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Copper Stocks in South Australia
Jan. 02, 2023 01:50PM PST
South Australia is the state to beat when it comes to copper. Here's a look at copper stocks in South Australia to watch.
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The state of South Australia is home to the largest copper mine in the country — Olympic Dam — which is also the fourth largest copper deposit globally.
Olympic Dam, which is a polymetallic mine, is owned by BHP (ASX:BHP,LSE:BHP,NYSE:BHP), and produced 205,000 tonnes of copper cathode in the 2020 to 2021 financial year. It is located within the Gawler Craton, which is a geological province described by the government of South Australia as one of the world's most significant deposits of copper, gold, silver and uranium.
South Australia is the state to beat when it comes to copper. While it's only home to three operational copper mines, it sits on Australia's largest share of copper reserves — 66 percent of the nation's reserves. Despite this high number, only 27 percent of Australian copper is produced in South Australia.
The two other operational mines are Prominent Hill and Carapateena, both owned by OZ Minerals (ASX:OZL,OTC Pink:OZMLF). Prominent Hill, the company’s primary copper producer, produced 62,927 tonnes of copper in the 2021 financial year — almost 2,000 tonnes more than in the previous year. The project has recently transitioned from open-pit mining to underground mining over the last 4 years.
The company's second South Australian mine, Carapateena, is located within the Gawler Craton, just like Prominent Hill and Olympic Dam. Carapateena is a smaller and newer mine, that since its recent start in 2019, has ramped up its production for a total output of 55,262 tonnes of copper in 2021. The mine only came online in December 2019 and is expected to have a life of 20 years.
The state has a lot of potential as it is already known to host 66 percent of Australia's copper reserves. Most copper deposits in the state are located underneath newer layers of rock, making extensive exploration a must.
Beyond the existing operational mines, there are a number of exploration and development projects in the works, which means South Australia is an attractive prospect for both companies and investors. According to the Fraser Institute’s most recent survey, South Australia ranked in the top ten for overall Investment attractiveness.
South Australia's government has long touted the strengths of its investment profile and its mineral wealth. According to the state government, South Australian copper grades are around 0.93 percent — higher than the global average of 0.65 percent, which continues to decline.
Copper stocks in South Australia
Besides BHP and OZ Minerals’ operational mines, there are a handful of companies with exploration and development projects in the state. The Investing News Network has compiled a list of copper companies on the ASX with assets in South Australia by market cap. Data for this list was gathered from TradingView’s stock screener on October 31, 2022, and market caps were above AU$40 million at the time.
1. BHP
Market cap: AU$189.93 billion; current share price: AU$37.36
BHP (ASX:BHP) is a global mining company headquartered in Melbourne and the largest mining company in the state. Olympic Dam is not BHP's largest copper-producing asset (contributing only 12 percent of the company’s 1.6 million tonnes produced in 2021) but it is currently the company's only Australian copper asset. BHP also has copper projects in Chile and Peru as well as a proposed one in the U.S.
In a recent report for Q3 2022, the company announced record performance at its Olympic Dam Project which produced copper anode. There was an 11 percent increase since June Q22 and a 68 percent increase in comparison to the September quarter in 2021.
2. OZ Minerals
Market cap: AU$8.08 billion; current share price: AU$24.17
South Australian company OZ Minerals (ASX:OZL) has its roots (headquarters) in Adelaide and two active copper-gold operations in the state. The Prominent Hill project produces one of the highest-grade copper in the world and has an expected life of 15 years while the Carapateena project has a life of 20 years. The company has another operational copper-gold mine in Brazil, where it also has ongoing exploration prospects, however, South Australia is the jurisdiction that reels in most of its income.
In May 2022, the company announced that has been in conversation with Havilah Resources for the purchase of Havilah's Kalkaroo project for $205 million.3. Rex Minerals
Market cap: AU$112.6 million; current share price: AU$0.15
Rex Minerals (ASX:REX) is in the process of exploring the fully-owned Hillside copper-gold project which is its flagship project on the Yorke Peninsula. Rex also owns the land where the mine is to be located, and the Program for Environment Protection and Rehabilitation was approved by the South Australian government in 2020.
The company signed a non-binding Letter of Intent with Thiess, an Australian mining services company, to develop a mining plan for the Hillside project. In partnership with the engineering company Ausenco, design elements for the plant are in the works for evaluation including updates to 3D building models and piping diagrams. Besides Hillside, the company also has interests in Nevada. In the most recent updated feasibility study, the company states that the Hillside copper-gold project has the potential to be a 13-year project producing 35,000 tonnes of copper per year.
4. Havilah Resources
Market cap: AU$96.58 million; current share price: AU$0.31
Havilah Resources (ASX:HAV) is a company with multiple exploration projects on the go in South Australia. Two of them — Kalkaroo and Mutaroo — are copper-focused, with Kalkaroo being the company's best prospect. Both the Kalkaroo and Mutooroo Projects are located on the far eastern border of the state near New South Wales. Kalkaroo has a JORC resource estimate of 1.1 million tonnes of copper. The project, should it reach production, is estimated to have a 10-year mine life with an annual copper output of 30,000 tonnes (along with 72,000 ounces of gold).
The company has entered into an alliance with OZ Minerals for its Kalkaroo Project over a period of 18 months. The plan is to accelerate the funding and development of Kalkaroo with OZ Minerals’ expertise for a potential full purchase at the end of the agreed term. Currently, the agreement is still conditional.
5. Hillgrove Resources
Market cap: AU$43.45 million; current share price: AU$0.04
Hillgrove Resources (ASX:HGO) is an Australian mining company sitting on the Kanmantoo underground project. The copper mine in the southern region of the state is well located, near the capital city and major population centres, and the exploration and development work over 2020 led to the company doubling the resource estimate for the projected 34,400 tonnes of copper metal. Kanmantoo was previously an open-pit mine for Hillgrove but it has not produced copper for many years.
The company is also exploring the territory around the mine. A statement in August 2022, reported that Hillgrove entered a royalty agreement with major shareholder Freepoint Metals & Concentrates. Freepoint will fund the company with $6 million in return for 2.5 percent for the first 85,000 tonnes of copper and 0.5 percent beyond that.
This is an updated version of an article first published by the Investing News Network in 2021.
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Securities Disclosure: I, Marlee John, hold no direct investment interest in any company mentioned in this article.
