DML Production Cost

The C1 production costs will be better than the recent performance and are likely to be less than $2.00/lb in the longer term.  The first chart below shows the inverse relationship between Cu production and C1 cost.  This relationship demonstrates that the divisor has a larger impact on unit cost than the numerator,  that is, the more pounds of copper in concentrate each month the better.  The monthly/quarterly production costs are relatively constant.

The last 6 quarters have been during the ramp up phase from explorer to producer.  The last two quarters provide some guidance on what the operation can achieve, but even then, the Cu production is affected by the proportion of oxide ore milled each period.  Oxide ore has a significantly lower recovery, and, if it is like other mine-sites, has a slower mill throughput.

The second chart below shows the relationship between C1 costs and Cu in Concentrate from the last 6 quarters.  

The logic for developing the underground Zeta deposit is to ensure access to consistent, high grade sulphide ores with recoveries of more than 90%.  The Q1 FY15 quarter provides the best indication to-date of what the underground cost position could be.