BHP Group PLC (LON:BHP) spent US$81mln on exploration during the first half of its 2018/19 financial year, the FTSE 100-listed miner revealed in its latest production update.
In addition, the company boosted its interest in Solgold PLC (LON:SOLG) to 11.2% after taking an initial 6% stake. Solgold has one of the best looking copper-gold projects under development anywhere in the world right now.
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Otherwise, there wasn’t much to get excited about in the BHP numbers. Copper guidance has been boosted, but only because the company is retaining Cerro Colorado after its US$320mln sale fell through in December.
Group copper equivalent production was broadly unchanged in the December 2018 half year, with volumes for the full year also expected to be in line with last year.
Full year unit costs for all major assets are expected to be in line with guidance, predominantly reflecting stronger anticipated volumes in the second half of the year.
In petroleum, the first appraisal well at Trion in Mexico (Trion-2DEL) encountered oil, in line with expectations. A downdip sidetrack is currently being drilled to further appraise the field.
US sale returns
The US onshore business sale process was completed on 31 October 2018, with the net proceeds of US$10.4bn to be returned to shareholders.
On 17 December 2018, a US$5.2bn off-market buy-back of BHP Group Limited shares were successfully completed. The balance of the net proceeds will be paid on 30 January 2019 as a special dividend of US$1.02 per share.
Productivity for the December 2018 half year has been impacted by unplanned production outages at Olympic Dam, Spence and Western Australia Iron Ore, with a total negative impact of approximately US$600mln.
In early afternoon trading, BHP shares were 1.6% lower at 1,584.60p.
In a note to clients, analysts at Shore Capital said BHP’s first-half production “underwhelms” with “revised guidance to be issued with financials”.
They also noted that the miner’s costs are up but are expected to come good on better second half volumes.
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