Copper Mountain revised its mine sequencing plan and lowered its copper production guidance by about 19% at its British Columbia mine in response to weak copper prices and market uncertainty caused by the coronavirus outbreak, the company said Tuesday.
"We are committed to protecting our cash flow and minimizing costs given the low and volatile copper price environment that we are currently operating in as a result of the coronavirus impact," Copper Mountain CEO Gil Clausen said in a statement.
Copper Mountain said it will delay the mining of higher-grade ore zones until 2021 when it expects copper prices to recover. The company will instead focus on mining lower cost areas of its main pit to maintain positive margins.
"We have revised our mine plan to protect and grow cash margin so that we are able to comfortably meet all our obligations, including debt service, while continuing with key projects," Clausen said. "In periods of low metal prices such as today, we will be disciplined and orderly in our development and take a prudent approach to cash management."
Copper Mountain said it will reduce its daily ore mining rate for the remainder of 2020 to between 120,000 mt and 160,000 mt from the previous 200,000 mt daily rate.
Due to the revised mine sequencing and decreased throughput, Copper Mining reduced its 2020 copper output guidance to 70 million-75 million lb from 86 million-96 million lb.
The Vancouver-based copper miner said the changes would maximize cash flow in order to internally fund the first stage of its mill expansion project, which is still scheduled for commissioning in June 2020.
However, Clausen said the second stage of the project, involving the installation of a third ball mill, would be delayed to save capital expenditures in 2020. The project is "flexible" and would resume based on future market conditions, he added.
"While the mine plan we have currently implemented is sustainable longer term at these low copper prices, we believe this market uncertainty is short term and fully anticipate the copper price to recover," Clausen said.
The COMEX copper spot price settled at 252.4 cents/lb Monday, down from 283.3 cents/lb on January 2.
Freeport still Plans Ramp-Up in Response to Virus
In contrast to Copper Mountain's revised mine plan and guidance, Freeport-McMoRan said Monday it would continue to increase production at its Grasberg mine in Indonesia regardless of weaker market conditions connected to the coronavirus outbreak.
"Despite market volatility and potential economic impacts of the coronavirus and turmoil in the global oil market, our team remains focused on execution of our plans to enhance performance at low copper prices and provide opportunities for superior performance as market conditions improve," Freeport CEO Richard Adkerson said in a statement.
The Phoenix-based company said daily ore throughput at Grasberg reached about 35,000 mt year-to-date, a 35% increase from daily throughput in the fourth quarter.
Freeport said it also still plans to complete and commission mining operations at its Lone Star project in Arizona by the end of the year.
"Execution on these three important initiatives is expected to significantly enhance the company's cash flows in 2021 and beyond," Freeport said.
Freeport said there had not yet been significant disruptions to its supply chain or product shipments since the outbreak of the coronavirus but was continuing to monitor the situation.
Source: Platts |
