Western Mining eyes Olympic Dam expansion

Denver — Western Mining (WMC-N) is evaluating options to expand copper production at its giant Olympic Dam mine in South Australia.

The board of directors has given the green light to engineering work and contract negotiation for the A$100-million expansion, which would boost annual tonnage to 245,000.

Previously, in 1999, Western Mining completed a A$1.9-billion expansion to 200,000 tonnes per year, up from 84,000 tonnes. Underground production reached record levels of 52,949 tonnes of refined copper during the September quarter, and 147,414 tonnes in first nine months of the year.

Olympic Dam also produced a record 1,354 tonnes of uranium oxide concentrate during the quarter, raising year-to-date production to 3,340 tonnes. In July, the company finished commissioning a gold plant at Olympic Dam, which should make significant contributions to profit and cashflow.

Western Mining Chief Executive Officer Hugh Morgan predicts the mine will be one of the world’s 10 largest copper mines, by volume.

When the expansion project is completed, by 2003, it will generate A$80 million in annual profits, assuming copper prices above US85 per lb. and an exchange rate of US65 per Australian dollar. Cash operating costs should fall to US30 per lb. as a result.

Four new sections will be installed in the refinery while the company evaluates potential bottlenecks in the milling circuit, hydrometallurgical plant and electrowinning cells. Underground, Western Mining will open additional stopes, install more ore passes and extend the rail system, while maintaining headgrades of 2.4% copper (headgrades in the past averaged 3%).