The mixed ore circuit achieved increased recoveries and grade, while throughput remained consistent with the prior year. Following the circuit interchange in Q2 2012, the reduced throughput on the mixed circuit allowed longer residence time in flotation resulting in improved recoveries. In the second half of the year, throughput significantly exceeded capacity of 6.5 Mtpa due to optimization of the front end, improving plant availability and utilization.
Year-on-year the oxide circuit achieved slightly higher throughput, which has been offset by lower grades. The effect of completion of the oxide expansion works to 7.2 Mtpa allowed increased throughput in Q4 2012. The limited availability of locally-sourced sulphuric acid meant that most of the high grade, higher acid consuming oxide ore was stockpiled in 2012.
Gold production was 21% higher than in 2011 as a result of gold circuit enhancements and improvements resulting in higher recoveries.
Year-on-year cash costs have increased by 6% from 2011, however there has been a downward trend throughout the year with cash costs decreasing each quarter to $1.45 per lb in Q4 2012. An increase in the gold credit in 2012 was largely offset by an increase in treatment and refining charges. The increase in costs compared to 2011 is mainly due to an increase in processing costs including higher acid costs.
Full year sales revenues decreased by 3% compared to the prior year despite an increase in copper sales volumes of 6% and an increase in gold sales volumes of 15%. These increases in sales volumes were offset by a decrease in net realized copper prices of 9%. The effect of these lower realized copper prices is also seen at the gross profit level which fell 22% to $929.4 million from $1,187.1 million in 2011.
Q4 operating results
Copper production increased by 19% from Q4 2011 due to increased throughput, grades and recoveries. Throughput in Q4 2012 increased as a result of the oxide circuit expansion works and benefited from a later than usual start to the Zambian rainy season.
The exposure of sulphide ore faces at target grades, as a result of the mine pit development work, led to the increased sulphide grades in Q4 2012 compared to the prior year.
Mixed ore throughput in Q4 2012 continued to exceed the 6.5 Mtpa design capacity. Increased recoveries compared to Q4 2011 resulted from the longer residence time in flotation.
Oxide throughput has increased 16% from Q4 2011 as a result of the completion of the oxide expansion to 7.2 Mtpa capacity in Q3 2012. This increase in throughput has been offset by a decrease in grade as high-grade, high-acid consuming ore was stockpiled in the quarter.
Gold production was 54% higher than Q4 2011 as a result of gold circuit enhancements resulting in higher recoveries.
Q4 2012 C1 costs decreased by $0.07 per lb from Q4 2011. C1 costs benefited from lower mining costs and an increased gold credit as a result of higher gold sales volumes and a higher net realized gold price. This benefit outweighed higher acid costs.
Sales revenues and gross profit increased by 22% and 28% respectively in Q4 2012 compared to Q4 2011. The increase in sales revenues reflects both an increase in sales volumes and higher realized prices. Gross profit was higher than Q4 2011 due primarily to higher realized copper prices offset partially by higher royalty rates. The Zambian copper royalty rate was increased from 3% to 6%, effective April 2012, being the principal reason for the increase of $18.6 million in the royalty expense in Q4 2012 compared to Q4 2011.
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