28th Apr 2005 07:02
BHP Billiton PLC28 April 2005 Date 28 April 2005Number 19/05 BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES January 2005 - March 2005 This report covers exploration and development activities for the quarter ended31 March 2005. Unless otherwise stated, BHP Billiton's interest in the projectsreferred to in this report is 100 per cent, and references to quarters are basedon calendar years. The industry is currently operating in an environment where the services andsupplies necessary to execute its projects are in great demand, and as a result,delivery of projects to budget and schedule is becoming more challenging. Aweakening US dollar combined with the demand for raw materials and hencesignificant levels of project activity are leading to labour shortages andrising input costs (such as steel, heavy machinery, fuel and other commodities).BHP Billiton continues to work with its suppliers, contractors and otherstakeholders to mitigate the effect of these cost pressures where possible. Wehave been successful to date. However, whilst all of our projects are currentlytracking in line or ahead of schedule, some will run over original Boardapproved budgets. PETROLEUM DEVELOPMENT Atlantis South Development, Gulf of Mexico, USA (BHP Billiton 44%, non-operated) In February 2005, BHP Billiton approved a revised budget of US$1.1 billion forthe development of the Atlantis South oil and gas reserves. The Atlantis Southdevelopment will have a gross nameplate daily capacity of 200,000 barrels of oiland 180 million cubic feet of natural gas. During the quarter the productionplatform's hull left the shipyard in South Korea and installation of suctionpiles has commenced on site. The project remains on schedule for firstproduction in the third quarter of 2006. MINERALS DEVELOPMENT Aluminium Worsley Development Capital Projects (DCP), Australia (BHP Billiton 86%) The Worsley Alumina Development Capital Projects were approved in May 2004 witha budget of US$192 million (US$165 million BHP Billiton share). The projectswill increase alumina capacity by 250,000 tonnes per annum (215,000 tonnes perannum BHP Billiton share) to 3.5 million tonnes per annum (3.01 million tonnesper annum BHP Billiton share). Overall the projects are greater than 40 per centcomplete. Engineering and procurement activities are nearing completion and siteactivities have increased with a number of major contractors mobilised toundertake mechanical and electrical construction work. Commissioning of the DCPis scheduled for the first quarter of 2006. Base Metals Escondida Norte, Chile (BHP Billiton 57.5%) The development of the Escondida Norte pit, located approximately 5 kilometresnorth of the existing Escondida mining operations, was approved in June 2003 aspart of Escondida's operating strategy to maintain copper production capacity infuture years. Pre-mine waste stripping continued during the quarter with totalmaterial movement to the end of March 2005 equalling 166 million tonnes. Duringthe period, work on the crushing station and both silo structures continued andinstallation of the overland conveyor belt commenced. Commissioning of theelectrical power distribution system is well advanced and control systemsintegration of the Escondida Norte ore into the existing mineral distributionsystem has commenced. Overall project progress is on schedule at approximately79 per cent complete with pre-mine development, design and constructionactivities on track to meet first ore delivery to the crusher in the fourthquarter of 2005. Development costs are estimated at US$400 million (BHP Billitonshare US$230 million). Escondida Sulphide Leach, Chile (BHP Billiton 57.5%) The Escondida Sulphide Leach project was approved in April 2004. The projectwill produce 180,000 tonnes (103,500 tonnes BHP Billiton share) of coppercathode per annum, utilizing a bacterially assisted leaching process onlow-grade run-of-mine ore from both the Escondida and Escondida Norte pits. Theresulting solutions will then be treated in conventional solvent extraction andelectrowinning plants. Detailed engineering and procurement activities aresubstantially complete. Construction underway includes the leach pad basepreparation, the sea water desalination facilities and the solvent extractionand electrowinning civil foundations. Development costs are estimated at US$870million (US$500 million BHP Billiton share) and production is scheduled to beginduring the second half of 2006. Spence, Chile The Spence Project, approved in October 2004, will be a new open cut mine withassociated plant facilities capable of producing 200,000 tonnes per annum ofcopper cathode through a combination of chemical and bacterial leaching. Allmajor equipment is being fabricated with some equipment now starting to arriveon site. The road relocation is complete and construction of initial camp andoffice facilities continues. The power line and main substation along with minesupport facilities are also under construction. The major earthworks contractshave been awarded and hiring of personnel for mine operations is nearingcompletion. Development costs are estimated at US$990 million and production isscheduled to begin during the last quarter of 2006. Carbon Steel Materials Dendrobium Coal Project, Australia The Dendrobium Mine will be a low cost underground longwall operation capable ofproducing 5.2 million tonnes per annum of raw coal (3.6 million tonnes per annumof clean coal). Longwall production commenced on 3 April 2005, eight weeks aheadof schedule. Production commissioning was completed on 19 April 2005 and theramp up of longwall operations is now underway. Outstanding project worksinclude the completion of the coal fines dryer and installation of a sizer forrun of mine coal. Development costs, revised in October 2004, are estimated atUS$200 million. As the project has now been successfully commissioned, it willno longer be included in this report. Rapid Growth Project 2, Australia (BHP Billiton 85%) The Rapid Growth Project 2 (RGP2) was approved in October 2004. The projectcomprises increases in mine, rail and port capacity through the development ofOre Body 18, purchases of additional rolling stock and a new car dumper atFinucane Island. Engineering activities are well advanced, tendering procurementprocesses are underway and initial site activities have commenced. The projectwill increase installed capacity at Western Australian Iron Ore to 118 milliontonnes per annum by the second half of 2006. Development costs are estimated atUS$575 million (BHP Billiton share US$489 million). Diamonds and Specialty Products Panda Underground Project, EKATI Diamond Mine, Canada (BHP Billiton 80%) The Panda Underground Project, approved in May 2004, will be a 2,600 tonnes perday sub-level retreat mine that will deliver approximately 4.6 million tonnes ofore and 4.7 million carats of high value Panda diamonds to the EKATI processplant over a 6 year production life. Underground mine development is progressingto schedule while construction activities associated with the mine surfacefacilities are nearing completion. All four ventilation shafts have beencompleted. First ore production was successfully achieved to schedule on 26April 2005, with full production expected in early 2006. Development costs areestimated at US$182 million (BHP Billiton share US$146 million). Stainless Steel Materials Ravensthorpe Nickel Project, Australia The Ravensthorpe Nickel Project was approved in March 2004. The project includesthe development of a mine, treatment plant and associated infrastructure nearRavensthorpe in Western Australia. The Ravensthorpe processing plant willproduce a mixed nickel-cobalt hydroxide intermediate product (MHP). Engineeringand procurement activities are proceeding to schedule. On site, the majorconcrete pours to date have been completed, access roads are open to traffic,all the construction camp accommodation modules are in place, and bulkearthworks progress is enabling the mobilisation of oncoming contractors.Development costs are estimated at US$1.05 billion, with the first shipment ofMHP expected by the second quarter of 2007. Yabulu Extension Project, Australia The Yabulu Extension Project was approved in March 2004. The metal refiningsection of the QNI Yabulu refinery near Townsville in Queensland is beingexpanded to process up to 220,000 tonnes of MHP. This additional processingcapacity will increase refinery production to 76,000 tonnes of nickel and 3,500tonnes of cobalt. Engineering and procurement activities are proceeding toschedule. The site infrastructure, site-wide piling, concrete and first tankcontracts have been awarded. Site work commenced during the period, withactivity on infrastructure and tankage underway. Development costs are estimatedat US$350 million, with first nickel metal production from the expanded Yabulurefinery expected by late 2007. PETROLEUM EXPLORATION Exploration and appraisal wells drilled during the quarter or in the process ofdrilling as at 31 March 2005. WELL LOCATION BHP BILLITON EQUITY STATUSScarborough-3, 4a & 5 Australia, 50% BHP Billiton and Plugged and abandoned. Exmouth Plateau operator11 Hydrocarbons encountered.West Moonfish-1 Australia, 50% BHP Billiton; Esso Plugged and abandoned. Gippsland Basin operator Hydrocarbons encountered.Mad Dog Southwest Ridge & Gulf of Mexico, 23.9% BHP Billiton; Hydrocarbons encountered. SeeSidetracks 1 & 2 Green Canyon 825 BP operator News@BHPBilliton dated 23 March 2005.Joseph-1 Gulf of Mexico, 20% BHP Billiton; Drilling ahead. High Island Block 10L Shell operatorBlackbeard West-1 Gulf of Mexico, 5% BHP Billiton; Drilling ahead. South Timbalier Block 168 Exxon operatorMustang Gulf of Mexico, 43.66% BHP Billiton and Drilling ahead. West Cameron 77 OCS-G-9387 operator #2Shenzi-4 Gulf of Mexico, 44% BHP Billiton and Plugged and abandoned. Green Canyon 653 operator Hydrocarbons encountered.Knotty Head-1 Gulf of Mexico, 25% BHP Billiton; Drilling ahead. Green Canyon 512 Unocal operatorMakalu-1 Gulf of Mexico, 30% BHP Billiton; Temporarily plugged and abandoned. Mississippi Canyon Block Chevron Texaco operator 937 1 BHP Billiton operated and funded 100% of the activity. MINERALS EXPLORATION The Minerals Exploration group of BHP Billiton continued to pursue globalexploration opportunities for key commodities of interest utilising bothin-house capabilities and the Junior Alliance Programme. Exploration drilling continued on diamond targets in Botswana, Namibia andAngola; on porphyry copper targets in Chile and Peru; and on nickel targets inCanada. Exploration for iron ore, coal and bauxite was undertaken in a number ofregions including Australia, India, Brazil and West Africa. EXPLORATION EXPENDITURE During the quarter, BHP Billiton spent US$31 million on minerals exploration,all of which was expensed (US$93 million gross and US$92 million expensed yearto date), and US$106 million on petroleum exploration, of which US$77 millionwas expensed (US$243 million gross and US$132 million expensed year to date). **** Further information on BHP Billiton can be found on our Internet site: http://www.bhpbilliton.com Australia United KingdomJane Belcher, Investor Relations Mark Lidiard, Investor & Media RelationsTel: +61 3 9609 3952 Mobile: +61 417 031 653 Tel: +44 20 7802 4156 Mobile: +44 7769 934 942email: [email protected] email: [email protected] Tania Price, Media Relations Ariane Gentil, Media RelationsTel: +61 3 9609 3815 Mobile: +61 419 152 780 Tel: +44 20 7802 4177 Mobile: +44 78 81 51 8715email: [email protected] email: [email protected] United States South AfricaMark Lidiard, Investor & Media Relations Michael Campbell, Investor & Media RelationsTel: +1 713 599 6100 Mobile: +44 20 7802 4031 Tel: +27 11 376 3360 Mobile: +27 82 458 2587email: [email protected] email: [email protected] BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209Registered in Australia Registered in England and WalesRegistered Office: Level 27, 180 Lonsdale Street Melbourne Registered Office: Neathouse Place London SW1V 1BH UnitedVictoria 3000 KingdomTelephone +61 1300 554 757 Facsimile +61 3 9609 3015 Telephone +44 20 7802 4000 Facsimile +44 20 7802 4111 The BHP Billiton Group is headquartered in Australia This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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