BHP Billiton has sold its West Musgrave nickel-copper project in Western Australia for a song as chief executive Andrew Mackenzie moves to streamline the resources giant by divesting non-core assets.
The assets include the huge but low-grade Nebo-Babel nickel-copper deposits and the promising Succoth copper prospect in the remote West Musgrave region near the WA-South Australia border.
Perth-based junior explorer Cassini Resources, chaired by former BC Iron chief executive Mike Young, will today announce it has bought the assets from BHP for an upfront cash sum of just $250,000.
Cassini will also hand over $10 million a year after it begins production, as well as a 2 per cent royalty on all future output.
The sale comes after BHP this week all but confirmed it was considering a demerger of non-core assets such as nickel, aluminium and bauxite as part of a potential $US20 billion ($21.6bn) transaction.
The West Musgrave assets do not meet the development threshold for BHP, which is now focused on its four “pillars” of major iron ore, copper, petroleum and coking coal projects.
The remote region has been home to some short-lived bursts of exploration excitement since WMC made the original Nebo-Babel discovery in the early 2000s. But the lack of scale and infrastructure has so far thwarted efforts to develop mines in the region.
It is understood BHP halted all work at West Musgrave about 18 months ago.
Cassini managing director Richard Bevan said yesterday the company — which has a market value of just $2.5m — had picked up a significant resource for an upfront payment that equated to the cost of a small drilling program.
“For us it’s a very low-cost low-risk entry to some really significant assets,” he said.
Cassini approached BHP 18 months ago about buying the West Musgrave assets but was rebuffed by then chief executive Marius Kloppers.
But late last year the junior was asked to participate in a closed tender process that involved one other party.