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Discovery metals suspends Boseto operations

Publishing Date : 22 December, 2014

Author : NGONIDZASHE DZIMIRI


Discovery Metals Ltd announced this week that it will freeze operations at its Boseto openpit copper mine within the next six months, citing low copper prices.


The miner told shareholders that a review of the openpit operation had been launched earlier this year to determine the effect of the current and continuing soft market outlook for copper, as well as the prevailing high stripping ratio and the restricted geometric nature of the Boseto open pits.


The review determined that the prevailing high strip ratio would result in a high operating cost environment, which was not sufficiently cash flow positive in light of the prevailing copper price.


“The review concluded that the current outlook for copper pricing on world commodity markets is expected to remain soft in the short- to medium-term, and hence the recovery in the profitability of the Boseto open pit operation is unlikely in the near future,” the company said in a statement.


Copper prices have now plunged by around $1,000 a tonne since the start of the year, underscoring a mounting supply glut, which miners say could take years to work through.


A worldwide copper supply surplus of 300,000 tonnes is forecast in 2015 by Australia's Bureau of Resource and Energy Economics, equivalent to half a year's output by South Korea.


Discovery says it will now move to maximise the extraction of ore from the current operating pits, while no new openpit operations would be started. The company would also maximise all available revenue from the current open pit operations and minimise waste stripping and movement.


Moreover, Discovery would also immediately implement cost management and reduction strategies in order to reduce the operating costs at the Boseto projects.


In September this year, Discovery placed the development of the Zeta underground mine, at the Boseto mine, on hold, after failing to raise the necessary funding for the project.


Discovery shares tumbled by as much as 35 percent on Wednesday to just above 1 Australian cent.

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