Quarterly Report
Broken Hill Proprietary Co Ld
24 July 2000
THE BROKEN HILL PROPRIETARY COMPANY LIMITED
QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT
April 2000-June 2000
This report covers exploration and development activities for the quarter ended
June 30, 2000.
Unless otherwise stated, BHP's interest in the projects referred to in this
report is 100%.
DEVELOPMENT PROJECTS
The following projects are in various stages of construction and/or development:
MINERALS
Escondida Phase IV Expansion, Chile (BHP 57.5% interest)
The current engineering and procurement phase for the proposed 110 000 tonnes
per day sulfide concentrator reached 88% completion during the quarter. The
joint venture partners continued to evaluate the final feasibility study and the
project will be presented for approval in the coming months.
HBI Joint Venture, Iron Ore, Venezuela (BHP 50% interest)
Production from two trains on Module 1 commenced on May 29 and commissioning is
in progress. Early results relating to performance and briquette quality are
encouraging.
Mechanical construction on Module 2 is complete and electrical and
instrumentation installation is underway. Commissioning is scheduled to
commence late in the first quarter of next fiscal year.
The construction project's lost time frequency rate stands at 0.82.
San Juan Underground, New Mexico, USA (BHP 100% interest)
Evaluation of the proposed San Juan Underground coal mine continued during the
quarter. Work continued on the completion of the feasibility study including
technical peer review, geotechnical and ventilation studies plus third party
reviews of safety, health and environmental issues. Submission of the project
for development approval will be dependent on successful negotiation of an
agreement with the San Juan Generating Station owners and completion of the
project feasibility study.
PETROLEUM
Typhoon, Gulf of Mexico (BHP 50% interest, non-operated)
The Typhoon development, consisting of the subsea completion and tieback of the
four existing appraisal wells to a mini tension leg platform (TLP), is being
developed jointly by Chevron (50%, operator) and BHP (50%). Peak production of
40 000 bopd and 60 mmscfd (gross) is expected, with first production scheduled
for third quarter 2001.
Construction began in April and May on the Typhoon mini TLP hull and topsides at
McDermott's yard in Morgan City, Louisiana, for installation second quarter
2001. Work progressed on the fabrication of the four subsea production
wellheads that will be installed as part of the well completion activities
beginning in September 2000.
Oil and gas export transportation contracts were signed by both partners and
Coastal Corporation to provide infrastructure that will tie-in to existing shelf
export networks.
Griffin, Australia (BHP 45% interest, operated)
Over the period the Scindian 3 infill well was drilled and penetrated a 26 metre
oil column. The well was tested at 6370stb/d. The Griffin 8 infill well
encountered a larger than predicted oil column of 63 metres and was tested in
excess of 8000stb/d although the true potential was not realised because of
equipment limitations on the rig. The importance of the Griffin 8 result
suggests the presence of larger than previously estimated in-place and
recoverable volumes. These results will be evaluated in combination with further
data collection to reassess the potential of the Griffin Field and the need for
further development and/or drilling. Additional reserves are expected to be
booked in FY2001.
In June a Diving Support Vessel was mobilised to the field to complete the
subsea tie back of these wells and at the end of the period work was nearly
complete with both wells expected to be in production by mid July. Additional
infill and exploration prospects in the Griffin permit and other nearby permit
areas are under evaluation and additional drilling and/or development proposals
are likely to be made in FY2001.
Keith, North Sea (BHP 31.83% interest, operated)
During this period the Keith Project achieved two major milestones with the
successful completion of the tie-in work at the Bruce Phase II Subsea Manifold
in preparation for the pipeline bundle installation in August, and the
installation of the Christmas tree overtrawlable structure at the Keith well
location. Other activities have focused on the fabrication of the bundle at
Halliburton's Subsea site at Wick in the North of Scotland, and the manufacture
of the Christmas tree at Kvaerner's works in Aberdeen. The bundle is on
schedule to be launched on 4-5 August. The Christmas tree is due to have
completed all of its System Integration Testing and Stack-up Testing by the end
of July in readiness for the mobilisation of the John Shaw drilling rig at the
end of August or early September 2000. The project is within budget and first
oil is projected between mid-October and early November depending on the arrival
of the John Shaw.
Zamzama Extended Well Test, Pakistan (BHP 38.5% post commerciality equity,
operated)
In 1998 BHP discovered the Zamzama gas field on the Dadu Concession, Sindh
Province, with the successful exploration well Zamzama-1/ST1. An appraisal
program comprising 2D/3D seismic and an appraisal well was completed in 1999.
In February 1999 BHP obtained approval from the Government of Pakistan to carry
out an Extended Well Test (EWT). In April 2000 BHP and its Joint Venture
partners executed a gas sales and purchasing agreement with Sui Southern Gas
Company Ltd for the supply of up to 70 MMscfd of gas for 21 months. The EWT
project, at a capital cost of US$8.8 million (BHP share), is a precursor to the
field development. Execution is under way with first gas planned for April
2001.
On 31 May 2000 BHP submitted to the Pakistan authorities the Notice of
Commercial Discovery, an Application for a Development and Production Lease and
the preliminary Development Plan for the Zamzama gas discovery. BHP is
continuing the aggressive market capture activities and subject to timing and
the volume of market capture it envisages a two phased development.
ROD Integrated Oil Field Development, Algeria (BHP 17.3% interest. Joint
operating entity comprising SONATRACH/BHP /AGIP)
During the quarter BHP announced the development of the Rhourde Oulad Djemma
(ROD) 300 million barrel (gross) integrated oil field development in the Berkine
Basin of Algeria.
BHP's partners in the US$500 million development are the Algerian State oil
company SONATRACH and AGIP Algeria Exploration BV (the Algerian operating
company of ENI SpA). A total of five fields will be developed - ROD, SFNE, RERN,
BSF and RDB - all of which are located in Blocks 401a/402a. A Unitisation
Agreement has been put in place to give joint operatorship and commercial
arrangements for the development, giving BHP approximately 17 per cent of
overall project reserves. After grossing for Algerian taxes, BHP's net share is
around 60 million barrels of the proven and probable hydrocarbon reserves.
The fields will be developed via a new dedicated processing train which will be
built at AGIP and SONATRACH's existing BRN production facility on Block 403.
From there, oil will be exported via the established pipeline infrastructure to
terminals located on the Algerian coast. The associated gas will be reinjected
underground. BHP's share of the US$500 million investment cost will be around
US$190 million.
First production from the fields is scheduled for the first half of 2003, with a
gross peak production rate of 80 000 barrels per day. The development and
operations will be conducted by joint operating entities comprising BHP, AGIP
and SONATRACH.
Ohanet Development, Algeria (BHP 60% interest. Joint operating entity comprising
SONATRACH/BHP)
On 3 July BHP announced that it had signed a Risk Service Contract (RSC) with
SONATRACH, the Algerian national oil company for the development of four
gas/condensate reservoirs in the Ohanet region of Algeria. The participants in
the venture are BHP 60%, Japan Ohanet Oil & Gas Co Ltd, 30% and Petrofac
Resources (Ohanet) LLC, 10%.
The total cost of developing the Ohanet reservoirs will be around US$1.0 billion
(BHP share US$618 million). In return the participants will be entitled to
recover their investment - together with an agreed fixed profit consideration -
over a target eight year period from the start of production. The Ohanet fields
are estimated to contain total proven and probable reserves exceeding 3.4
trillion cubic feet of pipeline quality gas, 107 million barrels of condensate
and 116 million barrels of LPG. The structure of the RSC means that BHP's
reserves entitlement fluctuates with movements in hydrocarbon prices and the
company expects to book proved reserves in the range of 55 million to 75 million
barrels of oil equivalent.
First production is scheduled for October 2003 and peak liquids production will
be around 58 000 barrels per day. BHP's revenue is taken from its share of
condensate and LPG produced.
EXPLORATION
The Discovery Group of BHP Minerals carries out worldwide grass-roots
exploration for all BHP's minerals businesses. During the quarter, a process of
re-organisation, to align the Discovery Group with the BHP Minerals portfolio
management model, was completed.
The Discovery Group is also responsible for exploration and development work
related to existing mines.
MINERALS
Copper Projects
Agua Rica, Argentina (BHP 70% interest)
The joint venture is continuing to evaluate development options for the project
that may reduce capital and operating costs. Activity at the field site was
limited to environmental monitoring and tenement management.
Escondida Norte, Chile (BHP 57.5% interest)
Geological and metallurgical studies continued during the quarter. Attention
was focused on mineralogical modelling, trace metal distribution studies and
clay mineral studies. A detailed structural evaluation of the deposit and the
sidewall sampling of the decline were completed.
Geotechnical drill holes and a restricted close spaced (50m) in-fill program are
planned to commence in July. Database compilation of all data since the Phase 2
resource model (1998) is underway.
An environmental team is preparing the bidding documents for the Environmental
Impact Study.
Tintaya Oxide Project, Peru
During the quarter, work continued on updating the feasibility study and on
other engineering activities. Estimates are being reviewed and completion of a
final feasibility study is expected during the next quarter.
Subject to approval, construction of the Oxide Project will take approximately
15 months. Annual production is expected to peak at 34 000 metric tonnes of
Grade 'A' cathode at a direct cash cost of less than 40 cents per pound.
Tintaya Antapaccay Project, Peru
The drilling program to further evaluate the potential of the project, which
started in January, was completed during the quarter. Drilling on the project
now totals 79 500 metres. Metallurgical test-work indicates that all ore types
respond well to flotation and concentration. Assessment of development options,
based on a project with a stand-alone concentrator processing between 30 000 to
60 000 tonnes per day of ore, is continuing.
Coal Projects
Revision of Queensland Coal Resources & Reserves
BHP Queensland Coal has completed a major review of Coal Resources and Reserves
for the mines it operates in Queensland on behalf of the Central Queensland Coal
Associates (CQCA) Joint Venture, Gregory Joint Venture and BHP Mitsui Coal Pty
Ltd.
The various joint ventures are made up as follows:
CQCA joint venture - BHP (52.1%)
- QCT Resources Limited Group (32.37%)
- Mitsubishi Development Pty Ltd (15.53%).
Gregory Joint Venture - BHP (64.14%),
- QCT Resources Limited Group (32.37%)
- Mitsubishi Development Pty Ltd (3.49%)
BHP Mitsui Coal Pty Ltd - BHP (80%),
- Mitsui and Co. Ltd. (Japan) (13.3%)
- Mitsui and Co. Ltd. (Australia) (6.7%)
The process for estimating coal reserves and resources for the mines managed by
BHP Queensland Coal complies with the standards mandated in the JORC Code (1999
Edition of Australasian Code for Reporting of Minerals Resources and Ore
Reserves).
The estimates represent the first major review of resources and reserves for the
mines since May 1997.
The 1999 resources and reserves estimates for undeveloped deposits are
re-stated, since more recent exploration and mine planning studies have not been
conducted. Deposit models for all mines have been re-generated and in some
cases the deposit geology has been re-interpreted.
A more rigorous interpretation of the Measured, Indicated and Inferred resource
confidence levels and the definition of the term 'reasonable prospects of
eventual economic extraction' have, in some cases, resulted in a movement of
coal to lower confidence levels or a reduction in the resource base.
Significant increases in the estimates of the reserve base are due to a change
in the method of determining the economic cut-off, which is now based on a
breakeven analysis (current average coal prices less FOB cash costs and
sustaining capital).
In the past various forms of cut-off were applied, including depth and strip
ratio. The only underground reserves quoted are for Crinum. Given that the
feasibility studies for underground development at Goonyella and Saraji have not
been completed, it has not been possible to include underground reserves for
these projects at this time.
Marketable Coal Reserves and Total Coal Resources for the mines and undeveloped
deposits managed by BHP Queensland Coal at 30 June 2000, compared to the
previous 31 May 1999 estimates, are shown in the following tables:
Marketable Coal Reserves (Million Tonnes)
June 2000 May 1999
Total BHP Share Total BHP Share
Reserves at mines
CQCA JV (52.1 % BHP)
Goonyella 606.2 315.8 136.7 71.2
Peak Downs 564.0 293.8 239.5 124.8
Saraji 116.9 60.9 126.5 65.9
Norwich Park 48.7 25.4 74.3 38.7
Blackwater 250.6 130.6 162.9 84.9
Sub-total 1586.4 826.5 739.9 385.5
GREGORY JV (64.14 % BHP)
Gregory 16.9 10.8 24.2 15.5
Crinum 61.1 39.2 69.4 44.5
Sub-total 78.0 50.0 93.6 60.0
BHP Mitsui (80 % BHP)
Riverside 13.8 11.0 14.3 11.4
South Walker Ck 66.2 53.0 78.0 62.4
Sub-total 80.0 64.0 92.3 73.8
Total reserves at mines 1744.4 940.5 925.8 519.4
Undeveloped reserves
CQCA JV (52.1 % BHP)
Daunia 47.1 24.5 47.1 24.5
BHP Mitsui (80 % BHP)
Poitrel/Winchester 71.4 57.1 71.4 57.1
Nebo West 15.9 12.7 15.9 12.7
Sub-total 87.3 69.8 87.3 69.8
Total undeveloped reserves 134.4 94.4 134.4 94.4
Total reserves 1878.8 1034.9 1060.2 613.7
Total Coal Resources (Million Tonnes) *
June 2000 May 1999
Measured Indicated Inferred Total BHP Total BHP Share
Share
Resources at mines
CQCA JV (52.1 % BHP)
Goonyella 1396 278 14 1689 880 1943 1012
Peak Downs 1366 362 224 1951 1016 1441 751
Saraji 464 88 9 561 292 717 374
Norwich Park 407 124 39 569 297 561 292
Blackwater 491 253 272 1016 529 1078 562
Sub-total 4124 1105 557 5786 3014 5740 2991
GREGORY JV (64.14 % BHP)
Gregory Crinum 218 29 2 249 159 279 179
BHP Mitsui (80 % BHP)
Riverside 27 27 21 26 20
South Walker Ck 80 45 353 478 382 410 328
Sub-total 107 45 353 504 403 435 348
Total resources at
mines 4449 1178 912 6539 3577 6284 3408
Undeveloped resources
CQCA JV (52.1 % BHP)
Red Hill 90 406 306 801 417 167 87
Daunia 165 39 204 106 204 106
Peak Downs East 668 104 772 402 175 91
Sub-total 255 1113 410 1777 926 546 284
GREGORY JV (64.14 % BHP)
Liskeard 13 13 8 13 8
BHP Mitsui (80 % BHP)
Wards Well 331 289 620 496 817 654
Lancewood 225 225 180 78 62
Bee Creek 77 54 131 105 131 105
Nebo West 178 178 142 178 142
Poitrel/Winchester 310 15 4 328 262 328 262
Sub-total 717 760 4 1482 1185 1531 1225
Total undeveloped
resources 985 1873 414 3271 2119 2090 1517
Total resources 5434 3051 1326 9810 5696 8373 4926
* Total coal resources shown are inclusive of coal reserves
The relevant competent persons are Douglas L. J. Dunn and Brian W. Cox,
Goonyella Mine, Queensland (BHP 52.1% interest)
Exploratory mining of a three-heading Adit in the Middle Seam down-dip from the
Goonyella highwall continued. Results so far have generally corroborated the
interpretations made from surface drilling and seismic surveys. At the end of
June a total of 8 759 metres of development had been completed out of a
projected total of 13 079 metres.
Small scale faulting has delayed development and led to a budget overrun of
about 10%. It is now expected the adit will be completed in December, two
months behind schedule. Feasibility studies for a proposed longwall mine are on
going.
Saraji Mine, Queensland (BHP 52.1% interest)
Exploration activities for the Saraji longwall pre-feasibility study continued.
Two-dimensional seismic surveying completed during the quarter confirmed the
relative lack of geological structures, which could (if present) negatively
impact on any development.
Illawarra Coal, Dendrobium Project
Evaluation of potential mine design layouts and estimation of the capital
investment that may be required continued during the quarter. Further
geological work, engineering studies and environmental work are required to
improve confidence levels before any decision can be made.
Iron Ore Projects
Revision of Pilbara Iron Ore Resources and Reserves
BHP Iron Ore has completed a major review of the Mineral Resources and Ore
Reserves for its Western Australia Pilbara iron ore interests.
BHP Iron Ore manages several joint ventures in the region:
Mt Newman Joint Venture - BHP Minerals Pty Ltd 85%
- Mitsui Itochu Iron Pty Ltd 10%
- CI Minerals Australia Pty Ltd 5%
Mt Goldsworthy Mining Associates - BHP Minerals Pty Ltd 85%
- Mitsui Itochu Iron Pty Ltd 8%
- CI Minerals Australia Pty Ltd 7%
Yandi Joint Venture - BHP Minerals Pty Ltd 85%
- Mitsui Itochu Iron Pty Ltd 8%
- CI Minerals Australia Pty Ltd 7%
BHP/Renison Joint Venture - BHP Australia Coal Pty Ltd 77%
- Renison Ltd 23%
BHP Iron Ore also manages the Jimblebar operation which is 100% owned by BHP
Minerals Pty Ltd.
There is a significant increase in the Ore Reserves over those reported
previously, and Mineral Resources are reported for the first time.
This new reporting is due to a change in reporting practice; past practice was
to only report Ore Reserves for operating mines and BHP approved developments.
The BHP June 2000 Annual Report will bring all of BHP's Minerals Resource and
Ore Reserve reporting into line with standards outlined in the updated JORC Code
(1999 Edition of Australasian Code for Reporting of Mineral Resources and Ore
Reserves).
Minerals Resources and Ore Reserves for the BHP's Pilbara Ore interests as at
end June 2000 are shown the following tables:
Ore Reserves for Pilbara Iron Ore
as at end as at end as at end Compared
June 2000 June 2000 June 2000 with 1999
Proved Ore Reserve Probable Ore
Reserve Total Ore
Reserves
Tonnes Grade Tonnes Grade Tonnes Grade Tonnes Grade
Area Ore type (millions) (millions) (millions) (millions)
Fe% P% Fe% P% Fe% P% Fe%
Mt Newman JV
B IoP HG 479 65.0 0.05 165 65.3 0.05 644 65.1 0.05
(BHP 85% B IoP LG 214 58.5 0.08 78 58.2 0.09 292 58.4 0.08
Interest)B hiP HG 134 63.0 0.12 6 61.5 0.12 141 62.9 0.12
B hiP LG 61 59.7 0.12 61 59.7 0.12
M IoP HG 81 62.3 0.07 81 62.3 0.07
M IoP LG 12 59.1 0.06 12 59.1 0.06
Total 981 249 1230 695 63.4
Jimblebar B IoP HG 111 63.3 0.06 39 63.2 0.06 150 63.3 0.06
(BHP 100% B IoP LG 57 59.6 0.07 18 59.4 0.07 75 59.6 0.07
Interest) B hiP HG 11 63.3 0.11 3 63.3 0.11 15 63.3 0.11
B hiP LG 11 60.2 0.11 3 60.2 0.11 14 60.2 0.11
Total 191 63 254 52 62.1
Mt.Goldsworthy JV
Y IoP HG 18 65.8 0.03 1 64.7 0.04 20 65.7 0.03
(BHP 85% Y IoP LG 4 58.2 0.04 1 58.9 0.05 5 58.3 0.04
Interest) Yc IoP HG 0 63.9 0.04 - - - 0 63.9 0.04
Yc IoP LG 6 59.2 0.04 - - - 6 59.2 0.04
Yd IoP HG 2 63.4 0.06 - - - 2 63.4 0.06
Yd IoP LG 4 61.0 0.07 - - - 4 61.0 0.07
M IoP HG 128 63.4 0.06 23 63.4 0.06 151 63.4 0.06
M IoP LG 32 58.6 0.07 6 58.6 0.07 38 58.6 0.07
Total 196 31 226 39 62.4
Yandi JV C IoP HG 658 58.4 0.05 159 58.2 0.04 817 58.4 0.05 198 58.4
(BHP 85%
Interest)
Relevant Competent Person is P. Schultz. Totals have been rounded.
Total Mineral Resources for Pilbara Iron Ore
as at end June 2000 in 100% terms
Measured Indicated Inferred Total Resources
Resources Resources Resources
Tonnes Grade Tonnes Grade Tonnes Grade Tonnes Grade
Deposit type (millions)%Fe %P(millions)%Fe %P (millions)%Fe %P(millions)%Fe %P
Newman JV B IoP HG 819 63.1 0.07 315 63.0 0.08 5 60.0 0.06 1,138 63.1 0.07
(BHP 85% B IoP LG 8 61.7 0.05 13 57.0 0.07 - - - 21 58.8 0.06
Interest) B hiP HG 125 63.2 0.11 29 62.4 0.14 42 62.2 0.12 196 62.8 0.12
B hiP LG 21 61.6 0.10 - - - 52 56.8 0.13 73 58.2 0.12
M IoP HG 231 61.1 0.07 25 61.5 0.06 364 61.9 0.07 620 61.6 0.07
M IoP LG 31 57.6 0.05 18 57.1 0.06 266 55.6 0.09 315 55.9 0.08
D IoP HG - - - 11 58.8 0.05 1 61.1 0.03 12 59.0 0.05
Subtotal 1,235 410 731 2376
Jimblebar B IoP HG 279 61.5 0.07 105 61.3 0.08 - - - 385 61.4 0.07
(BHP 100% B IoP LG 45 58.4 0.08 - - - - - - 45 58.4 0.08
Interest) B hiP HG - - - 7 62.9 0.11 668 62.0 0.13 675 62.0 0.13
B hiP LG - - - - - - 76 57.6 0.11 76 57.6 0.11
D IoP HG - - - 10 60.1 0.08 7 55.6 0.06 17 58.2 0.07
Subtotal 324 123 752 1,199
Goldsworthy JV
Y IoP HG 32 65.0 0.04 9 62.5 0.04 - - - 42 64.5 0.04
(BHP 85% YcIoP LG - - - 31 58.5 0.06 2 54.2 0.04 33 58.3 0.06
Interest)Yd IoP HG 15 61.0 0.09 - - - - - - 15 61.0 0.09
D IoP HG 22 58.5 0.07 19 58.5 0.06 5 57.6 0.06 45 58.4 0.07
B IoP LG - - - 27 63.5 0.04 - - - 27 63.5 0.04
B hiP HG - - - 99 62.2 0.15 - - - 99 62.2 0.15
B hiP LG - - - 66 57.8 0.13 - - - 66 57.8 0.13
M IoP HG 151 62.8 0.06 131 61.9 0.06 510 61.3 0.06 793 61.7 0.06
M IoP LG 30 58.7 0.06 32 53.8 0.05 35 56.0 0.05 97 56.1 0.06
subtotal 250 415 552 1,216
BHP/Renison JV
B hiP HG - - - 49 61.1 0.15 67 62.0 0.16 116 61.6 0.16
(BHP 77% B hiP LG - - - 33 57.5 0.14 18 58.4 0.17 51 57.8 0.15
Interest) M IoP HG - - - 29 62.6 0.06 45 63.0 0.07 75 62.8 0.07
M IoP LG - - - 22 57.6 0.05 21 57.5 0.05 43 57.6 0.05
subtotal 133 151 284
Yandi JV C IoP HG 955 58.0 0.04 288 57.5 0.04 234 57.3 0.04 1,477 57.8 0.04
(BHP 85%
Interest)
Total Mineral Resources are inclusive of Ore Reserves
Relevant Competent Persons are M.Kneeshaw, P.Waters and D.Podmore. Totals have
been rounded
Iron Ore Type Legend
Brockman ore B Yarrie lode ore Y High grade ore - see notes HG
Marra Mamba ore M Yarrie crustal ore Yc Low grade ore - see notes LG
Channel Iron
Deposits C Yarrie detrital ore Yd Low phosphorus ore (< 0.1%P) IoP
Detrital ore
(lump product) D High phosphorus ore (> 0.1%P) hiP
Explanatory notes to Tables:
Grades
- Grades listed refer to in-situ (head grade) raw iron (Fe) and phosphorus
(P) percentages (%) of the various ore types available within the BHPIO resource
portfolio. Ore is defined as high or low phosphorus (P) viz + / - 0.1% P levels.
- High-grade ore is defined at +60%Fe, except for Channel Iron (+54%Fe) and
Detrital Ores (+56%Fe). Low-grade ore is defined at 54-60%Fe.
- The low P Brockman ores represent a core blending source which enables the
overall blend of Brockman ores to meet market requirements of max 0.08%P. The
balance of high P Brockman ores does not meet current market specifications.
- Detrital ore grade is estimated lump product grade (+6mm) and not the in
situ grade, except for the Yarrie Y10 (Yd) deposit, where in situ grade is
reported.
Ore Types
- Brockman ores have a martite-(hematite)-goethite mineralogy and are hosted
within the Proterozoic Brockman Iron Formation.
- Marra Mamba ores have a martite-(ochreous)-goethite mineralogy and are
hosted within the Archaean Marra Mamba Iron Formation.
- Channel Iron Deposits (or pisolites) have a goethite-hematite mineralogy
and occur within Tertiary age palaeochannels.
Yarrie lode ores have a martite-hematite mineralogy and are hosted within the
Archaean age Nimingarra Iron Formation in the Yarrie area.
- Yarrie crustal ore is low grade, near surface hematitic ore occurring on
the Nimingarra Iron Formation in the Yarrie area. This is normally fed to a
beneficiation plant for up grading.
- Yarrie detrital ore is a Proterozoic conglomerate hematite ore occurring
in the Eel Creek Formation in the Yarrie area. This is normally fed to a
beneficiation plant for up grading, but may also be used as direct high grade
feed.
Mining Area C, Iron Ore, Western Australia (BHP 85% interest)
Negotiations with registered groups under the Native Title Act Section 29 notice
proceeded during the quarter and agreement has been reached with one group
pertinent to an infrastructure title. Negotiations are also proceeding to
obtain agreements that would allow the mining lease to be issued.
A decision regarding a preferred railway route is still pending.
Other Projects
Ekati Diamonds, Canada (BHP 51% interest)
On-site processing of the Wolverine, Zach, Cougar and Lynx kimberlite samples
commenced during the quarter. Sample tonnage estimates were completed for the
reverse circulation drill hole samples (35 cm diameter) collected in early 2000.
The estimates shown below are based upon hole volumes (from calliper data),
lithology logs and dry bulk densities.
Pipe Name No. Holes Kimberlite Intersected Estimated Dry Tonnes
Wolverine 3 628m 130
Zach 1 252m 58
Cougar 2 408.5m 78
Lynx 5 849m 169
Exploration core drilling during the quarter intersected four additional
kimberlite pipes bringing the total number of confirmed kimberlite occurrences
to 125. Three of the discoveries are located within the core zone and one of
the discoveries is within the buffer zone claims. None of the new occurrences
yielded significant microdiamond results.
Chagai Copper, Pakistan (BHP 75% interest)
On 28 April Mincor Resources NL signed a six month Option Agreement with BHP
Minerals which, if exercised, will allow Mincor to enter into an Exploration
Alliance with BHP to explore and develop the copper potential of the Chagai
Hills region of Pakistan. This Alliance will include the Chagai JV between BHP
Minerals and the Government of Balochistan and has received all necessary
government approvals.
Gag Island Nickel, Indonesia (BHP 75% interest)
Although announced after the end of the quarter, the following materially
relevant information about the Gag Island Nickel Project was released on July
12:
'The Broken Hill Proprietary Company Ltd (BHP) today announced that it had
reached agreement with Falconbridge Limited on the formation of a Joint Venture
which may lead to development of the Gag nickel laterite project in Indonesia.
The basis of the agreement is that Falconbridge would spend US$75 million to
earn a 37.5 per cent interest in the Gag Island nickel project. It is expected
the investment would primarily be directed towards completing a Gag Island
project feasibility study, to be managed by Falconbridge, over the next 2 years.
A number of substantial matters need to be resolved before the Joint Venture can
become effective including:
- clarification of the commercial arrangements with P.T. Aneka Tambang;
- clarification of the forestry classification on Gag Island; and
- resolution of the scope of work for the proposed feasibility study.
Following completion of the Falconbridge earn-in, shareholders in the project
would be BHP 37.5 per cent, Falconbridge 37.5 per cent and P.T. Aneka Tambang 25
per cent. Currently BHP holds a 75 per cent interest in the project and the
remaining 25 per cent stake is held by P.T. Aneka Tambang.
The Gag Island nickel project is located in Republic of Indonesia. The current
resource estimate which contains both oxide and silicate laterite zones is
tabled below. At this stage there is no commitment to proceed with the project
beyond the feasibility study.
Gag Island Project Mineral Resource Estimate
Resource Class Tonnage* (Mt dry) Nickel Grade Cobalt Grade
Measured 12 million 1.33% 0.09%
Indicated 93 million 1.46% 0.07%
Inferred 135 million 1.3% 0.09%
Total Resource 240 million 1.35% 0.08%
* - The Relevant Competent Person is A. Bailey, totals have been rounded.
The Gag Island nickel project is consistent with BHP's strategy of adding
material growth opportunities and further diversifying its minerals asset
portfolio. The agreement with Falconbridge delivers on BHP's stated intention
to seek an experienced nickel partner to assist in developing the project.'
Exco Alliance, Mt Isa Australia
Drilling to evaluate new targets in the project area has commenced. No further
comment will be made in future reports unless there are developments which are
materially significant to BHP. Ongoing results of Exco's work are released by
Exco in regular reports to the Stock Exchange and may be found summarised on
their web-site (www.exco.com.au)
Falcon Airborne Gravity Gradiometer Technology.
The deployment of BHP's proprietary airborne gravity gradiometer technology
(called 'Falcon') is proceeding and results from the two aircraft in Australia
and North America continue to be very encouraging.
PETROLEUM
Wells drilled during the quarter or in the process of drilling as at June 30,
2000.
WELL LOCATION BHP EQUITY STATUS
Argus-1 AC/P30, Browse Basin,
Australia 66.66% Operator Drilling ahead
Aripo-1 Block 2(c), Northeast
coast Trinidad 45% Operator Gas discovery; Temporarily
suspended.
Atlantis-2 Green Canyon Block 743,
Gulf of Mexico 44%, BHP well-
operator The well has encountered a
significant oil zone in
Miocene (M7) sands with net
pay in excess of 300 feet.
Drilling ahead through
additional prospective zones.
RAR-1 bis Block 401a/402a,
Algeria 45%, Operator Operations concluded.
Viper-1 Grand Isle Block 106,
Gulf of Mexico 40% Operator Plugged and abandoned at a
total depth of 19,204 feet
EXPENDITURE
Information related to exploration expenditure will be included in the BHP
FY2000 Profit Report, released 27 July 2000.
COMPETENCE AND RESPONSIBILITY
The following statements apply in respect of the information in this report that
relates to any stated Mineral Resources or Ore Reserves.
- The information is based on and accurately reflects information compiled by
the person named under each relevant section of the report
- Each named person is either a Corporate Member or Fellow of The Australasian
Institute of Mining and Metallurgy or the Australian Institute of Geoscientists
and is a full-time employee of a member company of the BHP Group;
- Each named person has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which
he or she is undertaking to qualify as a Competent Person as defined in the 1999
Edition of the 'Australasian Code for Reporting of Mineral Resources and Ore
Reserves'. Each named person consents to the inclusion in the report of the
matters based on their information in the form and context in which it appears.
For information contact:
Media Relations: Mandy Frostick - Manager Media Relations
(BH) (61 3) 9609 4157
(AH) (61 3) 9687 6651
Mobile (61) 0419 546 245
E-mail: frostick.mandy.mj@bhp.com.au
Investor Relations: Robert Porter - Vice President Investor Relations
(BH) (61 3) 9609 3540
Mobile (61) 0419 587 456
E-mail: porter.robert.r@bhp.com.au
Friday, 10th January 2025
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