Aging mine ... Prominent Hill in South Australia. Photo: Bloomberg
OZ Minerals' difficult year just got tougher, with the copper and gold miner revealing today that it would miss its full-year production target.
In a disappointing set of September results, OZ said copper grades at Prominent Hill in South Australia had proved to be lower than hoped during the period.
Copper production will slide by as much as 14 per cent to somewhere between 70,000 tonnes and 78,000 tonnes, the company said today.
Previously, the company had forecast annual production of between 82,000 tonnes and 88,000 tonnes.
The news weighed heavily on OZ shares, which slumped 9 per cent to $4.01 in early trade.
Existing guidance for gold production remains in place, but the poor quarter has forced up full year cost estimates.
OZ was hoping to keep costs within a range of US165 cents per pound of copper to as much as US180 cents per pound of copper.
After today's guidance change, those costs will rise to US190 cents to US205 cents per pound.
Despite OZ managing director Terry Burgess previously warning shareholders that 2013 would be a tough year of moving waste out of the Prominent Hill open pit, today's news will disappoint shareholders, who had been told the September and December quarters may be slightly better than the first half of the year.
Mr Burgess will address the investment community and the media shortly.
The problems at Prominent Hill underline why much of the local investment community was sceptical last month when London newspapers suggested Glencore Xstrata may try to takeover OZ.
Prominent Hill is an ageing mine, whose grades continue to disappoint.
Mr Burgess said the lower guidance emerged because the company chose to prioritise the best long term approach to mining the pit, rather than focus on achieving short-term guidance targets.
"I cannot pretend I'm not very disappointed to report this guidance to you today,'' he said.