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BHP quietly reports strong Oak Dam results

Buried in BHP’s just-released third quarter report was a much-anticipated update on its Oak Dam copper discovery in South Australia.
BHP quietly reports strong Oak Dam results BHP quietly reports strong Oak Dam results BHP quietly reports strong Oak Dam results BHP quietly reports strong Oak Dam results BHP quietly reports strong Oak Dam results

Oak Dam is near BHP's Olympic Dam operation in South Australia

A further 10 diamond holes for 12,441m, drilled between February and June, returned "encouraging" results.

Intersections included a standout 205m at 2.04% copper and 0.43 grams per tonne gold from 1,247m, including 44m at 5.77% copper and 1.2gpt gold.

Other hits included 80m at 2.73% copper and 0.44gpt gold from 1,209m, including 24m at 4.7% copper and 0.41gpt gold; 230m at 1.79% copper and 0.52% copper from 1,071m, including 42m at 3.06% copper and 0.92gpt gold; and 71m at 2.2% copper and 0.28gpt gold from 810m.

The intersections also contained silver and uranium mineralisation.

"Further optimism from continuing drilling of Oak Dam, the copper discovery to the south of Olympic Dam," Morgans analyst Adrian Prendergast said.

"Only 14 holes drilled to date, but encouraging results showing good grades."

BHP said recent drilling continued to confirm IOCG-style alteration and mineralisation, with a core of barren hematite-quartz breccias approximately central to the gravity anomaly, surrounded by high-grade chalcocite and bornite mineralisation, which grades outwards to more dominant chalcopyrite and pyrite mineralisation towards the contact with the host granite.

Further drilling will start next month.

Oak Dam is 65km to the southeast of BHP's Olympic Dam mine and 45km northeast of OZ Minerals' commissioning Carrapateena mine.

Meanwhile, BHP reported a 3% fall in copper-equivalent production across the group for the September quarter, largely due to planned maintenance and natural field decline in petroleum.

Iron ore production was 61 million tonnes, down 3% over the June quarter due to planned maintenance at Port Hedland.

Copper production of 430,000 tonnes dropped 3% quarter-on-quarter with record concentrator throughput at Escondida offset by planned maintenance at Olympic Dam.

Metallurgical and energy coal production each dropped by more than 20% due to maintenance, higher strip ratios and weather.

Nickel output of 22,000t was down 25% quarter-on-quarter due to maintenance and the transition to new orebodies.

BHP CEO Andrew Mackenzie said the company had made a solid start to the new financial year.

"While group production for the quarter decreased slightly due to the expected impacts of planned maintenance and natural field decline in petroleum, guidance remains unchanged and we are on track to deliver slightly higher volumes than last financial year," he said.

"The South Flank iron ore project is 50% complete, with all our major projects on schedule and budget."

BHP said it expected the Jansen potash project in Canada to be put to the board for a final investment decision by February 2021.

The board approved US$144 million to support project planning and on finalising the port solution. An additional $201 million in funding was approved to further de-risk the project.

Shares in BHP were down 2.3% to A$35.20.