BHP Extends Exploration Hold Around Olympic Dam Mine

   By Robb M. Stewart 
 

MELBOURNE--BHP Billiton Ltd. (BHP) has struck a deal to buy a handful of prospecting rights near its Olympic Dam mining operation in South Australia state, tightening its hold on the area ahead of a decision on whether to proceed with a multi-billion dollar expansion of the copper, uranium and gold mine.

Multi-commodity explorer Tasman Resources Ltd. (TAS.AU) said in a statement Wednesday it has agreed to sell five exploration licenses and one license application to BHP for 3 million Australian dollars (US$3 million).

The sale won't affect a recently agreed deal that allows Rio Tinto PLC (RIO) to earn an up to 80% interest in Tasman's Vulcan prospect some 30 kilometers north of Olympic Dam.

Tasman said the licenses being sold to BHP cover 1,176 square kilometers west, north and northeast of Olympic Dam. The deal, which remains subject to due diligence by BHP and other conditions, will allow Tasman to focus on its Vulcan venture with Rio, it said.

Minotaur Exploration Ltd. (MEP.AU) in April sold five exploration sites near Olympic Dam to BHP for A$10 million plus BHP's interest in another exploration asset. The same month Archer Exploration Ltd. (AXE.AU) agreed to sell five licenses for an area 90 kilometers southwest of Olympic Dam to BHP for A$8 million in cash.

BHP's board is due to decide by the end of the year on whether to proceed with the expansion of the Olympic Dam mine, a project analysts estimate could cost close to US$30 billion but could be postponed as costs rise and commodity prices fall. If work proceeds, BHP has said copper production could rise almost fourfold over a decade to 750,000 metric tons a year, with uranium and gold output also up substantially.

Write to Robb M. Stewart at [e-mail]