MMG Limited today announced to the Hong Kong Stock Exchange (HKEx) an update on progress at the Las Bambas project, the release of the 2015 Mineral Resource and Ore Reserves statement and an expected year end accounting and non-cash impairment.
Las Bambas commissioning on track
Commissioning of the Las Bambas copper project in Peru continues to plan with the closeout of remaining construction work and the introduction of commissioning ore to the processing circuit.
Testing of plant and equipment has been underway for some weeks, with trial batches of copper concentrate now being produced. This concentrate will be used to test logistics and handling.
MMG Chief Executive Officer, Andrew Michelmore said “This key commissioning milestone is evidence of the skill and dedication of the Las Bambas project, operations and Bechtel teams, who are committed to bringing this world class project on line.”
Construction work on the primary crusher, overland conveyor, grinding and flotation circuits, filter cake storage and load out areas is now complete. Infrastructure development on the tailings storage facility and Matarani Port facility is approximately 75% complete as at 2 December 2015.
The projects and operations teams continue to work together to drive the project toward the production of concentrate for shipment to customers in the first quarter 2016. Forecast capital cost to completion continues to remain within the previously advised range of US$1.9-2.4 billion from 1 January 2015.
MMG will provide a further update in the 2015 Fourth Quarter Production Report due for publication on or about 28 January 2016.
Mineral Resources and Ore Reserves
MMG also released its 2015 Mineral Resources and Ore Reserves Statement (MROR) as at 30 June 2015 which included Las Bambas for the first time.
Mineral Resources (contained metal) have increased for copper (304%), silver (65%) and gold (29%), and molybdenum is being reported for the first time as a direct result of the inclusion of Las Bambas. Contained metal has decreased for lead (18%) and zinc (7%) due to mill depletion at Century and Rosebery.
Ore Reserves (contained metal) have increased for copper (596%), gold (443%) and silver (149%) due to the inclusion of Las Bambas and Golden Grove zinc increases. Decreases for lead (12%) and zinc (8%) are due to milling depletion at Golden Grove and Century, where processing of the Century ore body is now complete.
“The Las Bambas Mineral Resource and Ore Reserve had not been re-estimated for over five years which gave us an opportunity to initiate a wholesale review. Positive drilling results, Tailings Storage Facility Prefeasibility study and metallurgical test work has resulted in significant increases to both Mineral Resources (226Mt) and Ore Reserves (127Mt) when compared to the 2014 Competent Person’s report,” Mr Michelmore said.
Full details of MMG’s Mineral Resources and Ore Reserves are shown in the Mineral Resource and Ore Reserve Statement as at 30 June 2015 available on the MMG website.
Impairment and profit warning
The Company also announced an expected year end accounting and non-cash impairment of approximately US$640-800 million.
In association with the preparation of MMG’s 31 December 2015 financial statements, a review of the recoverable amount of certain exploration and development projects and goodwill associated with acquisitions is currently under way. This review has revealed that several impairment indicators have occurred during 2015, including significant declines in zinc, lead and copper spot prices, changes to development plans, production profiles and acquisition goodwill.
This is likely to result in changes to the fair value less cost to sell of each of the Dugald River (Queensland, Australia) and Izok Corridor (Nunavut, Canada) development projects, the Kinsevere Mutoshi Swap exploration tenements and goodwill associated with the Kinsevere operation acquired in the acquisition of Anvil Mining Limited.
The Company wishes to emphasise that the impairment is an accounting related adjustment and a non-cash item and it will therefore not have any impact on the cash flow of the Company.
Based upon the information currently available, the impairment is likely to have a significant impact upon the reported profit of the Company for the year ending 31 December 2015, as compared with the year ending 31 December 2014 for which no impairment was incurred.
The Company will disclose further details of its financial performance when the financial results for the year ending 31 December 2015 are announced.
<ends>