PERTH (miningweekly.com) – The board of mineral sands miner MZI Resources has approved a higher throughput operating plan for its Keysbrook mine, in Western Australia, aimed at increasing production and reducing unit cash costs.

The plan will result in a throughput increase at Keysbrook from four-million tonnes a year achieved in 2017 to 5.25-million tonnes by the fourth quarter of 2018, as well as incremental low-capital cost modifications to the Keysbrook flowsheet.

The new operating plan is expected to require a staged capital expenditure of A$5-million, which will initially be funded by an increase to the existing working capital facility being offered by Resources Capital Fund.

The changes are expected to increase saleable production by over 50% to between 95 000 t and 97 000 t in 2018, from 62 000 t in 2017. C1 unit cash operating costs will reduce from A$668/t in 2017 to between A$470/t and A$485/t.

MZI reported on Monday that based on the current product pricing and outlook, the new operating plan was expected to deliver a moderate gross operating surplus for the current financial year, and once completed, the changes would deliver consistent and sustainable operating cash flows comparable with the original financial projections for the project.

Since commissioning of Keysbrook started in late 2015, the project has been unable to maintain targeted performance on a sustainable basis, owing to a number of issues, including reliability and maintenance issues with the original mine feed unit, increased lease equipment requirements, variable mineral separation plant recoveries and higher-than-planned costs associated with noise management.

MZI has previously undertaken a number of measures to address these issues, which resulted in significantly improved operational performances, particularly since early 2017.

However, given the higher than originally anticipated underlying costs associated with operating the Keysbrook asset, an operational review of the project has now confirmed that the changes envisaged under the higher throughput operating plan are necessary for the project to achieve the desired operating cash flow on a sustainable basis.

“Implementation of the 5.25-million-tonne-a-year operating plan represents an important step towards achieving the desired turnaround of both Keysbrook and MZI,” said MD Martin Purvis on Monday.

“As the last two years have showed, it has been a far more complex challenge to get Keysbrook performing to the required level than was envisaged when operations commenced in 2015. Much of the heavy lifting to resolve many unforeseen challenges and difficulties has been done and the lessons learnt have been instrumental in constructing the new plan within a heightened level of confidence.”

Purvis said that the new operating plan provided MZI with a “clear, systematic and realistic pathway” to capitalise on the improvements already achieved at Keysbrook, and to deliver robust cash flows and attractive earnings on a sustainable basis, despite higher underlying costs of operating.