BHP enters into ‘earn-in’ agreement to fund | Australian Markets

Mining giant BHP is seeking to get copper-rich in Africa with the $198bn behemoth hanging a $40m deal to take control of two Botswana copper tasks.

Underneath the deal, BHP will fund ASX-listed Cobre’s exploration program on the Kitlanya East and Kitlanya West prospects, positioned within the southern African nation’s Kalahari Copper Belt, with an option to secure a 75 per cent stake within the tasks.

The eight-year “earn-in” settlement, utilized by large miners to secure entry to early stage and high-potential tasks, leaves Cobre with the remaining 25 per cent stake.

Cobre chief govt Adam Wooldridge, in a market replace from Monday, mentioned the settlement was a “major moment” for the junior explorer and expressed confidence Kitlanya would possibly maintain “tier-1 deposits”.

“The partnership with BHP will provide us with the funding and support necessary to implement a technology-driven work program design to discover the tier 1 deposits we believe may be hosted in our Kitlanya East and West projects.”

The company additionally holds the separate Ngami and Okavango copper tasks in Botswana and Mr Wooldridge mentioned Cobre would advance these prospects “independently” from BHP.

The Kalahari belt stretches some 1000km from central Botswana into northeast Namibia.

Copper producer Sandfire Sources operates the Motheo Mine close to the Kitlanya tenements.

BHP exploration officer Tim O’Connor mentioned the collaboration with Cobre mirrored the mining main’s “excitement” for Botswana.

“The Kitlanya projects in Botswana represent an exciting opportunity to uncover tier 1 copper-silver deposits and we are pleased to contribute our expertise and resources to this venture.”

Cobre has accomplished a seismic survey at Kitlanya West and additional exploration work at each tasks is anticipated to kick off from April.

BHP may even pay Cobre an further $15m, calculated at $5 per tonne of contained copper, following the declaration of a Joint Ore Reserves Committee (JORC) report.

JORC refers to standardised reporting pointers in mining for mineral deposits.

The stories, compiled by geologists, are designed to offer traders and miners with a clear evaluation of a project’s potential worth.

BHP is shifting to reposition its commodity portfolio and ramp up copper as a stability in opposition to any potential decline in iron ore, which dominates the miner’s earnings.

Final yr, the miner lobbed a $75bn takeover bid for diversified giant Anglo American, with Anglo’s copper belongings extensively seen as a key BHP goal.

In South Australia, it’s developing a “copper province” by linking its Olympic Dam mine 570km north of Adelaide with the Distinguished Hill and Carrapateena mines it gained from its acquisition of Oz Minerals this yr.

Copper is a crucial ingredient in a vary of rising AI and inexperienced applied sciences, however there are looming provide challenges.

In a speech to the IEA Essential Minerals and Clear Power Summit in Paris in September 2023, BHP chief govt Mike Henry warned about $386bn in “growth capital” investment was needed to fulfill the world’s renewable power aspirations.

“That is over and above sustaining capital,” he mentioned.

“But currently committed growth projects over this period only amount to around US$40 or US$50bn ($77bn) today.

“More projects need to be identified, permitted and given the green light by those who are to invest in them.”

Cobre lifted 1.7 per cent in morning trade to 6c a share for a market capitalisation of $27m.