Roxby Downs - Food for thought.

Discussion in 'Where to Buy' started by angel investor, 16th Oct, 2014.

  1. knightm

    knightm Member

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    ...as a result of the above my long term outlook for copper is generally positive over the coming 30 yrs or so - and my initial decision to purchase out there has never once been questioned despite the large ripple in the current cycle. Unpleasant, but in my view not worth selling for given the residual upside potential that remains given the ore body is still in the ground awaiting extraction. I think if you review the rhetoric of BHP's press comments over the last 6 months or so you will see a gradual warming of tone about this potential.

    Having said that I would be very hesitant to ever advise someone to go and purchase there unless they understood these factors and had capital to burn as it is still so speculative.
     
  2. D.T.

    D.T. Property Lookerafterer

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    You bought there? I thought you were a respectable BA? :D
     
  3. knightm

    knightm Member

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    I never ever called myself respectable ;)
     
  4. Corey Batt

    Corey Batt Finance Broker

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    Rolling with the punches! :p
     
  5. kskyring

    kskyring Member

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    AGM update

    OK so based on angel investor comments - i followed the AGM updates with interest 2 days ago.

    most papers are reporting Olympic Dam expansion potential in much more favourable light now versus past 2 years. The saline solution heaped leaching approach looks very promising but still only half way through trial. Albeit a more medium term play and not a mega expansion. More likely under ground expansion with heaped leaching which could increase mine output from 200,000 tonnes to 350,000 tones capacity (75% bigger) with higher grade ore - with option to explore open pit longer term - which is an expansion discussion and plan nonetheless. MAckenzie states OD will play "absolutely critical role in copper strategy".

    Good summary here:
    http://www.couriermail.com.au/news/...lympic-dam-prize/story-fnii5yv5-1227131299700

    Also note rentals in Roxby market have gone up from 40 - 64 in the past month as Headings went into liquidation in Sept and net job loss around 30-40.

    Can pick up 3B1B for 25% below advertised price at moment for sale - $250k for 3B1B if negotiate hard. Seems pretty cheap. Still high risk / high return equation.

    Current 6.5% yield with more likely increase in time & Capital growth potential.

    Is the possible return still not worth the risk?
     
  6. Waldo

    Waldo Rock Analyst

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    On a bit more of a micro level: http://www.themonitor.com.au/news-articles/141119-bhp-billiton-reducing-costs

    Regarding headings, the rumours I've heard from friends seem to indicate that all the headings employees have been redeployed.

    As for the option to mine open cut - doubt they will go open cut. Same as most mines at the moment - they want more for less. Which is good for the mine, bad for the supporting town however.

    No denying its good pickings for those brave enough to invest currently - definately some bargains to be had.
     
  7. kskyring

    kskyring Member

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    Thanks Waldo. The Monitor article is interesting but very speculative ... "can neither confirm or deny". Maybe true / maybe not. I understand net impact of headings is 30 jobs lost (out of 150).

    Interesting update released today (below) from Mackenzie provides more hope for medium term growth plan then has ever been the case post putting it on hold.

    Angel Investor - sounds like you got it right. This is a plan of sorts that will surely get things moving again albeit slower. This sounds like the first time BHP have publicly stated & set target on a new growth plan for Olympic Dam. This equates to an increase of 30% copper production output by 2018. And an increase of 130% copper production output by 2024 (2.3 times bigger than current 195,000 tonnes a year). So not the 750,000 tones of the previous Mega project but still a major development.

    Surely this will means a significant increase in population in Roxby over next 5-10 years? Medium term plan looks much brighter then it has in past 2.5 years.

    Possibly a great time to grab a bargain. Always risk though given mining town nonetheless.

    BELOW ARE SOME OF THE REPORTS COMING OUT FROM TODAYS INVESTOR MEETINGS


    Reported in the Age:

    Aside from the heap leach trial BHP is running at Olympic Dam, BHP revealed it would spend a further $US200 million increasing the processing capacity at the mine, as part of plans to grow production at the mine by 21 per cent to 235,000 tonnes of copper a year.
    Separately, BHP is investigating a bigger, longer-term plan to double the amount of ore mined at Olympic Dam, which could see the amount of copper produced soar to 450,000 tonnes a year by 2024.

    Mr Radclyffe said investors would be cheered to see the famous project starting to move toward development again.

    "The underground at Olympic Dam has never quite hit expectations so managing to hit that capacity would make sense before you even think about then taking the next step to do something bigger," he said.

    The new development plan at Olympic Dam is much smaller than the $US30 billion plan to build the world's biggest open pit, which was deferred in mid 2012.

    But Mr Mackenzie said smaller, gradual developments would increasingly become the norm rather than the huge, long-dated, multibillion-dollar projects that became typical in Australia over the past decade.

    "Our philosophy increasingly is 'let's not do that', let's use the whole ore body but not necessarily develop it all, to use a smaller number of sequential projects which in themselves are optimised ... and are bite-sized," he said.


    http://www.thebull.com.au/articles/a/50421-olympic-expansion-compelling:-bhp.html


    Reported in Australian:

    BHP Billiton has increased its annual savings target over the next two financial years to $US4 billion and flagged a more than doubling of the size of the Olympic Dam copper and uranium mine in South Australia over the next 10 years.

    BHP (BHP) chief Andrew Mackenzie revealed the new targets in slides released before an investor presentation in Sydney today.

    BHP, which abandoned a planned $US30bn open pit expansion of Olympic Dam in 2012, said it was looking at a plan to expand the underground mine to capacity of 450,000 tonnes of copper a year by the middle of next decade. This is up from about 200,000 a year now.

    It said it was planing to increase capacity at Olympic Dam by 50,000 tonnes of copper from 2017-18.

    ?Within our core portfolio alone we are now targeting sustainable, productivity-

    led gains of at least $US4 billion (per year) by the end of 2016-17,? Mr Mackenzie said.
     
    Last edited: 24th Nov, 2014
  8. angel investor

    angel investor Member

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    The announcement from BHP is defintely going to give Roxby a big boost in the medium term. Whilst copper now has ptential to increase more than double in medium term. Total ore hoisting will double. This should have a significant impact on jobs.

    The timing is key now.

    People I know close to this project in BHP have told me Mackenzie is very careful not to over promise and under deliver like Kloppers did on OD. He had purposefully provided long time frames that are very achieveable. They are 95% sure about the new technology. The extended trials etc play into the whole under promise and over deliver approach.

    if copper price goes up in 2018 like BHP predict it is more likely they will bring this forward to around 2020-2022.
     
  9. Waldo

    Waldo Rock Analyst

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    As you say, total hoist may double. But from what I'm reading heap leaching = alot less people employed in processing? I believe the majority of the workforce is currently employed on processing, than the physical mining so the actual net change may be negative I'd have thought (I'm no expert in heap leaching however).

    Anyway it is a step in the right direction of Olympic Dam.
     
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  10. angel investor

    angel investor Member

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    Waldo...What are you reading? To say that the actual net impact on jobs may actually be negative is a very big call to put out there. Do you have any facts or references to support such a claim? or is this just your opinion?

    Doesn't seem to stack up versus what The Australian Reports which states that many if the same current fashion processing is still required after the heaped leaching is done....

    "Heap-leaching involves the *extraction of the metals from ore by the application of a solution to a surface pile, or ?heap?. Mined ore is crushed and agglomerated to improve permeability and placed on to an impermeable liner. During the leaching phase, the acid *solution is applied to the top of the heap with garden variety drippers.

    After passing through the heap, the so-called ?pregnant?? *solution is collected at the bottom and further treated to recover the contained metal. The heap-leach proposal would, in effect, be the first-pass processing of the ore, coming as it would before the milling and flotation in the current surface treatment facilities.

    In Olympic Dam?s case, the intention is to recover nearly all of the uranium in the heap-leach phase, and some of the copper, with the reclaiming of the stacked material for further treatment in the current fashion to capture the remaining copper."

    I think it is a valid point though to understand what this may actually mean in regards to jobs and likely growth of roxby population if it was to eventuate.
     
  11. Waldo

    Waldo Rock Analyst

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    I'm definately no expert - I'm just concerned that after heap leaching, what is the processing plan?

    I know with the original expansion, the intent was always to ship off concentrate rather than refine. Does this new 'expansion' also involve shipping of concetrate? If so is the smelter & refinery they currently operate still required? Or do they form a concentrate out of the pregnant leaching liquior and ship it off? I don't know if there has been any formal announcement or not?

    No doubt any increase in the mine would be a major job boost at the mine, I'm just not sure how this translates to the processing end (which has always been 70% of Olympic Dam).

    Definately my opinion only.
     
  12. kskyring

    kskyring Member

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    Waldo not sure of accuracy if this reference. Note the monitor had a new editor. Seems like they may have jumped the gun for a headline. Also sounds like the other paper at roxby had something to say about it.
    http://www.roxbydownssun.com.au/story/2723437/opinion-dont-believe-everything-you-hear/?cs=1503
     
  13. Waldo

    Waldo Rock Analyst

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    So Angel, how is Roxby Downs treating you currently? Still feeling bullish?

    http://www.abc.net.au/news/2015-02-11/bhp-billiton-clarifies-olympic-dam-redundancies/6086256
    http://www.miningaustralia.com.au/News/Redundancies-for-Olympic-Dam-support-staff
    http://www.roxbydownssun.com.au/story/2983779/more-job-cuts-at-olympic-dam/
    http://www.miningaustralia.com.au/news/macmahon-cuts-jobs-at-olympic-dam

    All seperate redundancy announcements since we last talked. Rumours I've heard is there will be significantly more before the end of the year.

    I had a bit of a browse today regarding houses for sale (129 listed for sale, starting at 210k for a 3x1 standalone house) and rent (150, starting at $150=170 per week for a 3x1 again). So these don't seem to be going particularly well.


    I also noticed that you posted an identical thread on another forum the same day you started this one (also your first thread there):
    http://www.yourinvestmentpropertymag.com.au/forum/roxby-downs--food-for-thought-3562.aspx

    Apologies for the apparent negativity, however I don't share your outlook on the town. Having said that, still a massive opportunity for the (very brave) contrarian, you could almost just name your price. However in the short term you'd have to face the likelyhood of no tenant, or extremely low yield. And there still is the remote risk of the entire place going the way of Ravensthorpe or Port Headland HBI.