JOHANNESBURG (miningweekly.com) – BHP has approved capital expenditure of $2.46-billion for the Spence Growth Option (SGO) at the Spence opencut copper mine, in northern Chile, which will extend mine life by more than 50 years.
CEO Andrew Mackenzie on Thursday said the SGO project supports BHP's strategy to deliver near-term, valuable copper production.
“Execution of the SGO will create long-term value for shareholders in one of our preferred commodities. The project significantly extends the life of our Spence operation and unlocks the potential of the large, quality resource."
"SGO has been extensively studied and we have made significant improvements to project cost and design so that it is able to compete in our portfolio of attractive development options,” he added.
The SGO project includes the design, engineering and construction of a conventional large-scale sulphide concentrator for both copper and molybdenum with a 95 000 t/d nominal ore throughput capacity.
In the first ten years of operation, incremental production from SGO will reach about 185 000 t/y of payable copper in concentrate and 4 000 t/y of payable molybdenum, with first production expected in the 2021 financial year. The current copper cathode stream will continue until the 2025 financial year.
The SGO project will convert 1.3-billion tonnes of measured and indicated mineral resources to hypogene sulphide ore reserves.
The project has an expected internal rate of return of 16% and an expected payback period of four-and-a-half years from first production.
A new 1 000 ℓ/s desalination plant will have to be built at Mejillones Bay, along with a 154 km water pipeline to the Spence mine.
These will be built and operated by an undisclosed third party under a build, own, operate and transfer contract that has been separately awarded, with nominal, undiscounted value of lease payment obligations over the 20-year contract term totalling $1.43-billion.