MELBOURNE, Feb 26 (Reuters) - OZ Minerals OZL.AX said on Friday it aims to build a A$770 million ($556 million) copper and gold mine in South Australia, giving up on more expensive options for the project to drive growth as its one producing mine is on the decline.
OZ Minerals said it would start a pre-feasibility study for the Carrapateena mine to produce 55,000 tonnes of copper and 58,000 ounces of gold a year for the first three years, with a mine life of more than 20 years.
It expects to fund the development from existing cash and expected cash flow from its Prominent Hill mine, and hopes to begin construction in mid-2016 with the mine to be producing by 2019, when copper demand is expected to outstrip supply.
"Whatever lens you look through, whether it is value, rate of return, grade, cost, mine life, production profile, jobs or scalability, we believe Carrapateena will be an outstanding project," OZ Minerals Chief Executive Andrew Cole said in a statement.
Even at current weak prices for copper around $2.09 a pound, the company said Carrapateena would be profitable.
Opting for a less expensive, smaller initial project, the company said on Friday it would return A$60 million in cash to investors through a share buyback.
($1 = 1.3839 Australian dollars)