In a severely declining market, BHP Billiton may be alone in having the money available to purchase OZ Minerals’ Prominent Hill mine, resources industry analyst James Wilson told MINING DAILY.
“If you’re looking at people who could front up and pay half a billion dollars or more for a potential purchase, I don’t think there would be too many of them,” he said.
“BHP really does stand out as the only one.”
OZ Minerals is selling off the South Australian copper-gold project as it attempts to pay off more than US$560 million in debt.
According to Wilson, of Perth’s DJ Carmichael and Co., Prominent Hill would present an attractive option for BHP given its considerable copper and gold reserves, as well as its location so close to the miner’s existing site in South Australia.
“They’d get a great big copper resource up the road from their existing great big copper resource at Olympic Dam,” he said.
“They’d pretty much sew up South Australia in terms of having two of the biggest projects in that part of the world.”
Prominent Hill represents an appealing option for a big player such as BHP because so much of the work has already been done in setting it up, Wilson said.
“It’s perfect timing for anybody wanting to walk in the door because it’s a project that’s ready to start commissioning now,” he said.
“They can walk in the door, throw down a deposit and away they go.
“No more money has to be spent on the project.”
According to Wilson, a sale for a price in the range of $500 million, whether it’s to BHP or anyone else, would be particularly painful for OZ.
“$500 million is being bandied about for Prominent Hill, and it’s cost them $1 billion,” he said.
“That would sting an awful lot for OZ Minerals because it’s an absolute crackerjack project.”