Ann: OZL: OZ Minerals Rejects Indicative Proposal from BHP, page-62

The smelter at OD is the elephant in the room and the reason why the operation struggles to make a profit.

In May 2020 it was reported that BHP had completed a $350m upgrade (BHP completes $350mn upgrade of Olympic Dam smelter in SA).

A few months later, in October 2020, it was reported that they intended to spend an additional $500m on smelter upgrades. This upgrade was completed late last year / early this year (Olympic Dam to ramp up after major smelter works).

This is an ongoing issue and so far the company has only really committed to patching up the issues. It's a single-stage smelter and it needs chalcocite to run at optimum. Until they bite the bullet and either sell-off the smelter to a company committed to upgrade it properly, or spent the multi-billions to upgrade it to a 2-stage smelter (alone or with a partner) the operation will continue to struggle. The result is that Olympic Dam has been high-graded for decades and each day there is less and less chalcocite left - most of the deposit is chalcopyrite.

The conundrum is interesting when you consider what OZL owns. There's plenty of chalcocite at Prominent Hill - the OZL mine located farthest from OD.. but the asset which contributes most to OZL's value, Carrapateena, has no chalcocite. How does this reconcile with BHP's desire to acquire the mine?

Oak Dam West is deep but based on the exceptional Cu grades announced for drill holes it also has plenty of chalcocite. OZL's water supply for its Carrapateena mine is located very close to Oak Dam, so this is something else to consider given that OZ's water sources at both its mines are non-G.A.B. aquifers, and the sensitivities around BHP's G.A.B. supply for Olympic Dam.

BHP's current strategy would appear to be to develop and mine the high-grade chalcocite part of the Oak Dam West deposit as soon as possible. The SA copper hub idea has incredible potential for the state and for the country, but all the recent talk and action from BHP seems to be plagued with shortsightedness, in what's often touted as a 100+ year copper operation/district. Where is their 20+ year vision? Their downstream opportunities?

Regarding Intercept Hill...didn't OZL have a go at drilling that a few years ago before walking?