Oak Dam and OZL - What does it tell us?, page-2

Interesting questions..

- is it a huge resource?
Yes. Going on the info released to date, and assuming an SG of about 3.4, and xyz dimensions from the published cross sections, I’d be surprised if there’s not at least 300 Mt at 2% Cu plus some gold and uranium. That’s not counting all the low grade chalcopyrite mineralisation in granite breccia, which might be a later block cave mining target similar to Carrapateena.. the global resource is probably going to be well over a billion tonnes if you include all that. N.B. Some of the broader mineralised zone is likely deeper than 1.5km from surface, therefore making bulk underground mining a technical challenge.

-are the grades sufficiently high enough for profitable extraction?
Yes I think so. The quoted grades above are just for the high grade breccias, and are very similar to the Olympic Dam head grades, so you’re looking at a 25+ year mine - assuming a decent reserve conversion ratio and a 10Mt per annum run rate. We know there are higher grade pockets too ..6% Cu

-what copper price makes it profitable?
I think as an operation Oak Dam has the potential to be significantly larger than Carrapateena. It remains to be seen what mining method they will use and that will have a big impact on break even copper price. A sub-level cave transitioning to a block cave - as for Carrapateena - seems entirely possible. Of course it also depends on who the operator is/how is it operated. If that’s the case then it should be profitable at well below $3 Cu. Current OZ could operate at a lower copper price than current BHP. OZ actually operates two profitable underground mines in the region. OD breaks even at best. If BHP is buying OZ for their know-how and is serious about doing things the way OZ does them, then perhaps they could make the entire district more robust and more resistant to price fluctuations. No signs of BHP yet addressing the elephant-in-the-room though…the smelter.

The biggest synergy that the OZL takeover addresses for Oak Dam is water. OZ’s bore field is located very close and east of Oak Dam. Given ongoing community sensitivity around use of ** water at OD I’d have serious doubts about the Oak Dam development timeline if BHP were not to acquire OZL. Time will tell how well BHP’s community relations and stakeholder engagement has been performing too. This has the potential to cause significant delays. I’d certainly expect OZ to be well ahead in that department.

In many respects a reverse takeover, whereby OZ became the SA copper arm of BHP, would have made a lot of sense, for OZL, for BHP, for the SA govt, and for the district.

just my 2 cents… DYOR