UPDATE 1-Australia's OZ Minerals to shut mine, cut zinc output
uk.reuters.com
Tue Jan 13, 2009 12:22am GMT
SYDNEY, Jan 13 (Reuters) - OZ Minerals Ltd (OZL.AX), an Australian miner struggling to refinance its debt, said it would suspend operations at one of its west Australian mines, cutting zinc production in 2009 in favour of copper.
OZ Minerals said it has put the Scuddles mine at its Golden Grove project on care and maintenance, resulting in about a 25,000 tonnes cut in zinc output in 2009 to 55,000-60,000 tonnes.
Some of Scuddles' resources would be redeployed at Golden Grove's Gossan Hill mine site, which would boost 2009 copper production at the project by 5,000 tonnes to between 40,000 tonnes and 45,000 tonnes.
Plans to reduce zinc production in favour of copper at Golden Grove had been signalled last September.
The company said a review of the operational mix between the Scuddles and Gossan Hill mines showed that overall cash operating costs could be improved by shifting the focus to copper.
Since July 1 last year the London Metal Exchange zinc price has fallen about 64 percent compared with a fall of about 57 percent in the copper price.
Mining companies have been grappling with sharp falls in base metals prices on demand worries amid a global slowdown.
"What this decision means is that we will markedly improve the site's cost performance. This will allow us to ensure the long term sustainability of the operation," said Chief Executive Andrew Michelmore in a statement.
The move to improve cashflow comes as the company seeks to sell assets to refinance $560 million of debt by Feb. 27.
OzMinerals is also seeking bridging finance to cover shortfalls of cash as it commissions its A$1.15 billion ($781 million) Prominent Hill copper/gold mine in South Australia where production is expected to start early this quarter.
On Monday, OzMinerals said significant progress had been made with its bankers on the provision of bridging finance while the amount needed had been reduced by a fall in the company's cash consumption. ($1=A$1.47) (Reporting by Bruce Hextall; Editing by James Thornhill)
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