core sector communique

Lady Loretta mines first ore ahead of schedule

Mount Isa, 25 September 2012

Ore production has commenced ahead of schedule at Xstrata Zinc’s AUD303 million (US$296 million) Lady Loretta mine in north-west Queensland, Australia.

First deliveries of zinc-lead-silver ore trucked into Mount Isa for processing will take place later this month. The early production, which accompanies ongoing development of the underground zinc-lead-silver mine, is well ahead of the original scheduled start date.

Full scale commercial mining at Lady Loretta will begin in mid-2013, delivering at full production an estimated 1.2 million tonnes of ore per annum. This will deliver an expected net increase in annual zinc production of 20% for Xstrata Zinc’s Mount Isa operations and at full production will also provide 230 permanent jobs.

Chief Operating Officer of Xstrata Zinc Australia Brian Hearne said: “This project is of significant importance to our production profile and it is certainly a fantastic achievement to have production well ahead of the original schedule.

“We are taking early advantage of Lady Loretta’s higher grade zinc which will improve the overall quality of our Mount Isa resource base. It is all part of our plan to increase mining and concentrate production from the region.”

The Lady Loretta deposit contains an estimated 12.7 million tonne reserve, consisting of a 14.2% zinc and 4.8% lead grade, alongside 84 grams of silver per tonne. The amount of zinc metal contained is assessed at 1,803kt and lead metal contained at 610kt over a mine life of 12 years.

Construction of the Lady Loretta project 140km north-west of Mount Isa commenced in July 2011. The project was originally expected to commence first ore production by the end of 2013 but in May 2012 the decision was taken to accelerate development of the mine by developing the upper ore bodies independently of the deeper underground resources, and to increase the annual ore production rate from 1.0 million tonnes to 1.2 million tonnes.

Lady Loretta’s ore will go through primary crushing on site before being transported to the Xstrata Zinc Mount Isa complex for processing. There, blended with ore from the George Fisher underground mine, Black Star Open Cut and Handlebar Hill Open Cut mines, the high-grade Lady Loretta ore has the potential to lift average grades and metal production and in so doing, support improved cost efficiencies across the North Queensland business.

Construction of the surface infrastructure continues, with office buildings for the mining and administration team nearing completion by the end of September.