BHP Group Ltd. (BHP.AX) Copper SA expansion to 500ktpa Assessing the returns on the Olympic Dam block cave and US$10bn inv...

Equity Research 13 September 2026 | 6:55PM AEST

BHP Group Ltd. (BHP.AX) Copper SA expansion to 500ktpa: Assessing the returns on the Olympic Dam block cave and >US$10bn investment

BHP.AX 12m Price Target: A$65.30 Price: A$60.87 Upside: 7.3% BUY Paul Young BHP’s South Australia (SA) copper expansion forms ~1/3 of the | Goldman Sachs Australia Pty Ltd company’s long run 3-4% Cu Eq production growth target, with the Matt Greene aim to double copper from SA to >500ktpa in two phases; Phase 1 | Goldman Sachs International ~500ktpa by 2035, Phase 2 ~650ktpa by 2040. BHP has attempted several times over the past two decades to boost production from Chris Bulgin | Goldman Sachs Australia Pty Ltd the Olympic Dam copper mine, and this time is embarking on a ~US$15bn once-and-for-all investment (Phase 1 ~US$10bn) program to unlock the full potential from Olympic Dam, and realize Key Data _____________________________________ Market cap: A$307.2bn / $220.4bn synergies from the OZ Minerals assets. The program involves tripling Enterprise value: A$330.2bn / $236.8bn 3m ADTV: A$484.6mn / $341.6mn the size of the smelter, and three ~10-12Mtpa block caves. Australia ANZ Resources M&A Rank: 3 n Project returns compelling: we calculate average returns (IRR) Leases incl. in net debt & EV?: Yes of ~20% for the Phase 1 block caves and SRE capex at our long GS Forecast __________________________________ run ~US$5.2/lb (real $) copper price (note: ~15% IRR at 6/26 6/27E 6/28E 6/29E Revenue ($ mn) New 59,274.0 58,743.0 58,546.9 59,891.7 consensus prices). We think mining costs at Olympic Dam & Revenue ($ mn) Old 59,274.0 58,826.5 58,685.2 60,087.5 EBITDA ($ mn) 30,070.0 31,088.4 30,717.9 31,451.8 Carrapateena can be reduced by ~40% with block caving and EPS ($) New flexibility of the 2-stage smelter. Phase 2 involves block caves at EPS ($) Old FCF yield (%) 5.9 4.2 4.7 4.2 Oak Dam and Olympic Dam Deeps, which are higher risk due to Dividend yield (%) 5.2 3.7 3.5 3.6 EV/EBITDA (X) 5.5 7.7 7.8 7.7 orebody depth and geology, and we exclude both from our base ROCE (%)

case. We model peak copper production from SA of ~490ktpa 6/26 12/26E 6/27E 12/27E by 2035, long run EBITDA of ~US$7bn and a margin of ~55%. EPS ($)

GS Factor Profile ______________________________ n Overall impact to BHP: after including the Olympic Dam block Growth

cave in our base case but removing Oak Dam (deep, complex Financial Returns

orebody), our copper SA NPV is ~US$37bn (~A$10/sh), and Multiple represents ~14% of our BHP operating asset NAV. We think BHP’s biggest challenge will be to convince investors (on the Integrated

November investor tour) that the complex ~US$15bn Percentile 20th 40th 60th 80th 100th

investment program can be delivered on time and budget, and BHP.AX relative to Australia & New Zealand Coverage they can execute on three block caves. We make modest BHP.AX relative to ANZ Resources

changes to our NAV & PT and rate BHP.AX a Buy with ~7% Source: Company data, Goldman Sachs Research estimates. upside to our PT. See disclosures for details.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs BHP Group Ltd. (BHP.AX)

BHP Group Ltd. (BHP.AX) Income Statement ($ mn) ___________________________________ BUY Rating since Jun 6, 2024 6/26 6/27E 6/28E 6/29E Total revenue 59,274.0 58,743.0 58,546.9 59,891.7 Cost of goods sold (35,979.0) (35,196.8) (35,545.7) (36,408.3) SG&A -- -- -- -- Ratios & Valuation __________________________________________ R&D -- -- -- -- 6/26 6/27E 6/28E 6/29E Other operating inc./(exp.) P/E (X) EBITDA 30,070.0 31,088.4 30,717.9 31,451.8 P/B (X) 2.3 3.0 2.9 2.8 Depreciation & amortization (6,201.0) (6,706.7) (6,982.7) (7,322.6) FCF yield (%) 5.9 4.2 4.7 4.2 EBIT…