Monsters of Rock: Costs up for copper and gold miners in production results
It has not been a good day for the ASX 200 and 300’s listed miners with only a handful of lithium and gold plays on the rebound from yesterday’s losses.
Pilbara Minerals (ASX:PLS) was down ~4% despite exceeding sales guidance by shipping 91,549t of spodumene in the September Quarter, having already caught a bump from news about its JV on a lithium conversion plant in South Korea with POSCO and that it had sold the most expensive shipment of spodumene ever in Tuesday’s latest BMX auction.
Price moves overseas were one factor for the 1.15% slide from the materials sector, with iron ore and base metals off the boil overnight and the main January Dalian iron ore futures contract sliding by 6%.
A string of indifferent production reports were also to blame, although Fortescue was up slightly after announcing record first quarter production from its Pilbara iron ore operations despite increasing discounts for its ore.
Aeris Resources (ASX:AIS) has been one of the top performing mid caps in the year to date, and is up almost 180% over the past 12 months.
But a set of very ordinary production figures saw it hit with a ~10% sell off today, having lost more than 13% of its valuable earlier in trade.
Its Cracow gold mine in Queensland produce 14,691oz at all in sustaining costs of $1951/oz.
But it was the Tritton copper mine, which felt the brunt of historically high sea freight rates, with costs rising to $4.73/lb or production of 4535t.
FY 2022 production guidance has been maintained at 67-71,000oz at $1550-1600/oz from Cracow. At Tritton, Aeris will produce 21,000-22,000t in FY22, but costs are set to climb because of the freight issues from $3.95-4.30/lb to $4.10-4.45/lb.
Aeris is spending $50 million this year to develop three new production sources around the Tritton mine in New South Wales, where the company rerated on the high grade Constellation discovery this year.
Sandfire Resources (ASX:SFR) boss Karl Simich says he wants the company to ‘face the future’ with predominately copper assets as the energy transition takes hold.
The company will replace its depleting DeGrussa mine in WA with the US$1.865 billion purchase of the MATSA copper complex in Spain, which promises to be a 100,000tpa-plus producer over its remaining 12 year mine life.
Also building the Motheo copper mine in Botswana, due to open in early 2023, Sandfire has set its sights on producing 200,000tpa once the MATSA deal is bedded down and expanding to 300,000tpa from years 3-5 of its five year plan.
To Simich, both Motheo and MATSA have latent capacity to help achieve that, though with a ~$400 million warchest and no debt, it seems likely Sandfire still has some M&A clout to help it chart an aggressive growth path.
“As the world is working towards zero carbon emission by 2050, we will continue to build in our business, very much those future facing metals and predominantly a copper business,”Simich said on an earnings call.
“So we’re looking forward to moving to the next level as a business into the international global base metals, copper focused situation.
“And I think the assets that we are amassing and those significantly prospective opportunities within those assets are yet to be delivered, and we look forward to doing that over the next five to 10 years.”
Sandfire produced 15,900t of copper at US$1.13/lb, with gold production of 7500oz.
It plans to produce 64-68,000t of copper and 30-34,000oz of gold in FY22 at costs of between US$1-1.10/lb.
Maintenance hit Australia’s biggest gold miner Newcrest in the September quarter, with gold production sliding by 27% on the back of mill issues at its Cadia, Lihir and Telfer gold mines.
Newcrest saw production fall from 542,332oz in the June quarter at costs of US$799/oz to 396,214oz at US$1270/oz in the September Quarter.
The gold miner expects to produce 1.8-2Moz of gold and 125-130,000t of copper this financial year, having delivered 2,093,322oz of gold and 125-130,000t of copper in FY22.