The patience of Oz Minerals shareholders continues to be tested, with the company revealing a sharp quarterly jump in production costs and development of its new copper-gold project.
The miner will spend up to $110 million building an exploration decline at its new Carrapateena project, which is still about eight years away from production.
The decision is necessary so it can explore deep enough to investigate what mining method is suitable for an underground mine there.
The company's only producing mine, Prominent Hill in South Australia, is due to run out of copper by 2018 but Oz Minerals hopes to increase its mine life by between one and three years, by which time the $2.5 billion Carrapateena project would be operating.
"Without over-exaggerating the upside of Carrapateena, we are seeing extension beyond the resource we came out with previously," Oz Minerals chief executive Terry Burgess told a teleconference.
The company produced less copper and gold in the June quarter compared to the previous three months, with wet weather earlier this year restricting access to higher-grade pit ore.
Production costs jumped sharply by 18 per cent from the March quarter to $US1.185 ($A1.16) a pound as expected, having also leapt up by 13 per cent in the March quarter.
Costs of $US1.07 a pound for the first six months of the year were within guidance, Mr Burgess said.
June quarter production of 25,521 tonnes of copper was down from 27,182 tonnes but production for the year was still tipped to be at the lower end of guidance for 100,000 to 110,000 tonnes.
The company remains on track to produce between 130,000 and 150,000 ounces of gold this year.
However, investors were not impressed, with the company's shares 10 cents weaker at $7.43, which compares with $14.26 a year ago.
Oz Minerals came within an inch of collapsing from debts during the global financial crisis and sold almost all its assets in a fire-sale but was looking quite promising today with Carrapateena's development, Credit Suisse analyst Michael Slifirski said.
"The outlook for Carrapateena looks better and better but the problem is it's long-dated and markets are not going to pay for production that far out," he told AAP.
Mr Burgess said the company was still investigating what to do with its $750 million war chest, but was closely looking at copper rich regions around the world, including Chile.
"Some smaller companies are finding it difficult to get financing, that could be seen as an opportunity in the bigger M & A (merger and acquisition) picture," he said.
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