Sensational-Adelaide.com

Olympic Dam output set to rival Pilbara's
Matt Chambers
The Australian October 01, 2010 12:00AM

BHP Billiton says its huge planned Olympic Dam open-pit mine in South Australia could produce more than 1.3 million tonnes a year of copper.
This would rival both the scale of Western Australia's Pilbara iron ore region and production from Escondida, the world's biggest copper mine.

The big miner has also revealed plans to pump billions of dollars into growing its plant at Escondida, in Chile, in multiple stages to keep expanded production beyond 2015 at least steady at 1.3 million tonnes a year as grades there decline.

This week, BHP took analysts on a tour of its South American copper operations and briefed them on growth options there and at Olympic Dam.

While the resulting analysts' reports gave a contradictory picture of BHP's copper expansion plans, the miner has chosen to keep quiet on what was said, instead releasing just the slides from the presentations.

In the slides, BHP's non-ferrous boss, Andrew Mackenzie, produced a graph showing the planned Olympic Dam open pit plateauing at just under 1.4 million tonnes of annual copper production over its 50-year life.

BHP's environmental impact statement lodged last year says the pit will reach 750,000 tonnes a year of copper production after a decade from the go ahead (expected in 2012).

This fits in with the graph, but after this the plan is to increase annual copper production to 1 million tonnes after about 20 years and on to 1.3 million tonnes after 30 years.

"Additional resource availability means that the ultimate scale of the Olympic Dam operation could rival the Pilbara," Mr Mackenzie said.

Analysts have interpreted the presentation differently.

Some reports say the phased Olympic Dam expansion has been scaled back and others that it has been brought forward.

One analyst said he had not issued a report because he believed the phased expansion had not changed from the one BHP had previously spoken of.

Growth plans for Escondida are also unclear, based on the analysts' reports.

BHP's slides show new plans for three or more expansions of concentrator capacity at the huge mine beyond 2015.

But there was no mention of expected copper production.

Analysts briefed said the company had indicated each expansion would cost $US3 billion ($3.1bn) to $US4bn. While UBS saw the expansion as an indication of a "step-change" in production, Goldman Sachs saw production gains as limited as the expanded plant capacity was to treat lower-grade ore.

A feasibility study into Altona Energy's $3.2 billion power project in the state's north will be started before the end of the year.

Yesterday, joint venture partners Altona Energy and China National Offshore Oil Corporation announced details of a $40 million bankable feasibility study on the Arckaringa project.

The company will pursue coal-to-liquid and coal-to-synthetic gas technology for fuel production and low-cost power production.

CNOOC, through its subsidiary New Energy Investment, will fund the study over two stages. The first stage is likely to last 12 months and has a budget of $12 million, after which the second stage will begin.

The approved work program will include a review of coal deposit geology and open-cut coal mining options, consideration of supplemental drilling, groundwater investigation and verification and environmental studies.

Altona chairman Chris Lambert said: "The decisions of the JV parties and the agreement of the budget and work program will enable CNOOC-NEIA to lead the Arckaringa project forward.

"We are now moving from a conceptual and planning phase into the exciting detailed evaluation and execution phase."

The project is likely to create 1500 jobs and contains an estimated 7.8 billion tonnes of coal.

NEW Zealand investors have sought $2.5 million worth of Phoenix Copper shares to speed up exploration of a tenement next to Rex Mineral's "highly prospective'' Hillside project, near Ardrossan on the Yorke Peninsula.

Shareholders, through NZ stockbroker Forsythe Barr will be offered a first tranche of shares, at 29c, to raise $2 million.

A second tranche, worth $500,000, requires shareholder approval at the company's November 26 meeting.

The offer price, at a 11.5 per cent premium to yesterday's trading price, helped lift shares in Pheonix Copper by 2c to 28c by market close.

Managing director Paul Dowd said cashflow from Phoenix's recently recommissioned Leigh Creek copper project was insufficient for exploration to start this calendar year on its Yorke Peninsula tenements .

"Rex has announced very substantial resources of 700,000 tonnes of contained copper and 650,000 ounces of gold on its neighbouring tenements and recent geophysical interpretations by Phoenix Copper on the Hillside model have identified seven areas with similar anomalous zones that require detailed testing,'' he said in a statement to the ASX.

"The strategic investors are highly regarded in New Zealand. The placement of shares at a premium is an indication of the level of confidence in the future of the company,'' he said.

A LARGE mineral deposit on the Eyre Peninsula which lay dormant for 17 years is about to receive a new lease on life.

Strategic Energy Resources shut down its open-cut graphite mine in Uley (near Port Lincoln) in 1993 because of declining graphite prices and, SER managing director Mark Muzzin said, inexperience on the part of its earlier partner.

However, as the graphite market tightens and prices rise - primarily because of declining supply and rising demand in China, which produces 80 per cent of the global graphite output - the Uley mine is rapidly shaping up to be a profitable enterprise - if SER can find a partner.

"At the moment, we're just seeking a joint venture partner,'' Mr Muzzin said. "It's too big a project and we're too small a company to take it on alone. So we're trying to find a partner that brings money, obviously, but also expertise to the table.

"It failed last time because of a sharp decline in graphite prices, but also because the company involved didn't have expertise in graphite they were a coal company, not graphite, so we struggled. So we definitely need that expertise.

"The site's been in care and maintenance since 1993, and it's well and truly weathered,'' Mr Muzzin said. "Some of the parts will have to be redone."

"But in the last few months a few events in Asia particularly have caused people to look at other graphite deposits.

The company's shares have risen nearly 50 per cent since the announcement, now trading at 5.1c.

Graphite is used for more than just the lead in pencils; it is a vital component in everything from brake shoe lining to regulating nuclear reactors. Going into the future, it will be used heavily in electrical cars and batteries, and high-tech industries - such as Japan - will drive the demand.

Mr Muzzin said six "key'' Japanese companies had shown interest in the mine, and he had met with senior executives of five.

"The economics are definitely looking positive,'' he said. "If we get it into production, it will make money. It's sitting on an immense deposit we're talking 100 years plus of mine life.''

The Uley mine is situated 23km from Port Lincoln in the Mikkira Graphite Province, one of the largest in the world. "If this was gold or copper, it would've been done years ago,'' Mr Muzzin said. "But now we're moving into a very good market for graphite, so things are definitely looking positive."

"And we'd like to see Port Lincoln known for something other than tuna.''

BHP Billiton has radically upgraded its forecasts for the Olympic Dam mine expansion, declaring the mine could rival the entire Western Australian Pilbara region.

The announcement, made at a briefing in South America recently has prompted calls for the Government to review its approval process for the $21 billion mine expansion.

In the presentation, a senior BHP executive indicated the company plans to produce almost 1.4 million tonnes of copper per year at the Roxby Downs mine - almost double the 750,000 tonne limit outlined in current expansion plans.

The presentation suggested the company would achieve that level of production after just 11 years of operation at the mine, meaning a new approval process would have to be instigated.

Minerals Resources Minister Paul Holloway said the current Environmental Impact Statement covered the company up to 750,000 tonnes.

"If it wanted to extend beyond that, clearly, they would have to apply and the process would begin again.'' Mr Holloway said.

"If BHP wished to double production again then one imagines that will inevitably mean that they will go through the same sort of process they are going through nowif they seek to go beyond what would be their approval limits.''

"That is what has happened in the past and I do not see any reason why they would not be the case in the future,'' he said.

Greens MLC Mark Parnell said the company's plans to double expansion should require it to submit a revised EIS allowing further public consultation.

"This has major implications for BHP Billiton and its shareholders,'' Mr Parnell said. "The State Government and BHP Billiton need to come clean with the South Australian people and reveal the full extent of this project, before any approvals are given," he said.

A spokeswoman for BHP Billiton said the company was seeking government approvals to develop the open pit at Olympic Dam to annual production capacity of up to 750,000 tonnes per annum.

"It may be possible for Olympic Dam to one day expand beyond that, possibly to a million tonnes per annum,'' she said.

"However, any proposal beyond the current EIS would need further study and additional approvals under a separate EIS.''

mattblack wrote:it my say it somewhere on this thread but is there any indication as to when a decision may be handed down?

HAVILAH Resources has defined a maiden resource of 192,000 tonnes of copper at its Mutooroo project in the state's northeast.
The Adelaide company said it had delineated a resource of 13.1 million tonnes of ore at 1.48 per cent copper, which also included 92,000 ounces of gold, and 17,5000 tonnes of cobalt.
The company will now look at development options for a mining project, which could involve a roaster, which would treat the ore, liberating the copper and cobalt and also producing sulphuric acid.
"Havilah's studies indicate that the cost to build a roaster with a throughput of approximately 500,000 tonnes per annum is more than $300 million,'' the company said in a statement.
Havilah is also looking at shipping a concentrate offshore for processing.
"Havilah has employed a consultant to investigate this possibility in China over the last few months, with some positive results.
"This alternative would result in a lower net return to Havilah, but cash flow could be achieved earlier and the initial capital cost to build a roaster could be avoided altogether.''
Detailed mine design work, based on open pit mining, is currently under way, the company said. The Mutooroo project is about 60km west of Broken Hill.

IRONCLAD Mining's Wilcherry Hill iron ore project on the Eyre Peninsula will cost as little as $12 million to construct, the company says.
The Western Australian company said the first stage of the mine, 120km west of Whyalla, would export two million tonnes of ore per year, starting in the first half of next year.
The project would cost between $12 million and $19 million to construct, depending on which port option was used.
The low start-up cost was due to the company incorporating many of the costs into longer term operating contracts.
Another $6 million-$9 million would be needed for working capital during the start-up period.
The first stage would involve the direct shipping of un-treated magnetite ore, which usually has to be beneficiated.
"With the successful direct shipping ore export program in operation, IronClad's Wilcherry Hill project will be only the second iron ore mine worldwide to supply direct shipping grade magnetite iron ore for export,'' the company said in a statement.
"A Mongolian company is sending 10 million tonnes a year of similar product by train into northern China.''
IronClad will target exports of one million tonnes in the first year.
"Years two and three are expected to yield exports of approximately two million tonnes per annum, whilst year four onwards should see an increase to four to six million tonnes per annum through a combination of additional direct shipping ore material and magnetite concentrates.''
The second stage of the project involves upgrading magnetite ore, and the company hopes to bring that stage of the project on stream within three years.
Production from Wilcherry Hill is scheduled to commence in the first half of 2011. The ore will be sold via marketing arrangements with Singapore-based company OMS.
IronClad shares were 5.9 per cent higher at 89c in early trade.

CONSTRUCTION of a $121 million copper and gold mine in the Adelaide Hills will start as soon as Monday after Hillgrove Resources secured funding for the project.

The mine, near Kanmantoo 60km southeast of Adelaide, will employ 180 people during construction and 150 during its 10 year mine life. It will be the state's 12th producing mine, with the Honeymoon uranium mine near Broken Hill also scheduled to come online this year.

It has been a lengthy process to finance the project, which stalled during the global financial crisis.

Hillgrove managing director Drew Simonsen said it was a great day for the company. "It's a big day for everybody in the company, we've been working towards this for a long time,'' Mr Simonsen said.

Hillgrove has already bought a processing plant for the mine and transported it from Western Australia to SA. The next step is to construct it on site.

Hillgrove expects to start mining and stockpiling ore as early as March, with the first production of copper and gold expected for the last three months of next year.

"The critical element is getting the plant up and operational, we've already been in touch with the plant contractor,'' Mr Simonsen said. "We want them on site as soon as possible. I've said 9 o'clock Monday morning. We might not achieve that obviously, but it's as soon as possible.''

The open cut mine will produce 21,000 tonnes of copper per year, 9000 ounces of gold and 174,000 ounces of silver.

The company said there was also the potential to expand the mine by almost 50 per cent "with a modest capital expenditure spend''.

Hillgrove will raise $65 million of the money needed to fund the mine through a placement of 25c shares to institutional shareholders. The company has also secured a $30 million loan and a $20 million bond facility to pay for the project.

Hillgrove shares were in a trading halt at 30c.

THE Mt Gunson copper mine in the South Australia's far north could be restarted as part of a new $7 million company listing.
Salisbury Resources is aiming to raise $5 million via the issue of 25 million, 20c shares, with a further $2 million in oversubscriptions allowed.
The focus for the company will be the Cattle Grid copper deposit at Mt Gunson, which is 30km west of the large Carrapateena copper deposit and 120km south of the Olympic Dam copper, gold and uranium mine.
Cattle Grid has previously been mined, producing 7.2 million tonnes of 1.9 per cent copper ore over 12 years from 1974, and has a granted mining lease.
Salisbury managing director David Costello said the company had an exploration target of 11-12 million tonnes at 1-1.5 -per cent copper.
"Significantly for a start-up explorer-developer, Cattle Grid is already on a granted mine lease - 5599 - and there is electrical, water and transport infrastructure already in place," Mr Costello said.
"That is a major operational and capital expenditure head-start for a junior."
Salisbury also has a joint venture with Metallica Minerals covering three Olympic Dam-Style targets in SA.
Salisbury is free carried to the tune of $10 million on each drill target, with the company currently owning a 25 per cent share in the prospects, and Metallica the rest.
Metallica has also taken a two million share stake in Salisbury, and will own 3.99 per cent of the company if the initial public offer of shares is fully subscribed.
Shareholders who take part in the IPO will be granted loyalty options on a one for one basis six months after the company lists. The options will have a 25c exercise price and be valid for 12 months.
The offer is expected to open on Monday next week, and close on December 3, with Salisbury Resources expecting to list on the Australian Securities Exchange on about December 20.
At the $5 million take-up level, Salisbury will have 50.1 million shares on issue and be capitalised at listing at $10 million.