--Copper Range to sell exploration licenses to BHP Billiton for
A$3 million
--The licenses bolster BHP's position around its Olympic Dam
mine
--BHP reaffirms production guidance for Escondida copper
mine
(Revises first paragraph, adds details of the deal, comment from
BHP, background throughout)
By Robb M. Stewart
MELBOURNE--BHP Billiton Ltd. (BHP) continues to snatch up
prospecting rights around its Olympic Dam copper-uranium mine in
southern Australia, securing long-range options even as questions
build around whether the company will proceed with a multi-billion
dollar expansion of the existing mining operation.
Junior exploration firm Copper Range Ltd. (CRJ.AU) Wednesday
said it will sell four exploration licenses and five license
applications in South Australia state to BHP for 3 million
Australian dollars (US$3 million). The sale, which is subject to
several conditions, will enable Copper Range to focus on other
projects, it said.
BHP has bought a number of exploration licenses near its Olympic
Dam mine in recent months, investing relatively little to ensure it
has expansion options in the future and to block rivals that may be
interested in the land. BHP has remained bullish on the long-term
outlook for copper despite declines in commodity prices this
year.
BHP's board is due to decide toward the end of the year whether
to approve the expansion of Olympic Dam, a massive project that
analysts forecast will cost more than US$30 billion over several
years.
BHP has three US$10 billion-plus projects due for approval by
the end of the year, but is likely to defer at least one.
Analysts have speculated that BHP could delay or scale back
initially the Olympic Dam project. Deutsche Bank this month said it
would make sense for BHP to sell a stake in the operation to a
strategic partner to bolster funding. BHP has said copper
production could rise almost fourfold over a decade to 750,000
metric tons a year, with uranium and gold output also rising
substantially.
Copper Range in a statement said it had been reviewing options
for its projects near Olympic Dam since Barrick Gold Corp. (ABX)
withdrew as a joint venture partner more than a year ago, and BHP's
offer represented a fair market value.
"We believe there is potential for additional iron oxide copper
gold discoveries in the Stuart Shelf region of Australia," a BHP
spokeswoman said. "By taking this initial step of securing the
exploration rights, we are making a relatively low-cost investment
in a potential future option that may not be exercised for many
years."
Peter Beaven, president of BHP's base metals division, said in a
presentation prepared for meetings with investors and analysts
later this week that China's underlying long-term demand for copper
remains strong, although its inventory cycle would create
short-term volatility.
He reaffirmed that copper production at BHP's majority-owned
Escondida mine in Chile would decline slightly in the year through
June, supported by a strong increase in output in the current
quarter. BHP and partner Rio Tinto PLC (RIO) in February approved
spending US$4.5 billion to expand Escondida as they target copper
production of more than 1.3 million tons a year by mid-2015.
Write to Robb M. Stewart at robb.stewart@wsj.com