Copper and Who Mines it.

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Copper.

Australia is a major copper producer with mining and smelting operations at Olympic Dam (SA) and Mt Isa (Qld). Other significant copper producing operations are at Northparkes and Cadia-Ridgeway (NSW), Ernest Henry, Osborne, and Mt Gordon (Qld), Nifty and Golden Grove (WA) and Mt Lyell (Tas). Copper (Cu) and copper alloys are used in building construction, electrical equipment such as electrical cables, and industrial machinery and equipment.

ResourcesAustralia’s EDR [Economic Demonstrated Resources] fell by 1 Mt to slightly less than 41.4 Mt of copper, a decrease of 2%. South Australia has the largest EDR at 27 Mt, which increased by 6% in 2005 and is now around 65% of the national total.

The majority of these resources are associated with the Olympic Dam deposit. South Australian EDR increased by just over 1.5 Mt following pre-feasibility drilling of the Prominent Hill deposit. Queensland has the second largest EDR with 19% of the national total, followed by Western Australia (7%) and New South Wales (6%).

Sub economic demonstrated resources increased by 25% to 6.1 Mt, made up of 4.8 Mt in the Para marginal demonstrated resource category and 1.3 Mt in the sub marginal demonstrated resource category.
The increase of 1.2 Mt in Para marginal resources compared to 2004 largely reflects activity in the Mt Isa region of Queensland where evaluation of a range of deposits is in progress.
Most of the Para marginal resources are in Queensland and Western Australia with 48% and 20% respectively, followed by South Australia (15%).

Inferred resources rose marginally (1%) to just over 30 Mt in 2005. South Australia holds 65% of Australia’s inferred resources followed by Queensland at 13%, Western Australia and New South Wales both with 9%
.
Accessible EDR

All copper EDR is accessible. At Australia’s 2005 rate of production, EDR is sufficient for 45 years production. If, however, resources classified as reserves under the JORC Code are considered, they will support only 22 years at the 2005 production rate.

JORC Reserves

JORC Code reserves account for around 49% of AEDR. The remaining AEDR comprise those measured and indicated resources (reported by mining companies), which Geosciences Australia considers will be economic over the long term.

Exploration

Spending on exploration for copper rose by 90% in 2005 to $105.8 million. Expenditure in South Australia ($46 million) was 43% of all copper exploration and was directed mainly on both the search for further Olympic Dam style mineralization in the Gawler Craton, and resource definition drilling at Olympic Dam and Prominent Hill. Queensland had 36% of spending on exploration for copper across a range of projects and New South Wales 11%, with the remaining 12% distributed largely in Western Australia and to a lesser extent in the Northern Territory, Tasmania and Victoria. Expenditure on exploration for copper made up 9% of all mineral exploration. Significant exploration results reported during 2005 include:

Olympic Dam (SA): Since acquiring WMC in June 2005 for $9.2 billion,
BHP Billiton has continued an intensive drilling program aimed at delineating the size of the deposit which remains open, particularly to the south and at depth.

Carrapateena (SA): RMG Services reported intersecting Olympic Dam style iron oxide copper-gold mineralisation in a hole drilled 100 km southeast of Olympic Dam. Hole CAR002 intersected haematite alteration, sulphide development and brecciation over 185 m between 469 m and 654.2 m. The interval from 476 m to 654.2 m (178.2 m) yielded 1.83% Cu and 0.64g/t Au.

Balcooma (Qld): Kagara Zinc Limited reported significant intersections of copper mineralisation including 52 m @ 4.5% Cu, 21g/t Ag and 0.37g/t Au, 44 m @ 4.5% Cu, 20g/t Ag and 0.49g/t Au and 61 m @ 3.1% Cu, 12g/t Ag and 0.32g/t Au. Kagara announced an interim upgraded Balcooma copper resource of 3.3 Mt @ 3.9% Cu, 18g/t Ag and 0.43g/t Au.

Golden Grove (WA): Based on encouraging drill intercepts, Oxiana Ltd initiated a major exploration program seeking additional volcanic hosted massive sulphide deposits (which often occur in clusters) including testing for extensions to existing orebodies or stacked repetitions.

Einasleigh (Qld): Copper Strike Limited intersected further high grade copper intersections including 15 m @ 11.76% Cu from 244 m and subsequently announced an inferred resource for Einasleigh of 1.2 Mt @ 3% Cu, followed with an inferred resource at a nearby lower grade deposit (Kaiser Bill) of 11 Mt @ 0.84% Cu, 0.15g/t Au and 6.3g/t Ag.

West Whundo (WA): At its Whundo project, near the Radio Hill mine in the Pilbara region,
Fox Resources Ltd announced further copper-bearing intersections to those reported in 2004. Results included 14 m @ 5.65% Cu and 14 m @ 2.45% Cu. West Whundo is part of the Whundo project, which is based on the old Whundo copper mine. Subsequent exploration at West Whundoo has confirmed the presence of a super gene copper zone composed primarily of chalcocite.

Results include 8 m @ 19.94% Cu from 24 m below surface, 10 m @ 10.85% Cu from 18 m below surface and 12 m @ 9.50% Cu from 24 m below surface. Fox announced a measured plus indicated resource for West Whundoo of 0.894 Mt @ 2.0% Cu, 1.4% Zn and 3.3g/t Ag, and an indicated resource for Whundo of 32 000 t @ 5.3% Cu, 8.0% Zn and 45g/t Ag.

Cloncurry (Qld): Exco Resources NL reported copper-cobalt-gold mineralization at its Notlor prospect including intersections of 46 m @ 2.42% Cu, 0.97g/t Au and 0.25% Co and 24 m @ 3.48% Cu, 1.38g/t Au and 0.27% Co.

Mutooroo (SA): Havilah Resources reported that drilling indicates a well mineralised shallow system. Results include 26 m @ 1.55 % Cu and 0.18% Co from 101 m and 31 m @ 1.71% Cu and 0.18% Co from 78 m.
Havilah reported that an optimised pit contains 11.5 Mt @ 1.1% copper and 0.096% cobalt supporting a 1 Mtpa operation producing about 10 ktpa Cu and 1 ktpa Co. Havilah also announced that the nearby Kalkaroo deposit could support a 6.5 Mtpa operation producing 31 ktpa Cu, 186 tpa Mo and 95 000 ozs Au per annum for almost eleven years from a measured resource of 70 Mt @ 0.47% Cu, 0.46g/t Au and 124ppm Mo.

Kanmantoo (SA): Hillgrove Resources Limited encountered mineralised intersections including 47 m @ 1.13% Cu, 25 m @ 1.24% Cu and 0.28g/t Au and 15.6 m @ 1.25% Cu.
These results are reported by the company to have potential to increase the existing resource at Kanmantoo which is currently 18.37 Mt @ 1.1% Cu and 0.2g/t Au.

Roseby (Qld): Universal Resources Ltd discovered a new satellite copper gold system, the Ivy Ann Prospect, at its Roseby Project near Mt Isa.
Intersections include 108 m @ 0.84% Cu from surface and 88 m @ 0.93% Cu from 44 m which are expected to add further to the resources of the company’s Cloncurry project.

Browns East (NT): At its oxide prospect 80 km south of Darwin, Compass Resources NL reported intersections of 20 m @ 2.07% Cu, 0.30% Co and 0.37% Ni and 12 m @ 2.17% Cu, 0.03% Co and 0.09% Ni.
The company believes it is likely that the oxidised copper cobalt nickel mineralisation is the weathered near surface expression of the Browns East deposit (resource of 30.5 Mt @ 1.29% Cu, 1.28% Pb, 0.13% Co and 0.13% Ni).

Buckley River (Qld): Drilling by CopperCo Ltd yielded an intersection of 18 m @ 3.9% Cu from 55 m, including 11 m @ 5.8% Cu.

Production
In 2005, Australia’s mine production of copper totalled 921 kt of contained copper, 7% higher than in 2004 (860 kt). Queensland continued to dominate production with 399 kt (largely from Mt Isa), which is the same as in 2004, and accounted for 43% of Australian production. South Australia remained the second largest producer with 213 kt (down 5%), all from Olympic Dam and representing 23% of total production.
Other production was: New South Wales (190 kt, up 14% reflecting start of production from the Tritton mine), Western Australia (90 kt, up 137% reflecting Whim Creek opening and Telfer re-opening) and Tasmania (30 kt, down 6%).

The value of Australia’s exports of copper concentrates and refined copper in 2005 totalled just under $4 billion, 53% more than in 2004 ($2.57 billion) and 3% of the value of total merchandise exports.
The increase reflects higher copper prices in 2005 with the average up by 24% to $4852/t compared to the average of $3915/t in 2004.
In line with increased production of copper in 2005 was an 11% increase of exports to 784 kt. Copper had the largest increase in mineral export earnings in the December quarter 2005, up $395 million (42%) to $1.3 billion.

World Ranking

Based on USGS data for other countries, Australia has the second largest EDR of copper (9%) after Chile (29%) and ahead of USA and Indonesia (both 7%) and Peru, Poland and Mexico (all 6%). As a producer, Australia ranks fifth in the world with 6% after Chile (36%), USA (8%) and Indonesia and Peru (both 7%).

Industry Developments

Mt Isa (Qld): Copper-in-concentrate production in 2005 from Xstrata Plc’s Mt Isa and Ernest Henry operations was 306 kt, an increase of 8% over 2004. However, copper smelter production of 220 kt was almost 7% lower than 2004, primarily as a result of improvement activities and limitations to furnace gas off-take through reduced availability from a third party owned acid plant.
Consequentially, the Townsville copper refinery produced 219 kt of saleable cathode, 8% lower than in 2004, due to the lower anode supply.

The expansion of the Mt Isa copper smelter remains on track to increase capacity from 240 ktpa to 280 ktpa by mid 2006 through the installation of a second rotary holding furnace, a copper slag cleaning furnace and a converter slag treatment plant.
A new leaching plant will also recover around 2.5 ktpa of additional copper from the smelter’s electrostatic dust precipitator.
Prefeasibility work will be undertaken during 2006 on evaluating the potential to exploit the significant known resources contained within the 500 orebody and “halo” mineralisation surrounding the 1100 orebody.

At Mt Isa’s Enterprise copper mine, development of an additional high-grade mining zone (5.3 Mt @ 4.5% Cu) is progressing according to schedule. This will enable the mine to maintain its rated capacity of 3.5 Mtpa.
Late in 2005 a decision was made to further increase the copper smelter and refinery capacities to 300 ktpa to match the future copper-in-concentrate production from the Ernest Henry and Mt Isa copper mines.

Olympic Dam (SA): BHP Billiton continued a pre-feasibility study (initiated by WMC) into the expansion potential for Olympic Dam, announcing that an open-pit would be the preferred mining method, approximately doubling copper and trebling uranium capacity from an investment of up to US$5 billion.

As a consequence, major infrastructure for water, energy, transport and a township expansion would be required.
The timeframe the project is pre-feasibility resolution by end 2007, feasibility conclusion by early 2009, and construction from 2009 to 2013 resulting in operation of the expanded facilities from 2013 onwards.

Prominent Hill (SA): Oxiana Ltd’s pre-feasibility study indicated the Prominent Hill mine would probably comprise an open pit to be mined at the rate of 8 Mtpa, with an initial operating life of nine years, commencing in 2008 and producing 90 000–100 000 tpa Cu and 110 000–130 000 ozs Au per annum.

Work on a bankable feasibility study commenced in August 2005 and is scheduled to be completed in August 2006.

Telfer (WA): After almost two years under construction, Newcrest Mining Ltd’s re-development of Telfer as a gold-copper mine began staged production in early 2005.
It is expected to produce 800 000 oz of gold and 55 000 t of copper in 2006 with an expected mine life of 25 years.

Tritton (NSW): Tritton Resources commenced shipping copper concentrates from its newly commissioned Tritton mine and forecast copper production at 26 kt for 2005–06, slightly above the 24 ktpa planned.

Cadia (NSW): Pre-feasibility mining studies indicated panel caving is an appropriate extraction method at Cadia East Underground where Newcrest reports an ore reserve of 6 Moz Au and 630 kt Cu.

Roseby (Qld): The first stage of Universal Resources’ feasibility study into the Roseby copper project near Mt Isa envisages an open pit mining operation over a nine year mine life processing around 8 Mtpa with a capital cost of around $238 million and producing 50 ktpa Cu and 15 000–28 000 ozs Au per annum.

The final stage of the study is now underway for a resource of 124 Mt @ 0.72% Cu. Xstrata Copper is part funding the feasibility study with $4.4 million and spending a further $2.2 million seeking additional copper sulphide mineralisation within the Roseby tenement area.
Principal exploration targets are expected to be beneath and adjacent to the native copper deposits within the Roseby Feasibility Project.

Redbank (NT): Redbank Mines expanded an existing pilot plant and commenced copper production in March 2006 from indicated and inferred resources of 4.2 Mt @ 1.5% Cu.

Lady Annie (Qld): A bankable feasibility study by CopperCo Ltd proposes an open pit mine initially producing 15 000 tpa Cu before ramping up to 18 000 tpa over an eight year mine life for a development cost of $54 million from an ore reserve of 9.8 Mt at 1.2% Cu that incorporates the Lady Annie, Mt Clarke and Flying Horse deposits.
In addition, CopperCo is yet to calculate initial resource estimates for the Swagman, Mount Kelly Workings and Mount Kelly Fault Zone deposits.

White Range (Qld): Following further drilling, Matrix Metals Limited has revised its bankable feasibility study to incorporate an upgraded resource estimate of 13.87 Mt @ 1.1 % Cu for a project with an initial cost of $A39 million and producing 15 000 tpa Cu over a six-year mine life.
Subsequent drilling intersections at the McCabe deposit include 18 m @ 3.5% Cu from 99 m and 8 m @ 3.4% Cu from 37 m.

Maps for these mines and further information is available at: http://www.australianminesatlas.gov.au/TOC.jsp

Starting watch list

CSE, FXR, EXS, HAV, HGO, URL, CMR, CUO, NCM, RBM, MRX, OXR, KZL, CDU.

In the past I have held cse, cuo in my portfolio and they are currently on my watch list.

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