BHP's Shares Uplifted After Providing Update On Copper Exploration Program

  • Nov 27, 2018 AEDT
  • Team Kalkine
BHP's Shares Uplifted After Providing Update On Copper Exploration Program

On 27 November 2018, BHP Billiton Limited (ASX: BHP) confirmed that it has identified potential new iron oxide, copper, gold (IOCG) mineralized system near southeast of BHP’s operations at Olympic Dam in South Australia. Following the release of this news, the share price of the company increased by 1.446 percent as on 27 November 2018. 

Further, the laboratory assay results have confirmed downhole mineralization intercepts ranging from 0.5% to 6% copper with associated gold, uranium, and silver metals. As per the company’s announcement, the exploration program is at an early stage, and as of now, there is not enough information to assess the size, quality, and continuity of the mineralized intersections. The company is analyzing the results and planning a further drilling program which is expected to commence in early 2019. To replenish the company’s resource base and enhance its portfolio, the exploration program of the company is more focused on Copper and oil.

On 19 November 2018, the company announced that it has settled its longstanding transfer pricing dispute with Australian Taxation Office relating to BHP’s marketing operations in Singapore.  As per the deal, the group will pay approximately $529 Mn in additional taxes for years FY13 to FY18.

On 8 November 2018, the company informed the market that the group has been successful in its bids to acquire the participating interest in, and operatorship of, two exploration licenses for blocks eight and twelve in the offshore Orphan Basin in Eastern Canada. As per BHP President Operations Petroleum Mr. Steve Pastor, this opportunity delivers on the company’s focus on conventional petroleum. He further added that it would also leverage the company’s global deep-water development and operational expertise. The company presumed initially planned Capex for blocks 8, and 12 is US$140 Mn up to FY2021 which is within the exploration budget.

Moreover, the company completed the sale of Onshore US assets to BP America Production Company for a gross consideration of US$10.5 billion.  In the September quarter, the company expenditure on Mineral exploration was US$40 million, out of which US$30 million was expensed. In the month of September 2018, the company acquired an initial 6.1% interest in SolGold Plc (SolGold) and later in the month of October the company agreed to purchase an additional 100 million shares in SolGold, which will bring company’s total interest to approximately 11.2%.

In FY 2018, the company generated free cash flow of US$12.5 billion and increased underlying profit by 33% to US$8.9 billion. Further, the net debt of the company decreased by more than US$5bn in FY 2018, and now the net debt is at the lower end of the company’s targeted range.

In the last six months, the share price of the company decreased by 5.23 percent as on 26 November 2018 and traded at a PE ratio of 32.310x. BHP’s shares traded at $30.870 with a market capitalization of circa $97.73 billion as on 27 November 2018 (AEST 4:00 PM).


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