Name of the Project
Spence Growth Option (SGO) project.

Location
Spence copper mine, in the Atacama desert, northern Chile.

Project Owner/s
BHP.

Project Description
The SGO project will extend the mine life of the Spence opencut copper mine by more than 50 years. The project will convert 1.3-billion tonnes of measured and indicated mineral resources to hypogene sulphide ore reserves.

The project includes the design, engineering and construction of a conventional large-scale sulphide concentrator for copper and molybdenum with a 95 000 t/d nominal ore throughput capacity.

In addition, SGO will require a new 1 000 ℓ/sec desalination plant, located at Mejillones bay, and a 154 km water pipeline from the plant to the Spence mine site. These will be built and operated by a third party under a build, own, operate and transfer contract, which has been separately awarded, with nominal, undiscounted value of lease payment obligations over the 20-year contract term totalling $1.43-billion.

In the first ten years of operation, incremental production from SGO will be about 185 000 t/y of payable copper in concentrate and 4 000 t/y of payable molybdenum.

Potential Job Creation
During the construction phase, 5 000 jobs will be created.

Net Present Value/Internal Rate of Return
The project has an expected internal rate of return of 16% and an expected payback period of 4.5 years from first production.

Capital Expenditure
$2.46-billion.

Planned Start/End Date
First production is expected in the first half of the 2021 financial year.

Latest Developments
The project is on budget.

However, the schedule is under review, with first production potentially delayed until early in the 2021 calendar year, as a result of lower headcount on site, reflecting the decision to reduce the occupancy at the construction camp to facilitate physical distancing protocols, owing to Covid-19.

Consequently, the commissioning of the desalination plant could potentially be delayed a few months until the first half of the 2021 financial year.

The capitalisation of the lease will follow commissioning, with an update on the timing and recognition on the balance sheet to be provided in the June 2020 quarter operational review to be released in July 2020.

The overall project is 91% complete.

Key Contracts and Suppliers
None stated.

Contact Details for Project Information
BHP investor relations James Wear, tel: +1 713 993 3737, email: James.Wear@bhpbilliton.com.