Read an interesting article today on Business Spectator.
It about review of David Upton’s fascinating book The Olympic Dam Story.
... longer term shareholders should watch developments at Olympic Dam which will transform the company more than any other single asset since BHP’s discovery of Bass Strait oil in the 1960s.
BHP has converted Olympic Dam into the most valuable mineral resource in the world. Upton estimates that the current value of Olympic Dam ore is around $863 billion including $470 billion in copper, $270 billion in uranium, $116 billion in gold and $8 billion in silver.
The $863 billion valuation means that Olympic Dam has surpassed the value of Norilsk’s nickel-copper-palladium-platinum resource in Siberia which is valued at $745 billion.
It will cost something like $50 BILLION to bring up to full production.
While Joooolia has her hand out for 40% of PROFITS BHP will find other, more profitable projects. It's a big world with a lot of good mines the lease-holders don't have the cash needed to bring into production. BHP puts up the cash and takes 80%. Better'n 60% in Oz.
at what commodity price levels?
how will these revenue figures stack up with lower commodity prices?
and more importantly what about operational profit???
remember history tells as that over time, for commodity stocks, supply will increase over time to the point at which the margin revenue is just slightly higher than the cost of production.
The key here is time, and getting new mines into opperation takes time.
Hence: there are good trading opportunities, but these are not positions to buy and put in ones bottom draw, not after a commodity boom anyway. The time to put them in the bottom draw is after a supply has increased massively and the sector is not longer 'hot'. Hold for 10-20 years until the next commodity boom and then sell for multiple multiple baggers.
