It was announced today that BHP Group Ltd (ASX: BHP) has entered into an agreement for a 4,500km2 area of the Northern Territory.
What was announced?
BHP marked the announcement as price sensitive, so it could be a big deal over the longer term.
Encounter Resources Ltd. (ASX: ENR) announced today that it has entered into an option agreement covering the 4,500km2 Elliot Copper Project in the Northern Territory.
The agreement gives BHP the right, after completing a jointly designed validation program, to enter an earn-in and joint venture agreement to earn up to 75% interest in Elliot by spending up to $22 million over 10 years.
In the ASX announcement it was explained that Elliot represents a compelling first mover copper opportunity in a high quality jurisdication for three key reasons:
- It’s located at a major structural intersection on the southwestern margin of the Beetaloo Basion.
- It contains the key conceptual criteria for the formation of sedimentary copper with the target sequence being undercover and untested.
- Standout copper-in-groundwater anomaly which is supported by surface geochemical sampling at Elliot.
Elliot was first identified by analysing new datasets generated by Geoscience Australia, as part of the Federal Government’s Exploring for the Future Program.
Encounter said it retains 100% control of five other copper projects in the NT covering another 10,300km2.
Summary
Compilation, interpretation and modeling of the data packages at Elliot has been designed and will be completed before 31 December 2020.
BHP may elect to fund additional validation programs during 2021 prior to making a decision on whether to exercise its option to enter into an earn-in and joint venture agreement.
BHP has been a solid business, is one of the most popular ASX dividend shares. However, cyclical ASX shares may be worth avoiding if they’re at the top of the cycle like iron ore seems to be right now. I would prefer to buy other shares for dividends like Washington H. Soul Pattinson and Co. Ltd
(ASX: SOL).
