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BHP Group (NYSE:BHP), the $127 billion mining powerhouse with a "GREAT" financial health score according to InvestingPro, received a reiterated Overweight rating and GBP46.00 price target from JPMorgan (NYSE:JPM) on Thursday, following the mining giant’s January 2025 acquisition of a 50% stake in Argentina’s Vicuna copper project for $2 billion.
JPMorgan based its analysis on Lundin Mining (OTC:LUNMF)’s updated resource estimate for the district, which includes the Filo del Sol and Josemaria ore bodies. The firm projects a $7 billion Phase 1 development at Josemaria with a 63Mtpa concentrator and first production expected in 2032, potentially yielding approximately 270,000 tonnes of copper annually. With BHP’s robust EBITDA of $25.8 billion and moderate debt levels, the company appears well-positioned to fund its share of the development.
The investment bank also anticipates a separate $3 billion, 25Mtpa leaching operation at Filo del Sol targeting the oxide cap, which could produce around 100,000 tonnes of copper yearly. A future Phase 2 expansion at Josemaria could increase throughput to 95Mtpa at an estimated cost of $3 billion, leveraging the site’s substantial 3.6 billion tonnes resource. The company’s strong 8% free cash flow yield and conservative debt-to-equity ratio of 0.48 suggest financial flexibility for these expansions.
JPMorgan estimates an additional $4 billion will be required for a desalination plant with pipelines through Chile to support the operations. BHP’s share of the total capital expenditure is projected at $8.5 billion over 10 years.
The Vicuna project represents a significant copper growth opportunity for BHP, though JPMorgan expects the company’s group capital expenditure to remain at $11-12 billion annually throughout the next decade as development progresses.
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