South Australia is the state to beat when it comes to copper — while it’s home to only three operational copper mines, it sits on Australia’s largest share of copper reserves.
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 about 171,000 tonnes of copper cathode in the 2019 to 2020 financial year. It’s located within the Gawler Craton, which is 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, accounting for 66 percent of the nation’s reserves. Despite this high number, only 27 percent of Australian production is from South Australia.
Other operational mines are Prominent Hill and Carapateena, both owned by OZ Minerals (ASX:OZL,OTC Pink:OZMLF). Prominent Hill has shifted from open-pit to underground mining relatively recently, and is the company’s premier copper producer, with 61,375 tonnes of copper produced in the 2020 financial year.
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 mine, but is newer and ramped up production through 2020 for total output of 27,623 tonnes. The mine only came online in the final quarter of 2019, and is expected to have a life of 20 years.
Beyond the producing mines, there are a number of exploration and development projects in the works, which means South Australia an attractive prospect for companies and investors.
Most copper deposits in the state are located underneath newer layers of rock, making extensive exploration a must. With the state already known to host 66 percent of Australia’s copper reserves, it has a lot of potential.
The outlook for the state given the proven reserves and the number of development projects on the go is rosy. 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 the two companies with operational mines, there are a handful of explorers and developers at work in the state. Here’s a look at copper companies with assets in South Australia; stocks are arranged in order of market cap from largest to smallest.
Market cap: AU$240.6 billion; current share price: AU$47.63
As the company sitting on the largest copper mine in Australia, it’s a given that global mining company BHP is the premier company in the state. Olympic Dam is not BHP’s largest copper-producing asset (contributing only 10 percent of the firm’s 1.7 million tonnes produced in 2020), but it is the company’s only Australian copper asset. BHP continues to plough money into the mine to realise its full potential, although it is also working on exploration further afield.
Speaking of exploration, efforts by BHP within Australia are focused on South Australia, with the Oak Dam project (near Olympic Dam) slated as a potential major asset for the company going forward.
2. OZ Minerals
Market cap: AU$8.4 billion; current share price: AU$25.01
OZ Minerals is focused on South Australia, with two operations copper-gold mines in the state. The company has another operational copper-gold mine in Brazil, where it also has ongoing exploration prospects, but South Australia is the jurisdiction that pulls in most of its income.
3. Rex Minerals (ASX:REX)
Market cap: AU$110.9 million; current share price: AU$0.32
Rex Minerals is in the process of exploring the Hillside copper-gold project on the Yorke Peninsula. 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. Hillside was discovered and drilled out by Rex Minerals, and it continues to work on moving it towards production, with funds from recent placements going towards pre-development.
4. Havilah Resources (ASX:HAV)
Market cap: AU$61.2 million; current share price: AU$0.22
Havilah Resources is a South Australia-focused company with multiple exploration projects on the go. Two of them — Kalkaroo and Mutaroo — are copper based, with Kalkaroo being the company’s best prospect.
Kalkaroo is located to the far east of the state, up against the border with New South Wales. It has a JORC resource estimate of 1.1 million tonnes of copper. The project, should it reach production, is estimated to have annual copper output of 30,000 tonnes (along with 72,000 ounces of gold), with a 13 year mine life.
Towards the end of March 2021, the company lodged its final permitting documents for the West Kalkaroo gold project, which is a part of the larger Kalkaroo copper-gold project. Should everything go smoothly, the company estimates a three to four month assessment timeline with production estimated to begin in 2026.
5. Hillgrove Resources (ASX:HGO)
Market cap: AU$42 million; current share price AU$0.05
Hillgrove Resources is sitting on the Kanmantoo underground project. The copper mine in the south of South Australia is well located, near the capital city and major population centres, and exploration and development work over 2020 led to the company doubling the resource estimate for the project to 34,400 tonnes of copper metal. Kanmantoo was previously an open-pit mine for Hillgrove, but has not produced copper for many years. The company is also exploring around the mine.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.
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