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SANDFIRE RESOURCES LIMITED Investor Presentation 2013

Aug 27, 2013

65773_rns_2013-08-27_1004ac1a-d155-42d5-b810-b1972bf3d43f.pdf

Investor Presentation

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http://www.brrmedia.com/event/115085/ http://www.sandfire.com.au

J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

28[th] August 2013

1

Forward-Looking Statements

  • This presentation has been prepared by Sandfire Resources NL. This document contains background information about Sandfire Resources NL current at the date of this presentation. The presentation is in summary form and does not purport be all inclusive or complete. Recipients should conduct their own investigations and perform their own analysis in order to satisfy themselves as to the accuracy and completeness of the information, statements and opinions contained in this presentation.

  • This presentation is for information purposes only. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction.

  • This presentation may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. Recipients should inform themselves of the restrictions that apply in their own jurisdiction. A failure to do so may result in a violation of securities laws in such jurisdiction.

  • This presentation does not constitute investment advice and has been prepared without taking into account the recipient's investment objectives, financial circumstances or particular needs and the opinions and recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. Recipients should seek professional advice when deciding if an investment is appropriate. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments.

  • To the fullest extent permitted by law, Sandfire Resources NL, its officers, employees, agents and advisers do not make any representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted.

  • This presentation may include forward-looking statements. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Sandfire Resources NL. Actual values, results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward looking statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Sandfire Resources NL does not undertake any obligation to update or revise any information or any of the forward looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward looking statement is based.

Competent Person’s Statement

  • The information in this public presentation that relates to Exploration Results and Mineral Resources is based on information compiled by Mr John Evans who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Evans is a Director of Sandfire Resources NL. Mr Evans has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Evans consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Introduction and Overview: Karl Simich – Managing Director and CEO

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

  • Sales revenue of $507.3M from 62,154t copper, 41,725oz gold

  • Strong cash flow from operating activities of $250.2M

  • DeGrussa Mine earnings before net finance and income tax of $194.5M

  • Profit before net finance and income tax of $142.1M

  • Maiden annual net profit after tax $88.0M

  • Earnings per share of 57.48cps (basic) and 57.38cps (diluted)

  • Cash at 30 June 2013 of $77.1M

  • $95M in finance facility repayments completed – March 2013 ($50M) and June 2013 ($45M), reducing finance facility balance to $285M at 30 June 2013

  • Strong outlook for FY2014 with wholly-underground mine production at low cost

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

  • Open pit operations completed & ramping-up of underground mine on track

  • Optimisation of 1.5Mtpa Concentrator: FY13 production 64,017t copper , 42,679oz gold

  • Mineral Resource growth: mine life extended to late 2020

  • Strong and ongoing exploration commitment: $30M budget Australia-wide

  • FY2014 production guidance: 65-75,000t of copper , 35-45,000oz gold

  • FY2013 C1 cost guidance: US$1.05-1.15/lb

Contained metal production Sep 2012 Qtr Dec 2012 Qtr Mar 2013 Qtr June 2013 Qtr FY 2013
COPPER
Concentrator - 7,962 11,632 14,293 33,887
DSO 20,175 8,430 1,525 - 30,130
Total copper (tonnes) 20,175 16,392 13,157 14,293 64,017
GOLD
Concentrator - 3,927 6,289 7,762 17,978
DSO 5,097 5,163 2,620 - 12,880
Oxide gold 1,174 4,516 2,609 3,522 11,821
Total gold (ounces) 6,271 13,606 11,518 11,284 42,679

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Financial Results to June 2013: Matthew Fitzgerald – CFO

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($’000) June 2013 June 2012
Sales revenue 507,331 20,684
Profit before net finance and income tax 142,136 (33,543)
Net finance income (expense) (16,468) 982
Profit before income tax 125,668 (32,561)
Income tax (expense) benefit (37,670) 8,678
Net profit (loss) for the year 87,998 (23,883)
  • Strong sales revenue in ramp-up year of $507.3M from DSO and plant concentrate

  • Highly profitable open pit DSO sales program completed

  • Depreciation & amortisation expenses of $125.8M for the year (1HFY13: $54.0M), including:

  • $69.6M non-recurring amortisation charges for Open Pit Stage 1 and 2

  • $56.2M for the underground mine, 1.5Mtpa Concentrator and mine infrastructure

  • Lower recoveries from blending of open pit sulphide material into the Concentrator, as previously outlined, and lower copper price from February to April 2013

  • Increasing production lowering C1 unit costs; US$1.37/lb for the June 2013 Quarter

  • $37.7M tax expense offset against tax assets; no tax payable for the period

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Sales revenue Copper in
concentrate
Gold in
concentrate
Silver in
concentrate
Gold – toll
treatment
Total
$M $M $M $M $M
DSO 232.8 19.6 - - 252.4
Concentrator 213.8 21.7 1.2 - 236.7
Toll treatment - - - 18.2 18.2
Total 446.6 41.3 1.2 18.2 507.3
Contained metal Copper in
concentrate
Gold in
concentrate
Silver in
concentrate
Gold – toll
treatment
Total
Cu(t) Au(oz) Ag(oz) Au(oz) Cu(t) Au(oz) Ag(oz)
DSO 31,921 14,343 - - 31,921 14,343 -
Concentrator 30,233 15,561 49,379 - 30,233 15,561 49,379
Toll treatment - - - 11,821 - 11,821 -
Total 62,154 29,904 49,379 11,821 62,154 41,725 49,379

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

GOLD PRICE ($/ounce)

COPPER PRICE ($/tonne)

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  • Copper price weakened significantly in the second half below US$7,000 per tonne

  • Impact on revenue partly offset by the falling Australian Dollar to around US$0.90; lagged the reduction in USD copper price

  • Resulting AUD copper has returned to late CY2012 levels, with spot pricing now rising above A$8,000 per tonne – underpinning strong operating cash flows

  • USD and AUD gold price also increasing following a sustained decline

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

($’000) DeGrussa Mine Other Operations Other Operations Group
FY 2013 Expl and BD Corporate Treasury FY 2013
Sales revenue 507,331 - - - 507,331
Metal and price adjustment gains (losses) (6,878) - - (7,695) (14,573)
Other income - - - - -
Changes in inventories of finished goods and
work in progress
26,888 - - - 26,888
Mine operations costs (83,412) - - - (83,412)
Employee benefit expenses (26,459) (8,342) (3,915) - (38,716)
Freight, treatment and refining expenses (78,563) - - - (78,563)
Royalties expense (20,986) - - - (20,986)
Exploration and evaluation expenses - (22,079) - - (22,079)
Depreciation and amortisation expenses (123,409) (806) (1,634) - (125,849)
Share of net loss of associate - - (1,106) - (1,106)
Reversal of impairment loss - - (500) - (500)
Administrative expenses - - (6,299) - (6,299)
Profit before net finance and income tax 194,512 (31,227) (13,454) (7,695) 142,136

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

($‘000) June 2013 June 2012
ASSETS
Cash and cash equivalents 77,070 100,389
Trade and other receivables 8,491 7,015
Inventories 38,507 7,254
Other current assets 1,954 1,085
Total current assets 126,022 115,743
Receivables 84 3
Inventories 11,698 6,233
Mine properties 177,752 163,670
Property, plant and equipment 245,924 202,232
Investment in associate 183 1,189
Deferred tax assets 2,939 40,580
Other assets - -
Total non-current assets 438,580 413,907
TOTAL ASSETS 564,602 529,650
  • Cash – includes $70M relating to finance facility

  • Receivables – QP pricing

  • Inventories –

Concentrates, ore stockpiles and stores

  • Mine properties Underground development

• Property, Plant and Equipment – tail of construction program

  • Tax asset – expense has reduced tax assets

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

($’000) June 2013 June 2012
LIABILITIES
Trade and other payables 43,932 49,626
Interest bearing liabilities 163,906 94,146
Provisions 2,360 1,311
Total current liabilities 210,198 145,083
Trade and other payables 553 1,383
Interest bearing liabilities 119,542 251,019
Provisions 22,654 14,929
Total non-current liabilities 142,749 267,331
TOTAL LIABILITIES 352,947 412,414
NET ASSETS 211,655 117,236
  • Finance facility $380M fully drawn ($30M Sept 2012), $95M repaid March and June 2013

• Current – $165M scheduled quarterly repayments for FY2014 (September 2013 to June 2014)

• Non current – $120M (September 2014 to December 2015)

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Operations Update & Outlook: Karl Simich, Managing Director

J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

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  • Five stopes at various stages of development and production

  • Underground mining rate increasing while development is progressed – targeted 1.5Mtpa steady-state from the end of the September 2013 Quarter

  • Paste plant commissioned, second stope filled

  • Development of C1 and C4/C5 declines advanced +100m from Evans Decline junction

  • Total underground development progressed to +14km

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

  • Record mill throughput of 131,807t in July 2013

  • Production of 5,674t Cu for July 2013 and on track for targeted August production

  • Recoveries of 80-82% for Quarter-to-date due to processing of open pit sulphide material

  • On track to achieve nameplate +90% recovery following processing of open pit sulphide ore

  • Plant consistently achieved recoveries of 8590% when fed solely by underground ore (shown in black)

  • On track to achieve production of 14-16,000 tonnes of copper for the September 2013 Quarter

  • Increasing to target +18,000t per quarter from October 2013 processing underground ore

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Copper Recovery
89%
86%
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Underground Ore Feed
Underground / Open Pit Ore Blend
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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Production Guidance: FY2014

Key Operational Targets FY2014 – Guidance
Ore mined 1.45Mt Solely from underground operations.
Ore processed 1.50Mt Includes stockpile of open pit sulphide (blending Q1 FY2014).
Mined grade – copper
Mined grade – gold
5.2% Cu
1.8g/t Au
Mining Conductor 1 (~80%) and DeGrussa (~20%) orebodies
Copper recovery 89% Copper recovery maintained at ~80% for Q1FY2014 (open pit
blend), increasing to 92% into Q3-Q4FY2014.
Gold Recovery 47% Currently ~40%, increasing to LOM target of 50% over FY 2014.
Concentrate produced 280kt Based on mid-point of production guidance
Concentrate grade – copper
Concentrate grade – gold
25% Cu
5g/t Au
Targeted on spec concentrate grade and quality

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Production Guidance: FY2014

Metal production FY2014 – Guidance FY2014 – Guidance FY2013 – Actual FY2013 – Actual
Cu(kt) Au(koz) Cu(kt) Au(koz)
Concentrator 65-75 30-40 34 18
DSO
Oxide Gold
TOTAL
DSO
Oxide Gold
Total – FY2012
Total – Project to date
- - 30 13
- - - 12
65-75 30-40 64 43
4 2
- 1
4 3
68 46

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Operating Cost and Capital Guidance: FY2014

Key financial parameters
Unit costs – DeGrussa Mine
FY2014 Guidance
US$/lb
Q4 FY2013 Actual
US$/lb
Key financial parameters
Capital expenditure
Mining (net of development) 0.33 0.57 Decline and mine development
Processing 0.36 0.45 Sustaining capital
Business services 0.14 0.15 Other operations capital
Transport, treatment and refining 0.55 0.54 Total
C1 cost (pre-by product credit) 1.38 1.71
By-product credit (gold) (0.27) (0.34) Other investments:
C1 cost 1.11 1.37 DeGrussa / Doolgunna exploration
Royalties 0.17 0.15 Business development
Production cost 1.28 1.52 Total
Depreciation and amortisation 0.48 0.69
Total production cost 1.76 2.21

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

As at 31 March 2013 Mine Plan Mineral Resource Ore Reserve
Tonnes (Mt) 10.5 10.2 7.9
- DeGrussa 1.6 1.4 1.6
- Conductor 1 5.5 5.2 5.3
- Conductor 4 1.9 2.1 1.0
- Conductor 5 1.5 1.4 -
Cu grade (%) 4.9 5.7 5.0
Gold grade (g/t) 1.8 2.1 1.7
Contained copper (t) 512,000 586,000 393,000
Contained gold (oz) 597,000 688,000 434,000
  • DeGrussa Ore Reserve updated based on depletion to date, but excluding additional Inferred Mineral Resources in Conductor 4 and 5 (incorporated in Mine Plan due to geological continuity and high-grade nature of deposits)

  • Development of Conductor 4/5 Decline underway: new drilling positions to facilitate upgrading these Inferred Resources to Indicated category for conversion to Ore Reserves

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Life-of-Mine Underground Development Profile, Ore Sources and Grade

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$70M decline, lateral and vertical development capital includes:

• Jumbo development • Ore body drilling, including into C4 and C5 for development planning, grade control and resource extension • Mining overhead and supporting costs

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

  • Strong production performance in ramp-up year

  • Strong production and cost outlook for FY2014:

  • Guidance of 65-75,000t copper @ C1 cost of US$1.05-1.15/lb

  • Strong operating cash flow:

  • Decline and mine development, repaying finance facility, strong exploration commitment, business development opportunities, shareholder returns

  • Mineral Resources doubled since discovery

  • Mine life extended to late 2020

  • Underground exploration set to accelerate in FY2014

  • Board and management team strengthened

  • Well placed to pursue external growth opportunities

A premier, high-grade Australian copper producer.

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http://www.brrmedia.com/event/115085/ http://www.sandfire.com.au

J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

28[th] August 2013

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Competent Person’s Statement – Mineral Resources and Open Pit Ore Reserves

  • The information in this report that relates to Mineral Resources and Open Pit Ore Reserves is based on information compiled by Mr. Ekow Taylor who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Taylor is a permanent employee of Sandfire Resources and has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Taylor consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Competent Person’s Statement – Underground Ore Reserves

  • The information in this report that relates to Underground Ore Resources is based on information compiled by Mr Shane McLeay who is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr. McLeay is a permanent employee of Entech Pty Ltd and has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr McLeay consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Forward-Looking Statements

• Certain statements made during or in connection with this statement contain or comprise certain forward-looking statements regarding Sandfire’s Mineral Resources and Reserves, exploration operations, project development operations, production rates, life of mine, projected cash flow, capital expenditure, operating costs and other economic performance and financial condition as well as general market outlook. Although Sandfire believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward looking statements and no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, delays or changes in project development, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in metals prices and exchange rates and business and operational risk management. Except for statutory liability which cannot be excluded, each of Sandfire, its officers, employees and advisors expressly disclaim any responsibility for the accuracy or completeness of the material contained in this statement and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this statement or any error or omission. Sandfire undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events other than required by the Corporations Act and ASX Listing Rules. Accordingly you should not place undue reliance on any forward looking statement.

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Exploration and Resource Targets

  • Any discussion in relation to the potential quantity and grade of Exploration Targets is only conceptual in nature. While Sandfire is confident that it will report additional JORC compliant resources for the DeGrussa Project, there has been insufficient exploration to define mineral resources in addition to the current JORC compliant Mineral Resource inventory and it is uncertain if further exploration will result in the determination of additional JORC compliant Mineral Resources.

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

FY2013
Tonnes
Grade
(% Cu)
Grade
(g/t Au)
Contained
Copper (t)
Contained
Gold (oz)
DSO
Mined
127,591
23.4
3.1
29,845
12,703
Crushed
128,730
23.4
3.1
30,130
12,880
DSO sales
138,397
23.1
3.2
31,921
14,343
Concentrator
Mined
1,103,791
4.9
1.9
54,485
68,619
Milled
935,118
4.8
1.7
44,618
50,824
Concentrate produced
144,602
23.4
3.9
33,887
17,978
Concentrate sold
130,402
23.2
3.7
30,233
15,561
Oxide gold
Mined
3,559
-
0.8
-
94
Milled (toll treatment)
108,447
-
3.8
-
13,163
Gold production
-
-
-
-
11,821
Gold sales
-
-
-
-
11,821
Total
Mined
1,234,941
6.8
2.1
84,330
81,416
Crushed/Milled
1,172,295
6.4
2.0
74,748
76,867
Copper production
273,332
23.4
3.5
64,017
30,858
Gold production
-
-
-
-
11,821
Contained metal
-
-
-
64,017
42,679
Copper and gold sales
268,799
23.1
-
62,154
41,725

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J u n e 2 0 1 3 F u l l Y e a r R e s u l t s P r e s e n t a t I o n a n d O p e r a t I o n s U p d a t e

Project to date
Tonnes
Grade
(% Cu)
Grade
(g/t Au)
Contained
Copper (t)
Contained
Gold (oz)
DSO
Mined
144,887
23.6
3.3
34,169
15,218
Crushed
144,887
23.6
3.3
34,169
15,218
DSO sales
144,887
23.6
3.3
34,169
15,218
Concentrator
Mined
1,132,923
4.9
1.9
55,827
69,614
Milled
935,118
4.8
1.7
44,618
50,824
Concentrate produced
144,602
23.4
3.9
33,887
17,978
Concentrate sold
130,402
23.2
3.7
30,233
15,561
Oxide gold
Mined
278,603
0.2
1.8
463
16,446
Milled (toll treatment)
116,997
-
3.8
-
14,148
Gold production
-
-
-
-
12,786
Gold sales
-
-
-
-
12,786
Total
Mined
1,556,413
5.8
2.0
90,459
101,278
Crushed/Milled
1,197,002
6.6
2.1
78,787
80,190
Copper production
289,489
23.5
3.6
68,056
33,196
Gold production
-
-
-
-
12,786
Contained metal
-
-
-
68,056
45,982
Copper and gold sales
275,289
23.4
-
64,402
43,565

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