Discovery Metals, the Australian company that owns Boseto mine near Maun said it remains committed to exploring new efficiencies and initiatives to further improve production and reduce costs. The junior miner reported second successive record production quarter and recorded substantial reduction in C1 cash costs.
The company said the cash costs per pound of copper production reduced by 40.3 percent compared to Q4 FY14. It cited two primary drivers of the reduction including the 20 percent quarter on quarter increase in copper in concentrate produced and the commencement of waste stripping at the Plutus Stage 2.
“Waste moved at Plutus Stage 2 accounted for 42 percent of total material mined in the quarter. In accordance with applicable accounting standards, US$9.6m of related costs has been capitalised to the balance sheet to be matched with related revenue, as ore is mined from the Plutus Stage 2 Pit (first ore expected Q2 FY15),” DML said in quarterly report.
However, the company reported that mining costs per tonne were 7.2 percent higher than the Q4 FY14 mainly due to delays and costs associated with a fire that occurred on waste excavator EX903. The EX903 waste excavator sustained damage in the engine component following a fire on-board the machine during Q1 FY15.
A rental excavator, with a subsequently, higher cost base, is being utilised to ensure production rates are maintained. Processing costs per tonne milled fell 6.6 percent quarter on quarter, as throughput increased; despite a major planned shutdown for mill re-line work in September 2014.
“Site management initiatives to reduce expenditure are delivering positive results with total Boseto site operations costs falling 6.7% quarter on quarter (before waste stripping adjustments),” the company added.
The company’s commitment comes at a time when it faces backlash from lenders over nonpayment of debt. Last month (September 18, 2014), DML received a notice of breach from its lenders stating that the updated Business Plan was not in a form. While discussions are ongoing with the lenders, the Company requested a suspension from official quotation from 18 September, 2014 to 31 October, 2014.
On 1 September, 2014, the Company announced its intention to conduct a 2 for 1 rights issue at A$0.02 per new DML share. As announced on 18 September, 2014, the proposed renounceable rights issue will now not precede in the form and timeframe announced and the development of the Zeta Underground Mine Project is on hold, while discussions with the Company’s lenders continue.
“This was a major disappointment for the Company, given the quantum and quality of the work involved in both the Debt Re-Profile process and the development of the revised mining plan to include the Zeta Underground operation,” it said.
“The Company is actively progressing discussions with its lenders in relation to potential strategies and options for the continuing development and operation of the Company’s Boseto operations.”
DML said it has appointed Ironstone Capital advisors to assist the Company in sourcing and reviewing a range of alternative and replacement financing arrangements.