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BHP Oak Dam Copper discovery, page-58

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    Yesterday, the Department of Energy and Mining in SA hosted their annual Copper to the World conference in Adelaide. One of the speakers was Sam Hewitt, BHP Oak Dam manager. Unfortunately, I was not able to watch his presentation, but I found this article in the Australian covering his presentation on the future of Oak Dam. It's seems BHP are full steam ahead on the development of Oak Dam, which is great news for little CHK next door.

    BHP is accelerating work at its Oak Dam exploration project in South Australia, hoping to put a formal resource size on the major discovery and move to designing a mine around the discovery “sooner rather than later”, according to its project manager.Oak Dam has moved to near the top of BHP’s exploration portfolio since drilling discovered the potentially massive copper system in 2018, which offers BHP the hope of a reset for historically patchy performance of its nearby Olympic Dam copper operations.Speaking at South Australia’s annual copper to the World conference on Tuesday, BHP Oak Dam manager Sam Hewitt said the company had since punched more than 40km worth of drill holes into the discovery, building up a picture of a potentially significant discovery only 65km from its Olympic Dam operations.

    BHP’s latest drilling campaign is now filling in the spaces between those early holes, looking to define the size of the deposit and inform feasibility studies on its development, as well as trying to find the boundaries of the discovery.While BHP has so far been unwilling to put a time frame on its plans for Oak Dam, Mr Hewitt confirmed the mining major is moving as fast as it can to put a framework around the discovery.“Our strategy is to execute a staged ramp-up for what will become a significant drilling program; the underlying intent being to bring forward resource knowledge that can inform next phase strategy and investment decisions sooner rather than later,” he said.BHP has been reluctant to talk in detail about the discovery, and Mr Hewitt’s presentation to the conference in the project’s home state was still relatively sparse on details. But Oak Dam is firming as a critical element as BHP again mulls its plans for the future of its Olympic Dam operations, only 65km away.Olympic Dam was the major focus of BHP’s acquisition of Western Mining Corporation in 2005, but the massive copper and uranium mine has never lived up to its potential.The WMC-built plant has been plagued with issues over the years, and the company’s original mine plan has left BHP struggling to work out the best way to exploit the complex deposit’s remaining resources.Multiple expansion options have been considered and abandoned – from a giant $US30bn ($40.9bn) open pit discarded a decade ago, to more modest underground plans rejected last year, with BHP most recently having landed on the safe option of trying to get operational issues at its plant under control before making further investment decisions.

    As a measure of the cost of the problems at the mine, which has always been a relatively modest producer, Olympic Dam’s net operating assets sat at about $US3.5bn when it acquired WMC, and are now about $US9.05bn, suggesting BHP has capitalised about $US5.5bn worth of spending on Olympic Dam.BHP will spend about $500m this year on a major maintenance campaign at Olympic Dam, including rebuilding the flash furnace – required every 20 years.That decision suggests the lonely voices within BHP that have long believed the company should just bulldoze the processing plant and start again won’t carry the day this year, either.But a major discovery at Oak Dam could reset that thinking, or – if it is good enough – offer a new option to build afresh and recover some of the losses from the WMC acquisition.
 
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