Plant production consistently at or above design capacity
2012 was a year of significant accomplishments for Las Cruces with plant production averaging the design capacity of 6,000 tonnes of copper cathode for the last 9 months of the year. This production level was reached following a shutdown in March to remove and re-align the ball mill gearing as well as to make numerous operating improvements to improve process flows. Las Cruces produced 17,300 tonnes of copper cathode in this quarter of 2012, with a three day maintenance shutdown, and achieved plant recoveries of 90 percent.
The plant reliability increased in all areas during 2012 with stable reactor and agitator performance and further improvements to crushing, conveying and grinding. In all, 12 days of planned downtime were required for ongoing plant maintenance compared to our original plan of 20 days. Overall copper recoveries were 88 percent in 2012, an improvement from 84 percent in 2011 due to the full implementation of the leach feed surge tank with oxygen addition. Plant feed grades averaged 7.1 percent during the year, compared to 6.5 percent in 2011.
Las Cruces production of 67,700 tonnes of copper cathode this year was significantly higher than 42,100 tonnes in 2011 as a result of process improvements and came within 1.5 percent of the high end of our guidance range.
Cost per pound of copper produced was significantly lower than in 2011 due to higher production volumes.
2013 outlook for production
In 2013, we will concentrate on reducing recovery losses downstream of the leaching reactors that have increased with the increase in copper cathode production and due to operating with process solutions that contain more copper.
We expect to produce between 68,500 tonnes and 72,000 tonnes copper cathode in 2013. The plant will be tested at higher ore throughput and lower grade to assess the effects on plant performance before we enter into lower copper grade areas of the mine that we expect in 2014.
We expect cost per pound of copper in 2013 to be similar to 2012 levels.
Financial review
Higher sales volumes due to higher production
---------------------------------------------------------------------------- three months ended year ended(millions unless December 31 December 31 objectiveotherwise stated) 2012 2011 2012 2011 2013----------------------------------------------------------------------------Sales analysisCopper sales (tonnes) 17,400 12,800 68,900 42,000 70,300 ----------------------------------------------------Gross copper sales $137 $98 $539 $345 $562Smelter processing charges and freight (1) - (2) (1) (3)----------------------------------------------------------------------------Net sales $136 $98 $537 $344 $559----------------------------------------------------------------------------Cost analysisPounds of copper produced (millions) 38 31 149 93 155Direct production costs ($ per pound) $1.14 $1.21 $1.12 1.54 $1.11----------------------------------------------------------------------------Direct production costs $43 38 $167 $143 $172Change in inventory - (3) 2 1 -Depreciation and other non-cash costs 20 23 89 78 93----------------------------------------------------------------------------Operating costs $63 $58 $258 $222 $265----------------------------------------------------------------------------Operating earnings $73 $40 $279 $122 $294----------------------------------------------------------------------------Operating cash flow $50 $44 $320 $188 $386----------------------------------------------------------------------------
