REG - BHP Group Limited - HY2026 Results Announcement
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RNS Number : 2466T BHP Group Limited 17 February 2026
17 February 2026
Financial results for the half year ended 31 December 2025
Operational excellence; strong margins, cash flows and growth; >50% of
Group EBITDA from Copper
"We continue to prosecute our strategy of operational excellence, distinctive
social value creation and growth in copper and potash. We have achieved ~30%
growth in copper production in the last four years, positioning us ahead of
the strengthening copper market that we had anticipated.
This half marks a milestone for BHP with Copper contributing the largest share
of our overall earnings, at 51% of Underlying EBITDA.
BHP is the world's largest copper producer and with strong performance at
Escondida, and solid contributions from our other operations in Chile and
South Australia, we have increased FY26 group copper guidance to 1.9 -
2.0 Mt. This is allowing us to maximise increased earnings from the recent
run up in copper prices as well as gold.
With four compelling growth options across Chile, Argentina, Arizona and South
Australia, we are well positioned to capture the forecast higher long term
copper prices. We expect first production and revenue from the Jansen Stage 1
potash project in mid-CY27. Following completion of our definitive updated
cost estimate, at our recent Operational Review we announced an increase in
Jansen Stage 1 project expenditure to US$8.4 bn.
Our Western Australia iron ore business continues to deliver for shareholders.
WAIO achieved record first half production and shipments and we further
strengthened our position as the world's lowest cost major iron ore producer.
We continue to invest in this business. We are adding a sixth rail car dumper
at Port Hedland so trains can unload faster, supporting an uplift in
sustainable volumes to >305 Mt.
At a Group level, we again delivered a safe, reliable half, with resilient
margins and cash flows that support disciplined investment and strong
shareholder returns. Underlying EBITDA increased 25% to US$15.5 bn with an
Underlying EBITDA margin of 58%. Underlying Attributable profit also increased
by more than 20% to US$6.2 bn. Underlying ROCE increased by around 3
percentage points to circa 24%.
Consistently strong cash generation and balance sheet strength remain
hallmarks of BHP. We generated US$9.4 bn in operating cash and finished the
half with net debt of US$14.7 bn, comfortably around the midpoint of our
US$10-20 bn target range.
We determined an interim dividend of US 73 cents per share, equivalent to a
60% payout ratio, reflecting strong operating performance, disciplined capital
allocation and confidence in our outlook.
Today, we announced the most valuable silver streaming agreement ever relating
to our share of Antamina's future silver production, which follows the
agreement in December relating to our share of WAIO's inland power
consumption. These are examples of our active approach to capital portfolio
and asset management, improving our financial flexibility and unlocking value.
Together, these agreements will unlock over US$6 bn of cash. We see the
potential to unlock up to a total of US$10 bn.
Looking ahead we expect circa 3% global economic growth in CY26. China's
economy is resilient after meeting its around 5% target last year. India
continues to outperform. We are optimistic that the economic backdrop is
supportive for our key commodities. Against a structurally higher cost
environment, these conditions reinforce the importance of productivity and
cost discipline and play to the strengths of BHP's low cost, diversified
portfolio.
Our growth pipeline sets BHP apart, both from expansion of our existing Tier 1
assets and exciting greenfield projects like Jansen, Vicuña and Resolution,
and will allow us to deliver resilient returns through the cycle."
Mike Henry, BHP Chief Executive Officer
Safety Operational excellence
Maintaining strong safety performance Operational records in copper and iron ore
Our High Potential Injury Frequency (HPIF) i (#_edn1) declined 20% relative We achieved record performance across many assets. At Escondida, record
to H2 FY25 and is 67% lower now compared to HY20, demonstrating sustained, concentrator throughput underpinned strong production, even as grade declined.
long-term improvement in safety performance. With our other copper assets also performing well, we have increased our FY26
Group copper production guidance, and Escondida's FY27 production guidance.
This has been driven by our continued investment in engineering controls,
automation and expanding use of technology to identify hazards earlier and In iron ore, WAIO achieved record first half production and shipments, and
reduce risk exposure. Our safety performance is further enabled through the record material mined, while strengthening our position as the lowest cost
BHP Operating System (BOS). major iron ore producer globally. ii (#_edn2)
Group gold production increased, with record refined gold output at Copper SA
(up 33%), while Group silver production increased 29%.
Financial results Net cash tax paid
Attributable profit Net income tax and royalty-related taxation
US$5.6 bn Up 28% US$3.6 bn Up 5%
HY25 US$4.4 bn HY25 US$3.4 bn
The significant increase in Attributable profit was driven by operational BHP continues to be one of the top three corporate taxpayers in Australia v
excellence and disciplined cost control, alongside average higher prices. (#_edn5) and one of the largest in Chile.
Copper and Iron ore were standout performers with Underlying EBITDA
margins iii (#_edn3) of 66% and 62% respectively. The Copper segment (Copper) Our global adjusted effective tax rateiii remains elevated at 36.6% (HY25:
contributed >50% of Group Underlying EBITDAiii for the first time. iv 36.4%) and is 43.0% (HY25: 44.2%) once revenue and production-based royalties
(#_edn4) are included.
Investing in growth Shareholder value
Capital and exploration expenditureiii Fully franked interim dividend
US$5.3 bn Up 1% US$0.73 per share
HY25 US$5.2 bn 60% payout ratio
We are continuing to invest in our sector-leading pipeline of organic growth We have determined an interim dividend of US$3.7 bn, extending our track
projects at Jansen, Escondida, Copper SA and WAIO, which we expect will help record of strong returns while also investing in growth. Including this
drive our attributable copper equivalent (CuEq) production growth to a CAGR of dividend, we will have returned >US$110 bn to shareholders since the
3 - 4% between FY27 - FY35. vi (#_edn6) introduction of the Capital Allocation Framework in 2016.
Group financial performance
Earnings and margins
Operational records and strong prices result in record Copper EBITDA
Revenue Following another strong half of operational performance, Revenue increased Our Underlying EBITDA margin increased 7 percentage points to 58%, building
US$2.7 bn primarily due to the significant increase in copper prices, and further on our track record of maintaining an Underlying EBITDA margin of over
US$27.9 bn Up 11% higher iron ore prices. 50% on average over the last 25 years. vii (#_edn7) In Copper, we achieved an
Underlying EBITDA margin of 66%, an increase of 12 percentage points.
HY25 US$25.2 bn We remain focused on controlling costs and maintaining our attractive
Underlying EBITDA margins relative to our competitors. This discipline enabled For further details see
us to offset the unfavourable movements in exchange rates and inflation. Underlying EBITDA waterfall (#_Underlying_EBITDA_waterfall_2) .
Escondida and Copper SA delivered 16% and 53% reductions in unit costsiii
Attributable profit respectively, supported by increased gold and silver by-product credits. WAIO Our adjusted effective tax rate was broadly in line with HY25 at 36.6%. The
strengthened its position as the lowest cost major iron ore producer adjusted effective tax rate for FY26 is expected to be within the guidance
US$5.6 bn Up 28% globally.ii range of 36% to 40%.
HY25 US$4.4 bn Underlying EBITDA increased by 25%. Copper contributed 51% (HY25: 39%) of Operating costs included US$1.4 bn of revenue or production-based royalties.
Group Underlying EBITDA, increasing to a record US$8.0 bn and representing Including these payments, our adjusted effective tax rate was 43.0% (HY25:
the first time the majority of Group Underlying EBITDA was generated from 44.2%). For further details see Adjusted effective tax rate
Copper. (#_Effective_tax_rate) .
Underlying attributable profitiii
Supported by disciplined cost control and strong operational performance,
US$6.2 bn Up 22% together with higher prices for key commodities, we recorded Underlying
attributable profit of US$6.2 bn.
HY25 US$5.1 bn
For further details see
Note 2 - Exceptional items (#_2.__) and
Note 9 - Significant events - Samarco dam failure (#_9.__) .
Profit from operations
US$12.3 bn Up 34%
HY25 US$9.1 bn
Underlying EBITDA
US$15.5 bn Up 25%
HY25 US$12.4 bn
Underlying EBITDA margin
58.4%
HY25 51.1%
Adjusted effective tax rate
36.6%
HY25 36.4%
FY26e 36 - 40%
Detailed financial information is included in Appendix 1 (#_Appendix_1_3_0)
Cash flow and balance sheet
A solid balance sheet and strong cash flow generation support long-term
shareholder value growth
Net operating cash flow Net operating cash flow increased 13% predominantly due to higher realised After investing in line with our Capital Allocation Framework, our net debt
copper and iron ore prices. This included an offsetting increase in working increased by US$1.8 bn from 30 June 2025 to US$14.7 bn reflecting:
US$9.4 bn Up 13% capital of ~US$2.3 bn, primarily as a result of larger receivables driven by
higher copper prices. · Payment of dividends to BHP shareholders of US$3.1 bn, and to
HY25 US$8.3 bn
non-controlling interests of US$1.0 bn; and
Free cash flow increased 10% to US$2.9 bn, after investing US$5.3 bn in
capital and exploration projects. · US$1.0 bn in Samarco settlement obligations (BHP equity share)
related to the Brazil Agreement. The Samarco settlement obligations related to
Capital and exploration expenditure This included investing US$2.4 bn in Copper as we advance our significant the Brazil Agreement are expected to decline to ~US$0.6 bn in FY27.
pipeline of organic growth projects in Chile and South Australia. We also
US$5.3 bn Up 1% invested US$1.0 bn in potash in Canada, as we progress the Jansen project to Our balance sheet remains strong. Today, we announced a silver streaming
first production in mid-CY27. agreement for which we will receive an upfront cash payment of US$4.3 bn. We
HY25 US$5.2 bn
also expect to realise US$2 bn from the innovative agreement we announced with
Capital and exploration expenditure guidance remains unchanged at ~US$11 bn Global Infrastructure Partners linked to BHP's share of WAIO's power
FY26e ~US$11 bn viii (#_edn8) per annum in FY26 and FY27, and ~US$10 bn on average each year between FY28 consumption. Both transactions are expected to complete in H2 FY26. We see the
and FY30.viii potential to unlock up to US$10 bn through active capital portfolio and asset
management.
Vicuña, our joint venture with Lundin Mining on the Argentina-Chile border,
Free cash flowiii expects to spend ~US$800 m (100% basis) in CY26 to advance project studies and Our net debt target range remains unchanged at between US$10 bn and US$20 bn.
mine plan optimisation and to prepare the project for a potential Stage 1
US$2.9 bn Up 10% final investment decision (FID) by ~CY26. Today, Vicuña released updated Our global credit ratings(( ix (#_edn9) )) also remained unchanged in HY26.
studies that reinforce the scale of the resource and the opportunity to Moody's rating is A1(stable)/P-1 and Fitch's rating is A (stable)/F1
HY25 US$2.6 bn develop a top global copper, gold and silver producing asset. (long-term/short-term respectively).
For further details see Net debt waterfall (#_Net_debt_waterfall) .
Net debtiii
US$14.7 bn
FY25 US$12.9 bn
HY25 US$11.8 bn
Gearing ratioiii
20.9%
FY25 19.8%
HY25 19.2%
Detailed financial information is included in Appendix 1 (#_Appendix_1_3_0)
Value and returns
Strong operating cash flow enables investment in the business and excellent
shareholder returns
Interim dividend Earnings per share - basic Our operations continued to generate very strong Underlying ROCE, with our
largest assets, Escondida and WAIO, delivering 48% and 43% respectively.
73 US cps 111.1 US cps
An interim dividend of US$0.73 per share (US$3.7 bn) has been determined,
Fully franked HY25 87.1 US cps equivalent to a 60% payout ratio, with a payment date to shareholders of 26
March 2026.
60% payout ratio
This extends our track record of strong returns while balancing investment in
growth. Including the HY26 interim dividend determined, we will have returned
>US$110 bn to shareholders since the introduction of the Capital
Underlying return on capital employed (ROCE)iii Earnings per share - Underlyingiii Allocation Framework in 2016.
23.6% 122.2 US cps
HY25 20.4% HY25 100.2 US cps
Important dates for shareholders
BHP's Dividend Reinvestment Plan (DRP) will operate in respect of the interim
dividend. Full terms and conditions of the DRP and details about how to
participate can be found at: bhp.com/DRP (http://www.bhp.com/drp)
Events in respect of the interim dividend Date
Announcement of currency conversion into RAND 2 March 2026
Last day to trade cum dividend on Johannesburg Stock Exchange (JSE) 3 March 2026
Ex-dividend Date JSE 4 March 2026
Ex-dividend Date Australian Securities Exchange (ASX) and London Stock 5 March 2026
Exchange (LSE)
Ex-dividend Date New York Stock Exchange (NYSE) 6 March 2026
Record Date 6 March 2026
Announcement of currency conversion into AUD, GBP and NZD 9 March 2026
DRP and Currency Election date 9 March 2026(1)
Payment Date 26 March 2026
DRP Allocation Date(2) 13 April 2026
1 5:00 pm AEDT.
2 Allocation dates may vary between registers but all
allocations will be completed on or before 13 April 2026.
Shareholders registered on the South African branch register will not be able
to dematerialise or rematerialise their shareholdings between the dates of 3
March 2026 and 6 March 2026 (inclusive), and transfers between the Australian
register and the South African branch register will not be permitted between
the dates of 2 March 2026 and 6 March 2026 (inclusive). American Depositary
Shares (ADSs) each represent two fully paid ordinary shares and receive
dividends accordingly.
Any eligible shareholder who wishes to participate in the DRP, or to vary a
participation election should do so before 5.00 p.m. (AEDT) on 9 March 2026,
or, in the case of shareholdings on the South African branch register of BHP
Group Limited, in accordance with the instructions of your CSDP or broker. The
DRP Allocation Price will be calculated in each jurisdiction as an average of
the price paid for all shares actually purchased to satisfy DRP elections. The
DRP Allocation Price applicable to each exchange will be made available at:
bhp.com/DRP (https://www.bhp.com/drp/)
Economic outlook
x (#_edn10)
Commodities experienced healthy demand in H2 CY25, supported by fiscal
policies and improving market confidence. Combined with ongoing supply
constraints, this resulted in strong pricing for metals and minerals markets.
The International Monetary Fund (IMF) puts global growth at 3.3% in CY25,
reflecting milder tariff impacts and supportive monetary and fiscal policies.
Growth in CY26 is projected at around 3.0% with fiscal and monetary policy in
major economies continuing to support commodity demand.
China achieved its official growth target of "around 5%" in CY25, supported by
proactive fiscal measures and resilient exports. As expected, momentum slowed
in the second half of the year, most notably in property construction, and in
manufacturing and infrastructure investment. Looking ahead, the 15th Five-Year
Plan (CY26 - CY30) is expected to lift domestic household demand and
prioritise technological development - with the consequent structural
rebalancing of the economy providing further demand support for metals
critical to electrification and decarbonisation.
India's economy outperformed in CY25, with GDP growth exceeding 7%, driven by
solid household demand and investment. We believe momentum will continue into
CY26, supported by infrastructure spending, expanding manufacturing capacity,
and improving financial conditions.
Commodity demand
While policy and geopolitical uncertainty persisted through CY25, commodity
demand was robust. The market's concern with trade policy early in the year
did lead to some front-loading of demand.
In China, supportive policy measures in CY25 underpinned steel and
metals-related manufacturing activity, particularly in transport and
machinery, which helped to offset ongoing housing sector weakness and the
slowdown in infrastructure investment. China's trade surplus surpassed US$1 Tn
in CY25 for the first time, as strong exports to global markets offset weaker
shipments to the United States. Steel exports provided support to China's
production and more than offset the slight decline in domestic steel demand.
China's copper demand growth was a particularly robust 8.8% in H1 CY25 and
CY26 copper demand is expected to remain strong off its current high base.
Seaborne iron ore demand is expected to stabilise at a high level in CY26,
while seaborne metallurgical coal demand could recover modestly driven by
India and developing economies.
Indian commodity demand continues to grow strongly, driven by broad-based
sectoral growth and underpinned by the ongoing capacity additions in the steel
and metals value chain (e.g. blast furnaces in steel, smelting and refining in
copper).
Over the long term, population growth, urbanisation, rising living standards,
and the infrastructure required for digitisation and decarbonisation are all
expected to drive demand for steel and copper. Growing global population and
rising incomes will shift dietary patterns and the need to improve soil
productivity, underpinning long-term potash demand.
For the review and outlook relating to our individual commodities please refer
to the relevant sections below.
Costs and inflation
Cost pressures have been mixed across our operations, with upward pressure
emerging in several key categories. In Australia, inflation has increased
above the Reserve Bank of Australia's (RBA)'s 2-3% target range, reflecting a
broad-based rise in cost pressures as well as the temporary impact of the
withdrawal of electricity subsidies. In Chile, inflation has eased in recent
months and is expected to reach the Central Bank's 3% target in Q1 CY26. In
Canada, consumer inflation has stabilised at around 2%, although industrial
construction costs continue to rise sharply, increasing by over 12% over the
past two years in Saskatoon.
Labour market conditions have evolved unevenly across regions. In Australia,
labour market conditions have eased, and wage growth has largely normalised to
long-run averages. In Canada, labour demand is expected to remain subdued
through to mid-CY26, reflecting ongoing tariff-related economic headwinds. In
Chile, labour conditions within the mining sector remain volatile, with
employment reaching a record high at the start of H2 CY25 before easing in
recent months. At the same time, we expect ongoing regulatory changes to add
to cost pressures, particularly through higher labour costs in the coming
years.
Other inputs costs have been mixed. Average diesel prices have remained
relatively stable. In contrast, ammonia has rebounded after bottoming out
early in H2 CY25, while sulphuric acid prices remain elevated.
Overall, these dynamics point to a structurally higher cost environment
compared to pre-COVID norms. This reinforces the importance of productivity
and cost discipline, while highlighting the competitive advantage of low-cost,
diversified producers in a market where price support levels have shifted
upward.
Segment and asset performance
Detailed financial information on all business segments in the Financial
performance summary (#_Financial_performance_summary1_3)
Copper
Production Commodity review and outlook
The average copper price reached record nominal highs in H2 CY25 and finished
984 kt 0% the period close to US$12,500/t (US$5.67/lb). Prices averaged just over
US$10,400/t (US$4.72/lb) in H2 CY25 (up 13%) with large supply disruptions at
HY25 987 kt major copper mines and the threat of tariffs providing positive price
momentum.
FY26e 1,900 - 2,000 kt
Global demand increased 2.1% in CY25 relative to CY24. Chinese copper demand
was particularly strong in H1 CY25. Demand slowed toward the end of CY25 as
front-loading of demand ahead of US reciprocal tariffs and stimulus programs
Average realised price waned. Chinese demand is expected to remain strong in CY26 and OECD demand is
expected to gather momentum. Indian demand is expected to continue the strong
US$5.28/lb Up 32% growth experienced in CY25.
HY25 US$3.99/lb Given the strong demand outlook, combined with the impact of disruptions at
our competitor's mines, grade declines and the slow mine development pipeline,
we anticipate a continued tight copper market over the next few years.
Underlying EBITDA The supply shortfall is expected to be addressed through a combination of
greater scrap generation (although trade barriers, the fragmented supply-chain
US$8.0 bn Up 59% and rising collection costs could act as a constraint), recovery in currently
disrupted mine operations and new mine supply. However, the market still
HY25 US$5.0 bn requires 10 Mt of additional, as-yet-uncommitted new supply, to be able to
balance by CY35.
51% contribution to the Group's Underlying EBITDA
66% Underlying EBITDA margin
Underlying ROCE
22%
HY25 13%
Capital and exploration expenditure
US$2.4 bn Copper fundamentals remain attractive. Demand is expected to grow from ~34 Mt
today to >50 Mt by CY50, with the key drivers being 'Traditional' economic
HY25 US$2.2 bn growth (home building, electrical equipment and household appliances), 'Energy
Transition' (renewables and electric vehicles) and 'Digital' (Artificial
FY26e ~US$5.1 bn Intelligence and Data Centres). Growth potential for 'Digital' is promising -
we believe that copper demand in Data Centres could grow sixfold to nearly
3Mtpa in CY50.
We anticipate that the cost curve for the mines needed to meet this demand is
likely to steepen as both operational and development challenges progressively
increase.
Segment outlook
We continue to deliver strong performance across all operated copper assets,
with copper production up ~30% in the last four years. In HY26, total Copper
Underlying EBITDA increased by 59% to a record US$8.0 bn (HY25: US$5.0 bn).
Copper contributed 51% of the Group's HY26 Underlying EBITDA (HY25: 39%); the
first timeiv it has contributed the majority of Group Underlying EBITDA. This
was supported by strong contributions from by-products at Copper assets, with
259 koz of gold, 8.9 Moz of silver and 1.5 kt of uranium sales across the
portfolio in the half, delivering total revenue of US$2.1 bn, up 46% from
HY25.
We increased Group copper production guidance to between 1,900 and 2,000 kt
for FY26 (from between 1,800 and 2,000 kt previously). We have a significant
pipeline of organic copper growth projects which we estimate could increase
our attributable copper production to ~2 Mtpa (~2.5 Mtpa CuEq) by FY35; xi
(#_edn11) an increase of ~40% above current attributable copper production
levels.
These include:
· In Chile, we expect our growth projects at Escondida and Pampa
Norte assets will enable copper production in Chile of ~1.4 Mtpa on average
through the 2030s. The Environmental Impact Declaration (DIA) permit for the
Escondida New Concentrator, the centre piece of the growth program, remains on
track to be submitted in H2 FY26.
· In South Australia, we continue to develop the portfolio of
projects that we expect to deliver >500 ktpa of copper production (~750
ktpa CuEq) for the first phase and contribute to the strategy to deliver up to
650 ktpa copper production (towards ~1 Mtpa CuEq) from the 100%-owned
Copper SA in the second phase. xii (#_edn12) We expect the first phase growth
projects at our mines and concentrators to be at competitive capital
intensities of US$16 - 21k/t CuEq.
· In Peru, we hold a 33.75% share in Antamina, a top 10 global
copper producer. xiii (#_edn13) Antamina is expected to produce between 140
and 150 kt in FY26.
· In South America, today Vicuña released a Technical Assessment
Report (including an updated mineral resource estimate) on the Vicuña
project, which reinforces the scale of the resource and the opportunity to
develop a top global copper, gold and silver producing asset. The integrated
Technical Assessment Report is included in this document following the
Financial Statement and Non-IFRS Financial Information. The Josemaria and Filo
deposits are estimated to have a combined total of ~47 Mt copper, ~97 Moz gold
and ~1.8 Boz silver. Based on the study estimates, Vicuña would have first
quartile cash costs, and potential to produce >500 ktpa of copper, >0.8
Mozpa of gold and >20 Mozpa of silver (~800 ktpa CuEq) in peak production
years. Vicuña expects to spend ~US$800 m (100% basis) in CY26 to advance
project studies, mine plan optimisation and to complete access road
construction. Development of the Stage 1 mill, with initial production from
the Josemaria deposit, would set up the district for development of Filo in
Stages 2 and 3 later in the 2030s.
· We also have a 45% interest in the Resolution Copper Project in
the United States, one of the largest undeveloped copper projects in the
world, with the potential to become a significant copper producer in North
America.
The divestment of the Carajás assets is now expected to close in H1 CY26, subject to the satisfaction of customary closing conditions (including regulatory approvals).
Escondida
Copper production Unit cost(1,2) Underlying EBITDA
646 kt 0% US$1.12/lb Down 16% US$5.6 bn Up 63%
HY25 644 kt HY25 US$1.33/lb HY25 US$3.5 bn
FY26e 1,200 - 1,275 kt FY26e US$1.20 - US$1.50/lb
FY27e 1,000 - 1,100 kt Medium-term(4) US$1.50 - US$1.80/lb
Medium-term(3) 900 - 1,000 ktpa
1 Based on exchange rates of: HY26 USD/CLP 947 (realised); HY25
USD/CLP 947 (realised); FY26 and medium-term USD/CLP 940 (guidance).
2 Refer to Non-IFRS information
(#_Non-IFRS_financial_information) for detailed unit cost reconciliation.
3 Medium-term refers to an average for FY28 - FY31.
4 Medium-term refers to an average for FY27 - FY31.
Financial performance
Underlying EBITDA increased 63% driven by higher realised copper, gold and
silver prices, which had a favourable impact of US$2.1 bn (net of price linked
royalties).
Increased by-product credits and continued management focus on delivering
incremental cost productivity has delivered a 16% reduction in unit costs.
Asset outlook
Continued strong operational performance, driven by record concentrator
throughput in HY26 and improved recoveries underpinned the increase for FY26
production guidance to between 1,200 and 1,275 kt (from between 1,150 and
1,250 kt previously). Concentrator feed grade for FY26 is expected to be
between 0.85% and 0.90% (from ~0.85% previously). FY26 unit cost guidance
remains unchanged at between US$1.20/lb and US$1.50/lb, xiv (#_edn14) with
unit costs expected to be at the bottom end of the range.
As a result of the strong operational performance and ongoing mine plan and
productivity improvements, production guidance for FY27 is now expected to be
between 1,000 and 1,100 kt (compared to the medium-term guidance range of
between 900 and 1,000 ktpa). These outcomes reflect the effectiveness of BOS
in generating incremental improvement in performance. Medium term guidance
remains between 900 - 1,000 ktpa for FY28 to FY31, with grade <0.80%.
The increase in FY26 and FY27 production guidance ranges, combined with the
extension of medium-term production guidance to FY31 relative to plans
outlined at the Chilean copper site tour in November 2024, have generated
opportunities to create >500 kt of incremental copper volumes over this
period. These include several low capital intensity productivity initiatives
across the Laguna Seca concentrators and the Los Colorados life extension
beyond FY29 and subsequent demolition to allow earlier access to high grade
PL2 zone ore, which are aimed at offsetting the impact of this extension.
The Escondida New Concentrator remains central to the Escondida growth program
and the DIA permit application for the new concentrator remains on track for
submission in H2 FY26. The new concentrator is expected to deliver an
additional 220 - 260 ktpa of copper volumes and remains on track for a
potential FID by CY27-28, and first production by CY31-32. This is expected to
be delivered with a competitive capital intensity of US$15 - 21k/t CuEq and
IRR of 13 - 16%. xv (#_edn15)
Full SaL, a BHP designed leaching technology which has already been
successfully deployed at Spence, delivered first production during FY25 and
contributed 28 kt in HY26. We expect Full SaL to produce ~410 kt in copper
cathodes at Escondida over a 10-year period through improved recoveries and
shorter leach cycle times. We also continue to study various leaching
technologies, with each at different stages of evaluation.
Pampa Norte
Spence copper production Spence unit cost(1,2) Underlying EBITDA
114 kt Down 10% US$2.05/lb Up 2% US$0.7 bn Up 22%
HY25 126 kt HY25 US$2.01/lb HY25 US$0.5 bn
FY26e 230 - 250 kt FY26e US$2.10 - US$2.40/lb
Medium-term ~235 ktpa Medium-term US$2.05 - US$2.35/lb
1 Based on exchange rates of: HY26 USD/CLP 947 (realised); HY25
USD/CLP 947 (realised); FY26 and medium-term USD/CLP 940 (guidance).
2 Refer to Non-IFRS information (#_Non-IFRS_financial_information)
for detailed unit cost reconciliation.
Financial performance
Underlying EBITDA increased 22% driven by higher realised copper and silver
prices, which had a favourable impact of US$0.3 bn. This was partially offset
by lower sales volumes in line with planned lower cathode production and the
deferral of sales volumes to H2 FY26 due to port swells.
Unit costs at Spence increased by 2% due to lower sales volumes, partially
offset by increased by-product credits.
Asset outlook
Production guidance at Spence for FY26 remains unchanged at between 230 and
250 kt. Production is expected to average ~235 ktpa over the next five years,
driven by ore mineralogy as we transition into the deeper hypogene mineral
deposits of the orebody. FY26 unit cost guidance also remains unchanged at
between US$2.10/lb and US$2.40/lb.xiv
Since the Chilean copper site tour in November 2024, we have continued to
advance options to debottleneck the Spence concentrator to further lift
throughput and recoveries, which we are progressing at pace. We plan to invest
in upgraded flotation cells utilising a combination of conventional and new
technologies, which are expected to enable improved processing and recoveries
from the more complex ore characteristics in the orebody. This could
potentially increase copper production by 10 - 15 ktpa and FID for this
project is now expected in HY27.
We continue to test the implementation of BHP's Simple Approach to Leaching 2
(SaL2) technology at the sulphide leach pad, enabling processing of hypogene
ores and utilising latent capacity in the cathode infrastructure.
Cerro Colorado entered temporary care and maintenance in December 2023 and we
are continuing to study the application of BHP's Full SaL leaching technology
to potentially restart operations in the future.
Copper South Australia
Copper production Unit cost(1,2) Underlying EBITDA
148 kt Up 2% US$0.74/lb Down 53% US$1.3 bn Up 69%
HY25 145 kt HY25 US$1.57/lb HY25 US$0.7 bn
FY26e 310 - 340 kt FY26e US$1.00 - US$1.50/lb
1 Based on exchange rates of: HY26 AUD/USD 0.66 (realised); HY25
AUD/USD 0.66 (realised); FY26e AUD/USD 0.65 (guidance) and prices for
by-products of: gold US$2,900/oz, and uranium US$70/lb (guidance).
2 Refer to Non-IFRS information
(#_Non-IFRS_financial_information) for detailed unit cost reconciliation.
Financial performance
Underlying EBITDA increased 69% to US$1.3 bn, the second consecutive half
>US$1 bn, predominantly as a result of higher average realised prices for
copper and gold, which had a favourable impact of US$0.5 bn (net of price
linked royalties).
Record refined gold production of 113 koz supported the 3% increase in gold
sales.
Asset outlook
Production guidance for FY26 remains unchanged at between 310 and 340 kt,
weighted to the second half. FY26 unit cost guidance also remains unchanged at
between US$1.00/lb and US$1.50/lb.xiv
Since the integration of Carrapateena and Prominent Hill, Copper SA has
consistently delivered >310 ktpa copper production (>450 ktpa CuEq
including gold, silver and uranium production), and strong free cash flow.
This operational stability driven by BOS provides a strong foundation to
invest in the business, with growth programs now advancing at all assets.
· At Prominent Hill, we have made strong progress with the
Operation Expansion (PHOX) project since the shaft sinking was completed in Q4
FY25. The project remains on track to be completed in H2 FY27 for a total
investment of ~US$0.9 bn. The Wira shaft hoisting system is expected to
extend the mine life to at least 2040.
· At Carrapateena, the decline towards the base of the block cave
is now 95% complete. The project is expected to extend the mine life beyond
the existing sub-level cave and increase throughput up to 12 Mtpa, ramping up
from FY29.
· At Olympic Dam, the Southern Mining Area Decline continues to
progress with the completion of the box cut and the commencement of lateral
development. It is expected to unlock up to 2.5 Mtpa of additional vertical
capacity and support future mine expansion options, with completion on track
for FY28.
· In HY28, we plan to complete a planned Smelter Campaign
Maintenance (SCM27) following an extended six-year campaign life. This
campaign maintenance will include scope to enable the tie-in of the potential
Smelter and Refinery Expansion (SRE).
At Oak Dam, we have 4 active drill rigs currently in operation. We are seeking
government approvals to begin execution activities on twin underground access
declines.
During HY26, we continued to study the SRE option and we remain on track for a
potential FID in CY27. The first phase would involve a transition to a
two-stage smelter configuration (which is better suited to the assets'
mineralogy) with concentrate smelting capacity of 1,100 to 1,400 ktpa,
supported by expected production growth from Carrapateena and Olympic Dam. We
expect the first phase growth projects at our mines and concentrators to be at
competitive capital intensities of US$16 - 21k/t CuEq. The second phase of the
expansion would increase capacity to align with potential further growth from
Olympic Dam (including OD Deeps) and Oak Dam.
Iron ore
Production Commodity review and outlook
Iron ore prices (Argus 62% Fe Fines CFR China) averaged US$102/dmt CFR in
134 Mt Up 2% CY25, 7% lower than CY24, as supply growth outpaced demand and contributed to
a steady buildup in Chinese port inventories. Pricing momentum strengthened in
HY25 131 Mt H2 CY25, supported by higher blast furnace operating rates and renewed market
expectations of further government policy support.
FY26e 258 - 269 Mt
Chinese demand remained resilient with steel production estimated to have
remained around 1 Bt for the seventh successive year, supported by strong
steel exports and solid manufacturing demand, particularly from the automobile
Average realised price (WAIO) and machinery sectors. These factors helped offset ongoing structural weakness
in the real estate sector - which we expect to persist in CY26. Iron ore
US$84.71/wmt Up 4% demand in the rest of the world was mixed. Demand from India and emerging
Asian economies continued to grow alongside new blast furnace capacity
HY25 US$81.11/wmt additions, while demand in mature markets was subdued.
Looking ahead, global iron ore and steel demand is expected to remain broadly
stable in the short term, with the rising trade protectionism remaining a risk
Underlying EBITDA to demand - though we anticipate this to result in higher costs and trade
re-routing rather than demand destruction. Seaborne iron ore demand is
US$7.5 bn Up 4% expected to plateau at the current high level over the next few years, with
slight reductions in China offset by growth from emerging economies and a mild
HY25 US$7.2 bn recovery from Europe - driven by the Carbon Border Adjustment Mechanism
(CBAM). Seaborne iron ore supply is expected to increase, with the majors'
48% contribution to the Group's Underlying EBITDA established production bases showing modest growth, alongside the new supply
from Guinea. Rising Indian domestic demand is expected to act as a constraint
62% Underlying EBITDA margin on its iron ore exports going forward.
Our estimate of cost support continues to sit in the US$80-100/dmt range on a
62% Fe CFR basis, formed by ~180 Mt of higher cost supply, mainly from Chinese
Underlying ROCE (WAIO) domestic mines, Australian junior miners, Indian high-cost producers and some
African producers.
43%
We maintain our view that China's steel production will plateau around the 1
HY25 44% Bt level in the late 2020s. Chinese pig iron production is expected to decline
mildly over this period as less iron ore is displaced by scrap than previously
expected. A critical source of scrap is the property sector where sectoral
weakness is constraining scrap generation. In the long run, the seaborne iron
Capital and exploration expenditure (WAIO) ore trade is likely to undergo steady diversification as demand grows in
emerging economies.
US$1.6 bn
Segment outlook
Over the last 6 years, we have remained the lowest cost major iron ore
HY25 US$1.4 bn producer globally and are focused on extending our industry leading cost
position at WAIO.ii During this period, we have completed many low capital
FY26e ~US$3.3 bn intensity projects on time and on budget. The Car Dumper 3 (CD3) renewal was
delivered in Q1 FY26, ahead of schedule. We are also progressing the Western
Ridge Crusher project and it remains on track for completion in Q1 FY27. These
projects have created resilience and reliability across our operations. We
plan to increase production to >305 Mtpa (100% basis) by the end of FY28
and sustain it over the medium term, with unit costs expected to decrease to
305 Mtpa (100% basis) Medium-term 305 Mtpa (100% basis) from Q4 FY28. CD6 is expected to offset the
production impact from planned major car dumper renewals beginning in FY29 and
also improve our ore blending and screening capability at the port.
Sustained production of >305 Mtpa (100% basis) over the medium term is
expected to be supported by increased rail operation capacity created by the
Rail Technology Programme (RTP1) and the Western Ridge Crusher project which
replaces production from the depleting orebodies around Newman (first
production Q1 FY27; capital intensity of US$38/t). We expect average annual
sustaining capital expenditure guidance over the medium term to be
~US$6.50/t,(( xvi (#_edn16) )) excluding costs associated with CD6,
operational decarbonisation and automation programs. Ministers North (expected
to utilise the existing Yandi infrastructure) remains on track for potential
FID in FY26.
With record material mined, improving rail and port infrastructure, and strong
resource optionality (via Ministers North and Jinidi), we have a potential
pathway to grow WAIO beyond 305 Mtpa (100% basis) should market conditions be
supportive.
We are also focused on unlocking high returning growth through innovative
partnerships. BHP has entered into an agreement with Rio Tinto to explore
opportunities to mine up to 200 Mt of iron ore from the shared tenure
boundary between BHP's Yandi and Rio Tinto's Yandicoogina mines that was
previously inaccessible. Subject to approvals and a final investment decision,
first ore is anticipated early next decade.
Samarco
Iron ore production Samarco settlement cash impact
4.0 Mt Up 48% US$1.0 bn
HY25 2.7 Mt(1) FY26e(2) ~US$2.2 bn
FY26e 7 - 7.5 Mt FY27e(2) ~US$0.6 bn
1 As of Q1 FY26, Samarco is reported on a dry metric tonne
(dmt) basis. Prior periods have been restated from wet metric tonne (wmt) to
dmt for consistency.
2 Payments will be made in Brazilian Reais. BHP Brasil's
expected payments up to FY28 have been hedged to protect against potential FX
volatility.
Performance
Samarco production increased 48% to 4.0 Mt (8.0 Mt on a 100% basis), as a
result of stronger performance at the second concentrator following ramp up,
and higher feed grades and recoveries.
Production guidance for FY26 remains unchanged between 7.0 and 7.5 Mt (14 and
15 Mt on a 100% basis), with production expected to be in the upper half of
the range and planned maintenance in the second half.
Financials
BHP has supported extensive remediation and compensation efforts in Brazil
since 2015. In October 2024, BHP Billiton Brasil Ltda (BHP Brasil) (a
subsidiary of BHP Group Limited), Vale S.A. (Vale) and Samarco Mineração
S.A. (Samarco) entered into a R$170 bn comprehensive agreement with Brazil
public authorities and public defenders for a full and final settlement of key
claims in Brazil in relation to the dam failure (Brazil Agreement).
Since 2015, BHP Brasil, Vale and Samarco have provided US$15.6 bn (100% basis)
for reparation and compensation to affected people and to Public Authorities
in Brazil. In total, compensation and financial aid have been paid to ~625,000
people who have received ~US$6.5 bn (100% basis). Additionally, remediation of
the environment affected by the dam failure is substantially complete and
resettlement of the communities of Novo Bento Rodrigues and Paracatu is ~99%
complete.
Samarco, BHP Brasil and Vale continue to implement the Brazil Agreement for
reparation of the impacts of the dam failure, including water sanitation, the
public health system, economic recovery, local infrastructure, collective
damages for affected Indigenous and Traditional Communities and Brazilian
Municipalities and income support for the most vulnerable people in the
affected regions.
Samarco has processed nearly all claims under the Definitive Indemnity Program
(PID), established as part of the Brazil Agreement, and had paid ~301,000
claims as at 31 December 2025.
The Samarco dam failure provision stands at US$5.3 bn as at 31 December 2025,
down from US$5.8 bn at 30 June 2025. This reflects the net impact of spend
over the year, depreciation of the BRL/USD, updates to our cost estimates to
reflect the Brazil Agreement, updates from the UK group action, and the
impacts of discounting.
For further information, please see Note (#_9.__) (#_9.__) 9 - Significant
events - Samarco dam failure (#_9.__) for the Samarco dam failure provision.
Coal
Production Commodity review and outlook - Steelmaking coal
Though lower against the same period last year, steelmaking coal prices
Steelmaking coal rebounded by 4% from H1 CY25 to H2 CY25, with Prime Low Volatile Hard Coking
Coal averaging US$192/t FOB. The recovery was supported by strong Indian coal
9.2 Mt Up 2% demand and reduced Chinese domestic coal production in H2 CY25.
HY25 8.9 Mt New blast furnace capacity additions in India and coke import restrictions
reinforced India's position as the largest seaborne steelmaking coal importer
FY26e 18 - 20 Mt and as the price setter in the global seaborne steelmaking coal market.
Chinese controls on domestic coal supply supported seaborne imports in H2
Energy coal CY25.
8.1 Mt Up 10% Australia's steelmaking coal exports in CY25 are estimated to have declined by
over 20% from the peak levels recorded in CY16. Recovery is slower than
HY25 7.4 Mt anticipated amidst years of underinvestment. US supply is expected to increase
as restarted/ramp-up capacity comes online. Metallurgical coal market
FY26e 14 - 16 Mt fundamentals are expected to remain broadly balanced over the next two years,
with demand growth driven by India and emerging Asian economies, met by
gradual supply recovery from Australia and the US. Chinese policy toward
domestic coal supply remains a key uncertainty for the market.
Average realised price
Over the longer term, we expect that high quality steelmaking coals, such as
Steelmaking coal those produced by BMA, will be valued for for their role in reducing the
greenhouse gas emission intensity of blast furnaces. In addition, we expect
US$188.58/t Down 9% robust hard coking coal imports from emerging economies such as India to lead
to growing and resilient demand for high quality steelmaking coal for decades.
HY25 US$206.37/t Queensland remains the major seaborne supplier. There is a risk of
increasingly constrained supply with coals of the highest quality becoming
Energy coal - export increasingly scarce overtime.
Segment outlook
US$95.76/t Down 23%
Over the last few years, we have strategically refined our coal portfolio to
focus on higher-quality steelmaking coal and BMA remains one of the largest
HY25 US$124.42/t suppliers of this higher-quality coal in the seaborne market. xvii (#_edn17)
To deliver on our medium-term operational targets at BMA, we are focused on
rebuilding raw coal inventory levels into CY27 and normalising strip ratios,
Underlying EBITDA while further improving labour and fleet productivity.
US$0.2 bn Down 60% At New South Wales Energy Coal (NSWEC) we are progressing with our plan to
cease mining by the end of FY30. We are focused on extracting value from the
HY25 US$0.6 bn asset, while also progressing studies on post mining land use, and supporting
the community as it prepares for closure of the operation.
1% contribution to the Group's Underlying EBITDA
9% Underlying EBITDA margin
Capital and exploration expenditure
US$0.2 bn
HY25 US$0.3 bn
FY26e ~US$0.5 bn
BMA
Steelmaking coal production Unit cost(1,2) Underlying EBITDA
9.2 Mt Up 2% US$128.19/t 0% US$0.3 bn Down 34%
HY25 8.9 Mt HY25 US$128.46/t HY25 US$0.4 bn
FY26e 36 - 40 Mt (100% basis) FY26e US$116 - US$128/t
Medium-term 43 - 45 Mtpa (100% basis) Medium-term 305(3) 284 - 296 - 146.6 1%
Samarco (Mt) 7.0 - 7.5 Upper half 4.0 48%
Steelmaking coal - BMA (Mt) 21.5 - 22.5 18 - 20 - 9.2 2%
BMA (100% basis) (Mt) 43 - 45 36 - 40 Lower half 18.3 2%
Energy coal - NSWEC (Mt) 14 - 16 Upper half 8.1 10%
1 Medium term refers to a five-year horizon unless otherwise
noted.
2 FY27 production guidance of 1,000 - 1,100 kt. Medium term refers
to an average for FY28 to FY31.
3 Sustained production of >305 Mtpa (100% basis) from Q4 FY28.
Historical unit costs and guidance for our major assets are summarised below:
Unit cost(1) Medium-term FY26 HY26 at guidance HY26 at HY25(3) HY26
guidance(2)
exchange rates(2)
realised
v HY25
guidance(2)
exchange rates(3)
Escondida (US$/lb)(4) 1.50 - 1.80 1.20 - 1.50 Bottom end 1.12 1.12 1.33 (16%)
Spence (US$/lb) 2.05 - 2.35 2.10 - 2.40 - 2.03 2.05 2.01 2%
Copper SA (US$/lb)(5) - 1.00 - 1.50 - 1.34 0.74 1.57 (53%)
WAIO (US$/t)(6) <17.50 18.25 - 19.75 - 19.08 19.41 18.19 7%
BMA (US$/t) <110 116 -128 Upper half 126.17 128.19 128.46 0%
1 Refer to Non-IFRS information (#_Non-IFRS_financial_information)
for detailed unit cost reconciliations and definitions.
2 FY26 and medium-term unit cost guidance are based on exchange
rates of AUD/USD 0.65 and USD/CLP 940.
3 Based on exchange rates of: HY26 AUD/USD 0.66 and USD/CLP 947
(realised); HY25 AUD/USD 0.66 and USD/CLP 947 (realised).
4 Medium-term refers to an average for FY27 - FY31.
5 FY26 unit cost guidance is based on prices for by-products of
gold US$2,900/oz, and uranium US$70/lb.
6 The breakdown of C1 unit costs, excluding third party royalties,
are detailed on page 12 (#_Western_Australia_Iron_4) .
Competent Person Statement: Vicuña Mineral Resources
Measured Resources Indicated Resources Inferred Resources Total Resources Contained Metal
Deposit Material type Mt Cu Au Ag Mt Cu Au Ag Mt Cu Au Ag Mt Cu Au Ag Cu Au Ag
%
g/t
g/t
%
g/t
g/t
%
g/t
g/t
%
g/t
g/t
kt
Moz
Moz
Filo del Sol Sulphide - - - - 1,730 0.46 0.34 6 8,720 0.34 0.18 3 10,500 0.36 0.21 3
Copper Oxide - - - - 467 0.32 0.27 3 431 0.23 0.20 2 898 0.28 0.24 2
Gold Oxide - - - - 301 - 0.25 3 711 - 0.18 3 1,010 - 0.20 3
Silver Oxide - - - - 71 0.36 0.36 120 95 0.08 0.14 35 166 0.20 0.23 71
Josemaria Sulphide 648 0.33 0.25 1 961 0.25 0.15 1 683 0.22 0.11 1 2,290 0.26 0.17 1
Total Vicuña 648 0.33 0.25 1 3,530 0.34 0.27 6 10,600 0.30 0.18 3 14,800 0.31 0.20 4 46,600 97 1,780
1 Mineral Resources are reported in situ and reported as at 31
December 2025.
2 Mineral Resources are reported on a 100% basis. The Project is a
50:50 joint venture between Lundin Mining and BHP Canada. BHP Canada's
attributable interest in the Mineral Resource estimate is 50%.
3 The Competent Person for the Filo del Sol estimates is Mr. Luke
Evans, M.Sc., P.Eng., an SLR Consulting (Canada) Ltd. employee. The Competent
Persons for the Josemaría estimate are Mr. Sean D. Horan, P.Geo., a Resource
Modelling Solutions Ltd. employee and Mr. Paul Daigle, P.Geo. a AGP Mining
Consultants Inc. employee.
4 Additional information is provided in the Technical Assessment
Report Vicuña Joint Venture.
Health, safety and social value((
1 (#_ftn1)
))
Key safety indicators
Target/Goal HY26 FY25 HY25
Fatalities Zero work-related fatalities 0 0 0
High-potential injury (HPI) frequency(( 2 (#_ftn2) )) Year-on-year improvement in HPI frequency 0.08 0.09 0.07
Total recordable injury frequency (TRIF)(2) Year-on-year improvement in TRIF 4.3 4.5 4.3
Social value: key indicators scorecard
Target/Goal HY26 FY25 HY25
Operational GHG emissions (MtCO(2)-e)(( 3 (#_ftn3) )) Reduce operational GHG emissions by at least 30% from FY20 levels by FY30 4.4 8.7 4.4
Value chain GHG emissions (Scope 3): Steelmaking: 2030 goal to support industry to develop steel production ✔ 171 ✔
technology capable of 30% lower GHG emissions intensity relative to
Committed funding in steelmaking partnerships and ventures to date (US$m) conventional blast furnace steelmaking, with widespread adoption expected
post-CY30
Value chain GHG emissions: Maritime transportation: 2030 goal to support 40% GHG emissions intensity 46.6 44 44
reduction of BHP-chartered shipping of BHP products
Reduction in GHG emissions intensity of BHP-chartered shipping of our products
from CY08 (%)(( 4 (#_ftn4) ))
Social investment (US$m BHP equity share) Voluntary investment focused on the six pillars of our social value framework 61.4 127.8 37.4
Indigenous procurement spend (US$m) Key metric for part of our 2030 Indigenous partnerships goal, to support the 490 853 452
delivery of mutually beneficial outcomes
Female representation 5 (#_ftn5) (%) Aspirational goal for gender balanced employee workforce(( 6 (#_ftn6) )) by 41.2 41.3 38.9
the end of CY25
Indigenous employee participation(5,( 7 (#_ftn7) )) (%) Australia: aim to achieve 9.7% by the end of FY27 9.0 9.0 8.6
Chile: aim to maintain 10.0% by the end of FY26 11.8 10.5 10.0
Canada: aim to achieve 20.0% by the end of FY26 21.4 17.8 10.4
Area under nature-positive management practices 8 (#_ftn8) (%) Create nature-positive(( 9 (#_ftn9) )) outcomes by having at least 30% of the 1.5 1.5 1.3
land and water we steward(( 10 (#_ftn10) )) under conservation, restoration
or regenerative practices. In doing so we focus on areas of highest ecosystem
value both within and outside our own operational footprint, in partnership
with Indigenous peoples and local communities.
The Financial Report (#_Contents) for the half year ended 31 December 2025 has
been prepared on the basis of accounting policies and methods of computation
consistent with those applied in the 30 June 2025 financial statements
contained within the Annual Report of the Group. This news release including
the Financial Report is unaudited. Variance analysis relates to the relative
financial and/or production performance of BHP and/or its operations during
the December 2025 half year compared with the December 2024 half year, unless
otherwise noted. Medium term refers to a five-year horizon, unless otherwise
noted. Numbers presented may not add up precisely to the totals provided due
to rounding.
The following abbreviations may have been used throughout this release: silver
(Ag); gold (Au); billion dollars (B/bn); billion troy ounces (Boz); billion
tonnes (Bt); cost and freight (CFR); cost, insurance and freight (CIF); carbon
dioxide equivalent (CO(2)-e); compound annual growth rate (CAGR); copper (Cu);
copper equivalent (CuEq); dry metric tonne unit (dmtu); final investment
decision (FID); free on board (FOB); foreign exchange (FX); greenhouse gas
(GHG); grams per tonne (g/t); high-potential injury (HPI); kilograms per tonne
(kg/t); kilometre (km); million troy ounces (Moz); million ounces per annum
(Mozpa); million pounds (Mlb); million tonnes (Mt); million tonnes per annum
(Mtpa); ounces (oz); OZ Minerals Ltd (OZL); pounds (lb); million dollars (M);
thousand ounces (koz); thousand ounces per annum (kozpa); thousand tonnes
(kt); thousand tonnes per annum (ktpa); thousand tonnes per day (ktpd); tonnes
(t); total recordable injury frequency (TRIF); uranium (U); uranium oxide
(U(3)O(8)); and wet metric tonnes (wmt).
Forward-looking statements
This release contains forward-looking statements, which involve risks and
uncertainties. Forward-looking statements include all statements, other than
statements of historical or present facts, including: statements regarding
trends in commodity prices and currency exchange rates; demand for
commodities; global market conditions, reserves and resources estimates;
development and production forecasts; guidance; expectations, plans,
strategies and objectives of management; climate scenarios; approval of
projects and consummation of transactions; closure, divestment, acquisition or
integration of certain assets, ventures, operations or facilities (including
associated costs or benefits); anticipated production or construction
commencement dates; capital costs and scheduling; operating costs and
availability of materials and skilled employees; anticipated productive lives
of projects, mines and facilities; the availability, implementation and
adoption of new technologies, including artificial intelligence; provisions
and contingent liabilities; and tax, legal and other regulatory developments.
Forward-looking statements may be identified by the use of terminology,
including, but not limited to, 'aim', 'ambition', 'anticipate', 'aspiration',
'believe', 'commit', 'continue', 'could', 'desire', 'ensure', 'estimate',
'expect', 'forecast', 'goal', 'guidance', 'intend', 'likely', 'may',
'milestone', 'must', 'need', 'objective', 'outlook', 'pathways', 'plan',
'project', 'schedule', 'seek', 'should', 'strategy', 'target', 'trend',
'will', 'would', or similar words. These statements discuss future
expectations or performance, or provide other forward-looking information.
Forward-looking statements are based on management's expectations and reflect
judgements, assumptions, estimates and other information available, as at the
date of this release. These statements do not represent guarantees or
predictions of future financial or operational performance, and involve known
and unknown risks, uncertainties and other factors, many of which are beyond
our control, and which may cause actual results to differ materially from
those expressed in the statements contained in this release. BHP cautions
against reliance on any forward-looking statements.
For example, our future revenues from our assets, projects or mines described
in this release will be based, in part, on the market price of the commodities
produced, which may vary significantly from current levels or those reflected
in our reserves and resources estimates. These variations, if materially
adverse, may affect the timing or the feasibility of the development of a
particular project, the expansion of certain facilities or mines, or the
continuation of existing assets.
Other factors that may affect our future operations and performance, including
the actual construction or production commencement dates, revenues, costs or
production output and anticipated lives of assets, mines or facilities include
our ability to profitably produce and deliver the products extracted to
applicable markets; the development and use of new technologies and related
risks; the impact of economic and geopolitical factors, including foreign
currency exchange rates on the market prices of the commodities we produce and
competition in the markets in which we operate; activities of government
authorities in or impacting the countries where we sell our products and in
the countries where we are exploring or developing projects, facilities or
mines, including increases in taxes and royalties or implementation or
expansion of trade or export restrictions; changes in environmental and other
regulations; political or geopolitical uncertainty and conflicts; labour
unrest; weather, climate variability or other manifestations of climate
change; and other factors identified in the risk factors discussed in OFR 11
in the Annual Report (https://www.bhp.com/AR2025_OFR11) and BHP's filings with
the U.S. Securities and Exchange Commission (the 'SEC') (including in Annual
Reports on Form 20-F) which are available on the SEC's website at www.sec.gov
(http://www.sec.gov) .
Except as required by applicable regulations or by law, BHP does not undertake
to publicly update or review any forward-looking statements, whether as a
result of new information or future events.
Past performance cannot be relied on as a guide to future performance.
Emissions and energy consumption data
Due to the inherent uncertainty and limitations in measuring greenhouse gas
(GHG) emissions and operational energy consumption under the calculation
methodologies used in the preparation of such data, all GHG emissions and
operational energy consumption data or references to GHG emissions and
operational energy consumption volumes (including ratios or percentages) in
this release are estimates. There may also be differences in the manner that
third parties calculate or report GHG emissions or operational energy
consumption data compared to BHP, which means third-party data may not be
comparable to our data. For information on how we calculate our GHG emissions,
refer to the BHP GHG Emissions Calculation Methodology 2025, available at
bhp.com (https://www.bhp.com) .
No offer of securities
Nothing in this release should be construed as either an offer, or a
solicitation of an offer, to buy or sell BHP securities in any jurisdiction,
or be treated or relied upon as a recommendation or advice by BHP.
Reliance on third party information
The views expressed in this release contain information that has been derived
from publicly available sources that have not been independently verified. No
representation or warranty is made as to the accuracy, completeness or
reliability of the information. This release should not be relied upon as a
recommendation or forecast by BHP.
No financial or investment advice - South Africa
BHP does not provide any financial or investment 'advice' as that term is
defined in the South African Financial Advisory and Intermediary Services Act,
37 of 2002, and we strongly recommend that you seek professional advice.
BHP and its subsidiaries
In this release, the terms 'BHP', the 'Company, the 'Group', 'BHP Group', 'our
business', 'organisation', 'we', 'us', 'our' and ourselves' refer to BHP Group
Limited and, except where the context otherwise requires, our subsidiaries.
Refer to Note 28 - Subsidiaries (https://www.bhp.com/AR2025_Note28) of the
Financial Statements in the 2025 Annual Report
(https://www.bhp.com/-/media/Documents/Investors/Annual-Reports/2025/250819_bhpannualreport2025)
for a list of our significant subsidiaries. Those terms do not include
non-operated assets. Our non-operated assets include Antamina, Resolution,
Samarco and Vicuña.
This release covers BHP's functions and assets (including those under
exploration, projects in development or execution phases, sites and operations
that are closed or in the closure phase) that have been wholly owned and
operated by BHP or that have been owned as a BHP-operated joint venture(1)
(referred to in this release as 'operated assets' or 'operations') during the
period from 1 July 2025 to 31 December 2025 unless otherwise stated.
BHP also holds interests in assets that are owned as a joint venture but not
operated by BHP (referred to in this release as 'non-operated joint ventures'
or 'non-operated assets'). Notwithstanding that this release may include
production, financial and other information from non-operated assets,
non-operated assets are not included in the BHP Group and, as a result,
statements regarding our operations, assets and values apply only to our
operated assets unless stated otherwise.
1 References in this release to a 'joint venture' are used for
convenience to collectively describe assets that are not wholly owned by BHP.
Such references are not intended to characterise the legal relationship
between the owners of the asset.
BHP | Financial results for the half year ended 31 December 2025
Authorised for lodgement by:
The Board of BHP Group Limited
Contacts
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BHP Group Limited
ABN 49 004 028 077
LEI WZE1WSENV6JSZFK0JC28
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BHP Group is headquartered in Australia
bhp.com
Financial Report
Half year ended
31 December 2025
Contents
Half Year Financial Statements
Page
Consolidated Income Statement for the half year ended 31 December 2025
30
Consolidated Statement of Comprehensive Income for the half year ended 31
December 2025 30
Consolidated Balance Sheet as at 31 December 2025
31
Consolidated Cash Flow Statement for the half year ended 31 December 2025
32
Consolidated Statement of Changes in Equity for the half year ended 31
December 2025 33
Notes to the Financial Statements
34
1. Basis of preparation
2. Exceptional items
3. Interests in associates and joint venture entities
4. Net finance costs
5. Income tax expense
6. Earnings per share
7. Dividends
8. Financial risk management - Fair values
9. Significant events - Samarco dam failure
10. Subsequent events
Directors' Report
51
Directors' Declaration of Responsibility
53
Auditor's Independence Declaration to the Directors of BHP Group Limited
54
Independent Review Report
55
Consolidated Income Statement for the half year ended 31 December 2025
Notes Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Revenue 27,902 25,176 51,262
Other income 213 222 368
Expenses excluding net finance costs (16,075) (16,367) (32,319)
Profit/(loss) from equity accounted investments, related impairments and 3 220 95 153
expenses
Profit from operations 12,260 9,126 19,464
Financial expenses (973) (779) (1,771)
Financial income 268 322 660
Net finance costs 4 (705) (457) (1,111)
Profit before taxation 11,555 8,669 18,353
Income tax expense (3,799) (2,904) (6,130)
Royalty-related taxation (net of income tax benefit) (632) (480) (1,080)
Total taxation expense 5 (4,431) (3,384) (7,210)
Profit after taxation 7,124 5,285 11,143
Attributable to non-controlling interests 1,484 869 2,124
Attributable to BHP shareholders 5,640 4,416 9,019
Basic earnings per ordinary share (cents) 6 111.1 87.1 177.8
Diluted earnings per ordinary share (cents) 6 110.8 86.9 177.4
The accompanying notes form part of this half year Financial Report.
Consolidated Statement of Comprehensive Income for the half year ended 31 December 2025
Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Profit after taxation 7,124 5,285 11,143
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Hedges:
(Losses)/gains taken to equity (47) (88) 346
(Gains)/losses transferred to the income statement (6) 33 (392)
Tax recognised within other comprehensive income 16 16 14
Total items that may be reclassified subsequently to the income statement (37) (39) (32)
Items that will not be reclassified to the income statement:
Re-measurement gains/(losses) on pension and medical schemes 1 (6) (8)
Equity investments held at fair value 37 17 23
Tax recognised within other comprehensive income − 1 3
Total items that will not be reclassified to the income statement 38 12 18
Total other comprehensive income/(loss) 1 (27) (14)
Total comprehensive income 7,125 5,258 11,129
Attributable to non-controlling interests 1,484 869 2,119
Attributable to BHP shareholders 5,641 4,389 9,010
The accompanying notes form part of this half year Financial Report.
Consolidated Balance Sheet as at 31 December 2025
31 Dec 2025 30 June 2025
US$M US$M
ASSETS
Current assets
Cash and cash equivalents 13,466 11,894
Trade and other receivables 5,452 4,116
Other financial assets 607 561
Inventories 5,817 5,538
Current tax assets 419 545
Other 167 176
Total current assets 25,928 22,830
Non-current assets
Trade and other receivables 104 137
Other financial assets 1,116 1,122
Inventories 1,833 1,440
Property, plant and equipment 79,851 76,457
Intangible assets 2,012 1,924
Investments accounted for using the equity method 4,292 4,107
Deferred tax assets 74 78
Other 802 695
Total non-current assets 90,084 85,960
Total assets 116,012 108,790
LIABILITIES
Current liabilities
Trade and other payables 6,288 6,637
Interest bearing liabilities 3,431 2,018
Other financial liabilities 462 214
Current tax payable 1,330 900
Provisions 4,200 5,823
Deferred income 15 47
Total current liabilities 15,726 15,639
Non-current liabilities
Trade and other payables 37 33
Interest bearing liabilities 24,590 22,478
Other financial liabilities 1,412 1,364
Non-current tax payable 3 3
Deferred tax liabilities 3,755 3,506
Provisions 14,973 13,498
Deferred income 51 51
Total non-current liabilities 44,821 40,933
Total liabilities 60,547 56,572
Net assets 55,465 52,218
EQUITY
Share capital 5,093 5,015
Treasury shares (32) (18)
Reserves 91 (2)
Retained earnings 45,255 42,670
Total equity attributable to BHP shareholders 50,407 47,665
Non-controlling interests 5,058 4,553
Total equity 55,465 52,218
The accompanying notes form part of this half year Financial Report.
Consolidated Cash Flow Statement for the half year ended 31 December 2025
Notes Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Operating activities
Profit before taxation 11,555 8,669 18,353
Adjustments for:
Depreciation and amortisation expense 2,920 2,648 5,540
Net impairment/(reversal of impairment) of property, plant and equipment, 22 (56) 108
financial assets and intangibles
Net finance costs 705 457 1,111
(Profit)/loss from equity accounted investments, related impairments and (220) (95) (153)
expenses
Other 406 325 831
Changes in assets and liabilities:
Trade and other receivables (1,331) 576 776
Inventories (672) 197 64
Trade and other payables (65) (214) (116)
Provisions and other assets and liabilities (276) (733) (249)
Cash generated from operations 13,044 11,774 26,265
Dividends received 339 233 375
Interest received 237 265 608
Interest paid (814) (779) (1,478)
Proceeds from cash management related instruments 186 261 195
Net income tax and royalty-related taxation refunded 42 95 448
Net income tax and royalty-related taxation paid (3,662) (3,532) (7,721)
Net operating cash flows 9,372 8,317 18,692
Investing activities
Purchases of property, plant and equipment (5,070) (5,006) (9,398)
Exploration and evaluation expenditure (193) (199) (396)
Exploration and evaluation expenditure expensed and included in operating cash 167 174 346
flows
Net investment and funding of equity accounted investments (1,281) (679) (3,984)
Proceeds from sale of assets 75 55 127
Proceeds from sale of subsidiaries, operations and joint operations, net of 87 285 535
their cash
Other investing (251) (299) (580)
Net investing cash flows (6,466) (5,669) (13,350)
Financing activities
Proceeds from interest bearing liabilities 3,107 1,150 4,129
Settlements of debt related instruments − (147) (147)
Repayment of interest bearing liabilities (488) (1,311) (1,675)
Distributions to non-controlling interests − − (2)
Dividends paid (3,080) (3,865) (6,403)
Dividends paid to non-controlling interests (989) (1,097) (1,873)
Net financing cash flows (1,450) (5,270) (5,971)
Net increase/(decrease) in cash and cash equivalents 1,456 (2,622) (629)
Cash and cash equivalents, net of overdrafts, at the beginning of the period 11,893 12,498 12,498
Foreign currency exchange rate changes on cash and cash equivalents 117 (317) 24
Cash and cash equivalents, net of overdrafts, at the end of the period 13,466 9,559 11,893
The accompanying notes form part of this half year Financial Report.
Consolidated Statement of Changes in Equity for the half year ended 31 December 2025
Attributable to BHP shareholders
US$M Share capital Treasury shares Reserves Retained Total equity Non- Total
earnings attributable controlling equity
to BHP interests
shareholders
Balance as at 1 July 2025 5,015 (18) (2) 42,670 47,665 4,553 52,218
Total comprehensive income − − − 5,641 5,641 1,484 7,125
Transactions with owners:
Shares issued(1) 78 (78) − − − − −
Employee share awards exercised net of employee contributions net of tax − 64 (56) (8) − − −
Accrued employee entitlement for unexercised awards net of tax − − 83 − 83 − 83
Dividends − − − (3,048) (3,048) (989) (4,037)
Equity contributed net of tax − − 66 − 66 10 76
Balance as at 31 December 2025 5,093 (32) 91 45,255 50,407 5,058 55,465
Balance as at 1 July 2024 4,899 (36) (15) 39,963 44,811 4,309 49,120
Total comprehensive income − − (22) 4,411 4,389 869 5,258
Transactions with owners:
Shares issued(1) 65 (65) − − − − −
Employee share awards exercised net of employee contributions net of tax − 76 (63) (13) − − −
Accrued employee entitlement for unexercised awards net of tax − − 65 − 65 − 65
Dividends − − − (3,749) (3,749) (1,097) (4,846)
Balance as at 31 December 2024 4,964 (25) (35) 40,612 45,516 4,081 49,597
1 During the period, BHP Group Limited issued 2,920,940 fully paid
ordinary shares to the BHP Group Limited Employee Equity Trust and to Solium
Nominees (Australia) Pty Ltd at A$41.47 per share (31 December 2024: 2,370,371
fully paid ordinary shares at A$40.84 per share), to satisfy the vesting of
employee share awards and related dividend equivalent entitlements under those
employee share plans.
The accompanying notes form part of this half year Financial Report.
Notes to the Financial Statements
1. Basis of preparation
This general purpose Financial Report for the half year ended 31 December 2025
is unaudited and has been prepared in accordance with IAS 34 'Interim
Financial Reporting' as issued by the International Accounting Standards Board
(IASB) and AASB 134 'Interim Financial Reporting' as issued by the Australian
Accounting Standards Board (AASB) and the Australian Corporations Act 2001 as
applicable to interim financial reporting. The general purpose Financial
Report for the half year ended 31 December 2025 does not include all of the
notes of the type normally included in an annual report. Accordingly, this
report should be read in conjunction with the annual consolidated Financial
Statements for the year ended 30 June 2025 and any public announcements made
by the Group in accordance with the continuous disclosure obligations of the
ASX Listing Rules.
Segment Reporting disclosures from IAS 34/AASB 134 'Interim Financial
Reporting' have been disclosed within the Financial performance summary on
pages 19 and 20 outside of this Financial Report.
The half year Financial Statements have been prepared on a basis of accounting
policies and methods of computation consistent with those applied in the 30
June 2025 annual consolidated Financial Statements contained within the Annual
Report of the Group, with the exception of an amended accounting standard that
became effective for the Group from 1 July 2025. The adoption of this amended
accounting standard has not had a significant impact on the Group. A number of
accounting standards and interpretations have been issued and will be
applicable in future periods. These standards have not been applied in the
preparation of these half year Financial Statements.
All amounts are expressed in US dollars unless otherwise stated. The Group's
presentation currency and the functional currency of the majority of its
operations is US dollars as this is the principal currency of the economic
environment in which it operates. Amounts in this Financial Report have,
unless otherwise indicated, been rounded to the nearest million dollars.
The Directors have assessed the Group's ability to continue as a going concern
for the 12 months from the date of this report and consider it appropriate to
adopt the going concern basis of accounting in preparing the half year
Financial Statements.
2. Exceptional items
Exceptional items are those gains or losses where their nature, including the
expected frequency of the events giving rise to them, and impact is considered
material to the Financial Statements. Such items included within the Group's
profit for the half year are detailed below.
Half year ended 31 December 2025 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Samarco dam failure (562) − (562)
Total (562) − (562)
Attributable to non-controlling interests − − −
Attributable to BHP shareholders (562) − (562)
Samarco Mineração S.A. (Samarco) dam failure
The loss of US$562 million (after tax) relates to the Samarco dam failure,
which occurred in November 2015, and comprises the following:
Half year ended 31 December 2025 US$M
Other income 64
Expenses excluding net finance costs:
Costs incurred directly by BHP Brasil and other BHP entities in relation to (128)
the Samarco dam failure
Profit/(loss) from equity accounted investments, related impairments and
expenses:
Samarco dam failure provision (345)
Fair value change on forward exchange derivatives 149
Net finance costs (302)
Income tax expense −
Total(1) (562)
1 Refer to note 9 'Significant events - Samarco dam failure' for
further information.
The exceptional items relating to the half year ended 31 December 2024 and the
year ended 30 June 2025 are detailed below.
Half year ended 31 December 2024 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Samarco dam failure (442) − (442)
Western Australia Nickel (WAN) temporary suspension (320) 96 (224)
Total (762) 96 (666)
Attributable to non-controlling interests − − −
Attributable to BHP shareholders (762) 96 (666)
Year ended 30 June 2025 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Samarco dam failure (914) − (914)
Western Australia Nickel (WAN) temporary suspension (320) 96 (224)
Total (1,234) 96 (1,138)
Attributable to non-controlling interests − − −
Attributable to BHP shareholders (1,234) 96 (1,138)
3. Interests in associates and joint venture entities
The Group's major shareholdings in associates and joint venture entities,
including their profit/(loss), are listed below:
Ownership interest at the Group's reporting date Profit/(loss) from equity accounted investments, related impairments and
expenses
31 Dec 31 Dec 30 June Half year ended Half year ended Year ended
2025 2024 2025 31 Dec 2025 31 Dec 2024 30 June 2025
% % % US$M US$M US$M
Share of profit/(loss) of equity accounted investments:
Compañia Minera Antamina S.A. 33.75 33.75 33.75 459 264 538
Samarco Mineração S.A.(1) 50.00 50.00 50.00 − − −
Vicuña Corp(2) 50.00 − 50.00 (3) − 1
Other (40) (49) (141)
Share of profit of equity accounted investments 416 215 398
Samarco dam failure provision(1) (345) 194 (659)
Fair value change on forward exchange derivatives(1) 149 (314) 414
Profit/(loss) from equity accounted investments, related impairments and 220 95 153
expenses
1 Refer to note 9 'Significant events - Samarco dam failure' for
further information.
2 On the 15 January 2025, BHP Investments Canada Inc. (BHP Canada)
and Lundin Mining Corporation (Lundin Mining) completed the acquisition of
Filo Corp., a Toronto Stock Exchange listed company. Filo Corp. owns 100% of
the Filo del Sol (FDS) copper deposit. Prior to completion, Lundin Mining
owned 100% of the Josemaria copper deposit located in the Vicuña district of
Argentina and Chile. At completion, BHP Canada acquired a 50% interest in the
Josemaria copper deposit from Lundin Mining. BHP Canada and Lundin Mining
formed the Canadian based company, Vicuña Corp. and contributed their
respective 50% interests in Filo Corp. and the Josemaria copper deposit. BHP
Canada and Lundin Mining each own 50% of Vicuña Corp and share joint control.
4. Net finance costs
Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Financial expenses
Interest expense using the effective interest rate method:
Interest on bank loans, overdrafts and all other borrowings 727 667 1,325
Interest capitalised at 5.47% (31 December 2024: 6.31%; 30 June 2025: (400) (287) (595)
5.97%)(1)
Interest on lease liabilities 96 86 169
Discounting on provisions and other liabilities 591 457 975
Other gains and losses:
Fair value change on hedged loans (119) (90) 263
Fair value change on hedging derivatives 83 17 (290)
Exchange variations on net debt (5) (71) (94)
Other − − 18
Total financial expenses 973 779 1,771
Financial income
Interest income (249) (322) (603)
Other (19) − (57)
Total financial income (268) (322) (660)
Net finance costs 705 457 1,111
1 Interest has been capitalised at the rate of interest applicable
to the specific borrowings financing the assets under construction or, where
financed through general borrowings, at a capitalisation rate representing the
average interest rate on such borrowings.
5. Income tax expense
Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Total taxation expense comprises:
Current tax expense 4,147 3,155 7,033
Deferred tax expense 284 229 177
Total taxation expense 4,431 3,384 7,210
Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Factors affecting income tax expense for the year
Income tax expense differs to the standard rate of corporation tax as follows:
Profit before taxation 11,555 8,669 18,353
Tax on profit at Australian prima facie tax rate of 30 per cent 3,467 2,601 5,506
Derecognition of deferred tax assets and current year tax losses 661 578 1,036
Tax on remitted and unremitted foreign earnings 232 154 354
Amounts under/(over) provided in prior years 8 45 (57)
Foreign exchange adjustments (7) 48 21
Tax effect of profit/(loss) from equity accounted investments, related (21) (123) 78
impairments and expenses(1)
Recognition of previously unrecognised tax assets (60) (96) (127)
Impact of tax rates applicable outside of Australia (730) (505) (1,132)
Other(2) 249 202 451
Income tax expense 3,799 2,904 6,130
Royalty-related taxation (net of income tax benefit) 632 480 1,080
Total taxation expense 4,431 3,384 7,210
1 This item removes the prima facie tax effect on profit/(loss)
from equity accounted investments, related impairments and expenses that are
net of tax, with the exception of the Samarco forward exchange derivatives
described in note 9 'Significant events - Samarco dam failure', which are
taxable.
2 Includes current tax expense related to Pillar Two income taxes
of US$13 million (31 December 2024: US$1 million; 30 June 2025: US$1 million).
International Tax Reform - Pillar Two Model Rules
The Group has a presence in jurisdictions that have enacted or substantively
enacted legislation in relation to the OECD/G20 BEPS Pillar Two model rules,
including Australia, where its ultimate parent entity is a tax resident. This
effectively brings all jurisdictions in which the Group has a presence into
the scope of the rules.
The temporary exception to recognising and disclosing information about
deferred tax assets and liabilities related to Pillar Two income taxes has
been applied at 31 December 2025.
The Group continues to monitor and evaluate the domestic implementation of the
Pillar Two rules in the jurisdictions in which it operates. The implementation
of legislation that is enacted or substantively enacted but not yet in effect
is not expected to have a material impact on the Group's global effective tax
rate.
6. Earnings per share
Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Earnings attributable to BHP shareholders (US$M)(1) 5,640 4,416 9,019
Weighted average number of shares (Million)
- Basic(2) 5,077 5,072 5,073
- Diluted(3) 5,089 5,083 5,083
Earnings per ordinary share (US cents)(4)
- Basic 111.1 87.1 177.8
- Diluted 110.8 86.9 177.4
Headline earnings per ordinary share (US cents)(5)
- Basic 112.0 86.3 182.4
- Diluted 111.8 86.1 182.0
1 Diluted earnings attributable to BHP shareholders are equal to
earnings attributable to BHP shareholders.
2 The calculation of the number of ordinary shares used in the
computation of basic earnings per share is the weighted average number of
ordinary shares of BHP Group Limited outstanding during the period after
deduction of the number of shares held by the BHP Group Limited Employee
Equity Trust.
3 For the purposes of calculating diluted earnings per share, the
effect of 12 million dilutive shares has been taken into account for the half
year ended 31 December 2025 (31 December 2024: 11 million shares; 30 June
2025: 10 million shares). The Group's only potential dilutive ordinary shares
are share awards granted under employee share ownership plans. Diluted
earnings per share calculation excludes instruments which are considered
antidilutive.
At 31 December 2025, there are no instruments which are considered
antidilutive (31 December 2024: nil; 30 June 2025: nil).
4 Each American Depositary Share (ADS) represents twice the
earnings for BHP Group Limited ordinary share.
5 Headline earnings is a Johannesburg Stock Exchange defined
performance measure and is reconciled from earnings attributable to ordinary
shareholders as follows:
Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Earnings attributable to BHP shareholders 5,640 4,416 9,019
Adjusted for:
Loss/(gain) on sales of property, plant and equipment, intangibles and 5 (5) (3)
investments
Net impairment/(reversal of impairment) of property, plant and equipment and 22 (56) 154
intangibles
Loss on disposal of subsidiaries and operations 29 2 117
Tax effect of above adjustments (8) 18 (34)
Subtotal of adjustments 48 (41) 234
Headline earnings 5,688 4,375 9,253
Diluted headline earnings 5,688 4,375 9,253
7. Dividends
Half year ended Half year ended Year ended
31 Dec 2025 31 Dec 2024 30 June 2025
Per share Total Per share Total Per share Total
US cents US$M US cents US$M US cents US$M
Dividends paid during the period
Prior year final dividend 60 3,048 74 3,749 74 3,749
Interim dividend N/A − N/A − 50 2,537
60 3,048 74 3,749 124 6,286
Dividends paid during the period differs from the amount of dividends paid in
the Consolidated Cash Flow Statement as a result of foreign exchange gains and
losses between the record date and the payment date of equity distributions.
Proceeds of US$31 million were received on derivative instruments as part of
the funding of the dividend paid during the period and disclosed in 'Proceeds
from cash management related instruments' in the Consolidated Cash Flow
Statement.
Each American Depositary Share (ADS) represents two ordinary shares of BHP
Group Limited. Dividends determined on each ADS represent twice the dividend
determined on each BHP Group Limited ordinary share.
Dividends are determined after period-end and announced with the results for
the period. Interim dividends are determined in February and paid in March.
Final dividends are determined in August and paid in September or October.
Dividends determined are not recorded as a liability at the end of the period
to which they relate. Subsequent to the half year, on 17 February 2026, BHP
Group Limited determined an interim ordinary dividend of 73 US cents per share
(US$ 3,707 million), which will be paid on 26 March 2026 (31 December 2024:
interim dividend of 50 US cents per share - US$2,537 million; 30 June 2025:
final dividend of 60 US cents per share - US$3,045 million).
BHP Group Limited dividends for all periods presented are, or will be, fully
franked based on a tax rate of 30 per cent.
8. Financial risk management - Fair values
Recognition and measurement
All financial assets and liabilities, other than derivatives and trade
receivables, are initially recognised at the fair value of consideration paid
or received, net of transaction costs as appropriate. Financial assets are
initially recognised on their trade date.
Financial assets are subsequently carried at fair value or amortised cost
based on:
· the Group's purpose, or business model, for holding the financial
asset;
· whether the financial asset's contractual terms give rise to cash
flows that are solely payments of principal and interest.
The resulting Financial Statements classifications of financial assets can be
summarised as follows:
Contractual cash flows Business model Category
Solely principal and interest Hold in order to collect contractual cash flows Amortised cost
Solely principal and interest Hold in order to collect contractual cash flows and sell Fair value through other comprehensive income
Solely principal and interest Hold in order to sell Fair value through profit or loss
Other Any of those mentioned above Fair value through profit or loss
Solely principal and interest refers to the Group receiving returns only for
the time value of money and the credit risk of the counterparty for financial
assets held. The main exceptions for the Group are provisionally priced
receivables and derivatives which are measured at fair value through profit or
loss under IFRS 9/AASB 9 'Financial Instruments'.
The Group has the intention of collecting payment directly from its customers
in most cases, however the Group also participates in receivables financing
programs in respect of selected customers. Receivables in these portfolios
which are classified as 'hold in order to sell', are provisionally
priced receivables and are therefore held at fair value through profit or
loss prior to sale to the financial institution.
With the exception of derivative contracts and provisionally priced trade
payables which are carried at fair value through profit or loss, the Group's
financial liabilities are classified as subsequently measured at amortised
cost.
The Group may in addition elect to designate certain financial assets or
liabilities at fair value through profit or loss or to apply hedge accounting
where they are not mandatorily held at fair value through profit or loss.
Fair value measurement
The carrying amount of financial assets and liabilities measured at fair value
is principally calculated based on inputs other than quoted prices that are
observable for these financial assets or liabilities, either directly (i.e. as
unquoted prices) or indirectly (i.e. derived from prices). Where no price
information is available from a quoted market source, alternative market
mechanisms or recent comparable transactions, fair value is estimated based on
the Group's views on relevant future prices, net of valuation allowances to
accommodate liquidity, modelling and other risks implicit in such estimates.
The inputs used in fair value calculations are determined by the relevant
segment or function. The functions support the assets and operate under a
defined set of accountabilities authorised by the Executive Leadership Team.
Movements in the fair value of financial assets and liabilities may be
recognised through the income statement or in other comprehensive income
according to the designation of the underlying instrument.
For financial assets and liabilities carried at fair value, the Group uses the
following to categorise the inputs to the valuation method used based on the
lowest level input that is significant to the fair value measurement as a
whole:
IFRS 13 Fair value hierarchy Level 1 Level 2 Level 3
Valuation inputs Based on quoted prices (unadjusted) in active markets for identical financial Based on inputs other than quoted prices included within Level 1 that are Based on inputs not observable in the market using appropriate valuation
assets and liabilities. observable for the financial asset or liability, either directly (i.e. as models, including discounted cash flow modelling.
unquoted prices) or indirectly (i.e. derived from prices).
Financial assets and liabilities
The financial assets and liabilities are presented by class in the table below
at their carrying amounts.
IFRS 13 Fair value hierarchy Level(1) IFRS 9 Classification 31 Dec 2025 30 June 2025
US$M US$M
Current cross currency and interest rate swaps(2) 2 Fair value through profit or loss 29 13
Current other derivative contracts(3) 2,3 Fair value through profit or loss 229 275
Current other financial assets(4) 3 Fair value through profit or loss 60 −
Current other financial assets(5) Amortised cost 246 236
Current other investments(6) 1,2 Fair value through profit or loss 43 37
Non-current cross currency and interest rate swaps(2) 2 Fair value through profit or loss 424 448
Non-current other derivative contracts(3) 2,3 Fair value through profit or loss 186 158
Non-current other financial assets(4) 3 Fair value through profit or loss 113 122
Non-current other financial assets(5,7) Amortised cost 199 191
Non-current investment in shares 1,3 Fair value through other comprehensive income 101 64
Non-current other investments(6) 1,2 Fair value through profit or loss 93 139
Total other financial assets 1,723 1,683
Cash and cash equivalents Amortised cost 13,466 11,894
Trade and other receivables(8) Amortised cost 1,110 1,195
Provisionally priced trade receivables 2 Fair value through profit or loss 3,989 2,581
Total financial assets 20,288 17,353
Non-financial assets 95,724 91,437
Total assets 116,012 108,790
Current other derivative contracts 2 Fair value through profit or loss 381 130
Current other financial liabilities(9) Amortised cost 81 84
Non-current cross currency and interest rate swaps(2) 2 Fair value through profit or loss 1,175 1,056
Non-current other financial liabilities(9) Amortised cost 237 308
Total other financial liabilities 1,874 1,578
Trade and other payables(10) Amortised cost 5,627 6,087
Provisionally priced trade payables 2 Fair value through profit or loss 626 493
Bank overdrafts and short-term borrowings(11) Amortised cost − 1
Bank loans(11) Amortised cost 3,717 3,731
Notes and debentures(11) Amortised cost 20,642 17,653
Lease liabilities(12) 3,510 2,953
Other(11) Amortised cost 152 158
Total financial liabilities 36,148 32,654
Non-financial liabilities 24,399 23,918
Total liabilities 60,547 56,572
1 All of the Group's financial assets and financial liabilities
recognised at fair value were valued using market observable inputs
categorised as Level 2 unless specified otherwise in the following footnotes.
2 Cross currency and interest rate swaps are valued using market
data including interest rate curves and foreign exchange rates. A discounted
cash flow approach is used to derive the fair value of cross currency and
interest rate swaps at the reporting date.
3 Includes net other derivative assets of US$40 million related to
power purchase contract agreements that are categorised as Level 3 (30 June
2025: US$37 million).
4 Includes receivables contingent on future realised coal price of
US$101 million (30 June 2025: US$122 million). A 10 per cent change in the
coal realised price used in the valuation model, with all other factors held
constant, would increase or decrease profit after taxation by approximately
US$60 million.
5 Includes deferred consideration of US$292 million in relation to
the divestment of the Blackwater and Daunia mines (30 June 2025: US$280
million).
6 Includes investments held by BHP Foundation which are restricted
and not available for general use by the Group of US$136 million (30 June
2025: US$176 million) of which other investments (mainly US Treasury Notes) of
US$67 million is categorised as Level 1 (30 June 2025: US$105 million).
7 Includes Senior notes of US$153 million (30 June 2025: US$147
million) relating to Samarco with a maturity date of 30 June 2031. Refer to
note 9 'Significant events - Samarco dam failure' for further information.
8 Excludes input taxes of US$457 million (30 June 2025: US$477
million) included in other receivables.
9 Includes the discounted settlement liability in relation to the
cancellation of power contracts at the Group's Escondida operations.
10 Excludes input taxes of US$72 million (30 June 2025: US$90 million)
included in other payables.
11 All interest bearing liabilities, excluding lease liabilities, are
unsecured.
12 Lease liabilities are measured in accordance with IFRS 16/AASB 16
'Leases'.
The carrying amounts in the table above generally approximate to fair value.
In the case of US$520 million (30 June 2025: US$525 million) of fixed rate
debt not swapped to floating rate, the fair value at 31 December 2025 was
US$541 million (30 June 2025: US$541 million). The fair value is determined
using a method that can be categorised as Level 2 and uses inputs based on
benchmark interest rates, alternative market mechanisms or recent comparable
transactions.
For financial instruments that are carried at fair value on a recurring basis,
the Group determines whether transfers have occurred between levels in the
fair value hierarchy by reassessing categorisation at the end of each
reporting period. There were no transfers between categories during the
period.
9. Significant events - Samarco dam failure
As a result of the Samarco dam failure on 5 November 2015, BHP Billiton Brasil
Ltda (BHP Brasil) and other Group entities continue to incur costs and
maintain liabilities for future costs. The information presented in this note
should be read in conjunction with section 7 'Samarco', Financial Statements
note 4 'Significant events - Samarco dam failure' and Additional Information
section 8 'Legal proceedings' in the 30 June 2025 Annual Report.
The financial impacts of the Samarco dam failure on the Group's income
statement, balance sheet and cash flow statement for the half year ended 31
December 2025 are shown below and have been treated as an exceptional item.
Financial impacts of Samarco dam failure Half year Half year Year
ended ended ended
31 Dec 31 Dec 30 June
2025 2024 2025
US$M US$M US$M
Income statement
Other income(1) 64 − −
Expenses excluding net finance costs:
Costs incurred directly by BHP Brasil and other BHP entities in relation to (128) (114) (211)
the Samarco dam failure(2)
Profit/(loss) from equity accounted investments, related impairments and
expenses:
Samarco dam failure provision(3) (345) 194 (659)
Fair value change on forward exchange derivatives(4) 149 (314) 414
Loss from operations (260) (234) (456)
Net finance costs(5) (302) (208) (458)
Loss before taxation (562) (442) (914)
Income tax expense − − −
Loss after taxation (562) (442) (914)
Balance sheet movement
Other financial assets/(liabilities)(6) 33 (272) 441
Trade and other receivables 26 − −
Trade and other payables (43) (1) 29
Tax liabilities − − −
Provisions 503 623 656
Net decrease in liabilities 519 350 1,126
Half year ended Half year ended Year ended
31 Dec 2025 31 Dec 2024 30 June 2025
US$M US$M US$M
Cash flow statement
Loss before taxation (562) (442) (914)
Adjustments for:
Samarco dam failure provision(3) 345 (194) 659
Fair value change on forward exchange derivatives(4) (149) 314 (414)
Proceeds from/(settlement of) cash management related instruments 122 (37) (17)
Net finance costs(5) 302 208 458
Changes in assets and liabilities:
Trade and other receivables (26) − −
Trade and other payables 43 1 (29)
Net operating cash flows 75 (150) (257)
Net investment and funding of equity accounted investments(7) (1,150) (637) (1,773)
Net investing cash flows (1,150) (637) (1,773)
Net decrease in cash and cash equivalents (1,075) (787) (2,030)
1 Proceeds from insurance settlements.
2 Includes legal and advisor costs incurred.
3 US$407 million (31 December 2024: US$440 million; 30 June 2025:
US$540 million) change in estimate and US$(62) million (31 December 2024:
US$(634) million; 30 June 2025: US$119 million) exchange translation.
4 The Group enters into forward exchange contracts to limit the
Brazilian reais exposure on the dam failure provision. While not applying
hedge accounting, the fair value changes in the forward exchange instruments
are recorded within Profit/(loss) from equity accounted investments, related
impairments and expenses in the Income Statement.
5 Amortisation of discounting of provision.
6 Includes forward exchange contracts described in 4 above, and
Senior notes issued by Samarco as part of its Judicial Reorganisation in
September 2023.
7 Includes US$(1,150) million utilisation of the Samarco dam
failure provision including payments under the Brazil Settlement Agreement
ratified on 6 November 2024 (31 December 2024: US$(637) million; 30 June 2025:
US$(1,773) million).
Equity accounted investment in Samarco
BHP Brasil's investment in Samarco remains at US$ nil. No dividends have been
received by BHP Brasil from Samarco during the period and Samarco currently
does not have profits available for distribution.
Provision related to the Samarco dam failure
31 Dec 2025 30 June 2025
US$M US$M
At the beginning of the reporting period 5,849 6,505
Movement in provision (503) (656)
Comprising:
Utilised (1,150) (1,773)
Adjustments charged to the income statement:
Change in cost estimate 407 540
Amortisation of discounting impacting net finance costs 302 458
Exchange translation (62) 119
At the end of the reporting period 5,346 5,849
Comprising:
Current 1,589 2,958
Non-current 3,757 2,891
At the end of the reporting period 5,346 5,849
Samarco dam failure provision and contingencies
As at 31 December 2025, the Group has identified provisions, financial
liabilities and certain contingent liabilities arising as a consequence of the
Samarco dam failure. The provisions reflects the future cost estimates
associated with the obligations set out in the Brazil Settlement Agreement,
along with estimates associated with the United Kingdom group action claim
(see below). A financial liability has been recognised in relation to the
Australian class action complaint.
Contingent liabilities will only be resolved when one or more uncertain future
events occur or related impacts become capable of reliable measurement and, as
such, determination of contingent liabilities disclosed in the financial
statements requires significant judgement regarding the outcome of future
events. A number of the claims below do not specify the amount of damages
sought and, where this is specified, amounts could change as the matter
progresses.
Ultimately, future changes in all those matters for which a provision has been
recognised or contingent liability disclosed could have a material adverse
impact on BHP's business, competitive position, cash flows, prospects,
liquidity and shareholder returns.
The following table summarises the current status of significant ongoing
matters relating to the Samarco dam failure, along with developments during
the period, and the associated treatment in the Financial Statements:
Item Provision / Liability Contingent liability
Samarco dam failure - Brazil Settlement Agreement (Brazil Agreement)
On 2 March 2016, BHP Brasil, Samarco and Vale S.A. (Vale) (the Companies) ü û
entered into a Framework Agreement with the Federal Government of Brazil, the
states of Espirito Santo and Minas Gerais, and certain other public
authorities to establish a foundation (Fundação Renova) to develop and
execute environmental and socio-economic programs (Programs) to remediate and
provide compensation for damage caused by the Samarco dam failure (the
Framework Agreement). Key Programs included those for financial assistance and
compensation of impacted persons and those for remediation of impacted areas
and resettlement of impacted communities.
On 3 May 2016, the Brazilian Federal Public Prosecution Office brought a civil
claim against BHP Brasil and others seeking R$155 billion for reparation,
compensation and moral damages in relation to the Samarco dam failure. Since
the lodgement of the claim, the Federal Court had issued a number of interim
decisions, certain of which were subject to ongoing appeal at 30 June 2024.
On 25 October 2024, the Companies entered into an agreement with the Federal
Government of Brazil, State of Minas Gerais, State of Espirito Santo, public
prosecutors and public defenders (Public Authorities) that delivers full and
final settlement of the Framework Agreement obligations, the Federal Public
Prosecution Office civil claim and other claims by the Public Authorities
relating to Samarco's Fundão dam failure (Brazil Agreement). On 6 November
2024, the Brazil Agreement was fully ratified by the Brazilian Supreme Court.
On 15 May 2025, the decision that ratified the Brazil Agreement became final
and unappealable.
Item Provision / Liability Contingent liability
The Brazil Agreement provides compensation and reparation for the impacts of
the dam failure, and builds on the existing remediation and compensation work
already performed by Fundação Renova. The Brazil Agreement was announced as
having a financial value of R$170 billion (approximately US$31.7 billion 11
(#_ftn11) ) on a 100% basis, including amounts already spent plus future
payments and obligations as follows:
· R$38 billion (approximately US$7.9 billion(1)) in amounts already
spent to 30 September 2024 on remediation and compensation since 2016.
· R$100 billion (approximately US$18.0 billion(1)) in instalments
over 20 years to the Public Authorities, the relevant municipalities and
Indigenous peoples and traditional communities (Obligation to Pay).
· Additional performance obligations for an estimated financial
value of approximately R$32 billion (approximately US$5.8 billion(1)) that
will be carried out by Samarco in accordance with the terms of the Brazil
Agreement (Obligations to Perform). These obligations include remediation and
compensation programs that are expected to be largely completed over the next
15 years.
Under the Brazil Agreement, Samarco is the primary obligor for the settlement
obligations and BHP Brasil and Vale are each secondary obligors of any
obligation that Samarco cannot fund or perform in proportion to their
shareholding at the time of the dam failure, which is 50% each. While Samarco
has recommenced operations, Samarco's long-term cash flow generation remains
highly sensitive to factors including returning to full production capacity,
commodity prices and foreign exchange rates.
Further, under the Samarco Judicial Reorganisation Plan (JR Plan), ratified by
the JR Court on 1 September 2023, Samarco's funding of obligations to
remediate and compensate the damages resulting from the dam failure is capped
at US$1 billion for the period CY2024 to CY2030. Notwithstanding this cap, and
subject to certain conditions, to the extent that Samarco each year has a
positive cash balance after meeting its various obligations, during this
period Samarco's shareholders are able to direct 50 per cent of Samarco's year
end excess cash balance to fund remediation obligations, including those
arising from the Brazil Agreement.
The Group has considered the outcomes of the Brazil Agreement, including the
estimated costs of executing the Obligations to Perform, the extent to which
Samarco may be in a position to fund any future outflows to measure the
provision related to the Samarco dam failure at 31 December 2025. The amounts
provided include the Group's best estimate of outflows required to settle all
obligations arising from the Brazil Agreement.
Item Provision / Liability Contingent liability
Uncertainty remains around the Obligations to Perform, and there is a risk
that outcomes may be materially higher or lower than amounts reflected in BHP
Brasil's provision for the Samarco dam failure. Key areas of uncertainty
include the future costs relating to the Obligations to Perform programs and
the extent to which Samarco is able to directly fund the settlement
obligations. Further information on the key areas of estimation uncertainty is
provided in the 'Key judgements and estimates' section below.
There is also risk in relation to claims brought in Brazil that seek to, among
other things, change the eligibility parameters of the Brazil Agreement. The
Companies are defending these claims.
BHP Brasil, Samarco and Vale have maintained security under the Governance
Agreement ratified on 8 August 2018, comprising insurance bonds and a charge
over certain Samarco assets. On 6 August 2025, the Federal Court released this
requirement, in line with the Brazil Agreement, which does not mandate
maintaining the existing security. This decision is subject to any appeal that
may be filed.
Australian class action complaint
In 2018, BHP Group Limited was named as a defendant in a shareholder class ü û
action filed in the Federal Court of Australia on behalf of persons who
acquired shares in BHP Group Limited or BHP Group Plc (now BHP Group (UK) Ltd)
in periods prior to the Samarco dam failure.
In September 2025, BHP reached an agreement to settle the Australian class
action for A$110 million (US$74 million), inclusive of interest and costs,
with no admission of liability. In December 2025, the Federal Court of
Australia approved the settlement of the Australian class action.
The Group has recognised a liability for the settlement amount. As BHP expects
to recover the majority of the settlement amount from its insurers an
insurance recovery of US$64 million has also been recognised.
Item Provision / Liability Contingent liability
United Kingdom group action claim
BHP Group (UK) Ltd (formerly BHP Group Plc) and BHP Group Limited (BHP ü û
Defendants) are named as defendants in group action claims for damages filed
in the courts of England. These claims were filed on behalf of certain
individuals, municipalities, businesses, faith-based institutions and
communities in Brazil allegedly impacted by the Samarco dam failure, some of
whom are eligible for compensation under the Brazil Agreement.
In January 2024, the BHP Defendants were served with a new group action filed
in the courts of England on behalf of additional individuals and businesses in
Brazil allegedly impacted by the Samarco dam failure. The new action makes
broadly the same claims and is in the process of being consolidated with the
original action.
In July 2024, the BHP Defendants, BHP Brasil and Vale entered into an
agreement (BHP and Vale Agreement) - without any admission of liability in any
proceedings - whereby: (i) Vale will pay 50% of any amounts that may be
payable by the BHP Defendants to the claimants in the UK group action claims
(or by the BHP Defendants, BHP Brasil or their related parties to claimants in
any other proceedings in Brazil, England or the Netherlands covered by the BHP
and Vale Agreement); and (ii) BHP Brasil will pay 50% of any amounts that may
be payable by Vale to the claimants in the Netherlands collective action claim
discussed below (or by Vale or its related parties to claimants in any other
proceedings in Brazil, England or the Netherlands covered by the BHP and Vale
Agreement). The BHP and Vale Agreement reinforced the terms of the Framework
Agreement entered into in 2016 and is consistent with the aforementioned
Brazil Agreement entered into in October 2024, which requires BHP Brasil and
Vale to each contribute 50% to the funding of the settlement obligations where
Samarco is unable to contribute that funding. The Group has considered the BHP
and Vale Agreement when determining its provision for the UK group action
claim and have recognised it net of amounts to be received from Vale.
In November 2025, the English High Court found the BHP Defendants liable under
Brazilian law for the 2015 Samarco dam failure on the basis that it is a
'polluter' under Brazilian environmental law and at fault under the Brazilian
civil code. The English High Court rejected the argument that the BHP
Defendants are liable under Brazilian corporate law. The decision relates to
events that occurred in the period before November 2015. The English High
Court also found that the waivers and releases signed by claimants who have
already received compensation in Brazil are valid, and the claimants have
accepted these claims will be discontinued, reducing the size and value of the
claims in the UK group action significantly. The Group anticipates 240,000
claims will be discontinued as a result of these findings. The BHP Defendants
intend to appeal and will continue to defend the UK group action.
Item Provision / Liability Contingent liability
Subject to appeals, a stage 2 trial will decide generic issues of causation
and quantification and whether losses claimed by certain lead claimants were
caused by the dam failure. The trial is scheduled for April 2027 to March
2028. Following any decision and appeals in that trial, a stage 3 trial may
also be required, where each remaining claimant would need to prove their
individual damages before the BHP Defendants are required to make any payments
to them. This third trial is unlikely to occur before 2029. At 30 June 2025,
the UK group action was disclosed as a contingent liability, as the Group's
liability was yet to be established. As a result of the English High Court
decision, BHP has updated its Samarco dam failure provision to reflect its
best estimate of potential cash outflows in relation to the claim.
Given the status of the claim, significant uncertainty remains around the
extent of any potential outflow and there is a risk that outcomes may be
materially higher or lower than amounts reflected in the Group's provision for
the Samarco dam failure. Key areas of uncertainty include the outcomes of any
appeals on English High Court decision, findings of stage 2 on whether losses
were caused by the dam failure, and the number of individuals in stage 3 who
are able to prove damage and any amounts to be awarded. Further information on
the key areas of estimation uncertainty is provided in the 'Key judgements and
estimates' section below.
Vale and Samarco's Netherlands collective action claim
In March 2024, a collective action complaint was filed in the Netherlands û ü
against Vale and a Dutch subsidiary of Samarco for compensation relating to
the Samarco dam failure. That complaint, which formally commenced in February
2025, indicates that these claims were filed on behalf of certain individuals,
municipalities, businesses, associations and faith-based institutions
allegedly impacted by the Samarco dam failure who are not also claimants in
the UK group action claims referred to above. BHP is not a defendant in the
Netherlands proceedings.
Any amounts payable by Vale and Samarco under this claim will be subject to
the BHP and Vale Agreement referred to in the UK group action claim above.
Criminal charges
The Federal Prosecutors' Office filed criminal charges against BHP Brasil, û ü
Samarco and Vale and certain of their employees and former employees (Affected
Individuals) in the Federal Court of Ponte Nova, Minas Gerais (Federal Court).
The Federal Court granted decisions in favour of all Affected Individuals,
terminating the charges against these individuals.
As to the remaining cases, in November 2024, the Federal Court ruled that BHP
Brasil, Samarco and Vale and certain Affected Individuals (non-affiliated with
BHP) who still had their cases open, are not liable for criminal offences
relating to the failure of Samarco's tailings dam. In December 2024 the
Federal Prosecutors' Office filed an appeal, and a ruling is pending.
Item Provision / Liability Contingent liability
Civil public action commenced by Associations concerning the use of Tanfloc û ü
for water treatment
On 17 November 2023, the Federal Court dismissed the lawsuit filed by four
associations due to procedural reasons. The judgment is final and
unappealable. In July 2024, two further associations filed another lawsuit
against Samarco, BHP Brasil and Vale and others, including the States of Minas
Gerais and Espirito Santo, the Federal Government and the Water Treatment
Companies, who were all also defendants in the first lawsuit.
This second lawsuit was also dismissed due to procedural reasons on 12
November 2024, and the associations have appealed this judgement.
In both lawsuits the plaintiffs alleged that the defendants carried out a
clandestine study on the citizens of the locations affected by the Samarco dam
failure where Tanfloc (a tannin-based flocculant/coagulant) was used in the
water treatment process. The plaintiffs claim that this product put the
population at risk due to its alleged experimental qualities and dosage
applied. The plaintiffs presented largely similar pleas e.g. material damages,
moral damages.
Other claims, inquiries and investigations
BHP Brasil is among the Companies named as defendants in a number of legal û ü
proceedings initiated by individuals, non-governmental organisations,
corporations and governmental entities in Brazilian Federal and State courts
following the Samarco dam failure. The other defendants include Vale, Samarco
and Fundação Renova.
The lawsuits include claims for compensation, environmental reparation and
violations of Brazilian environmental and other laws, among other matters. The
lawsuits seek various remedies including reparation costs, compensation to
injured individuals and families of the deceased, recovery of personal and
property losses, moral damages and injunctive relief.
Certain of these legal proceedings are outside the scope of the Brazil
Agreement.
In October 2024, certain Brazilian municipalities, who are claimants in the UK
group action claims referred to above, brought criminal contempt proceedings
against the BHP Defendants in relation to their alleged involvement in a
constitutional claim brought by a third-party Brazilian mining association
(IBRAM) before the Brazilian Supreme Court. In June 2025, the High Court in
London rejected the BHP Defendants' application to strike out the proceedings,
allowing the contempt proceedings to continue. The BHP Defendants obtained
permission to appeal and a decision is pending from the Court of Appeal. The
contempt proceedings are stayed pending the outcome of the appeal.
In addition, actions for alleged damages, fees and/or expenses related to
claims concerning the Samarco dam failure have been, and may in the future be,
brought against the Group.
Item Provision / Liability Contingent liability
Government inquiries, studies and investigations relating to the Samarco dam
failure and actions taken in response to it have also been commenced by
numerous agencies and individuals of the Brazilian government and may still be
ongoing. Additional legal proceedings and government investigations relating
to the Samarco dam failure, including the use of Tanfloc for water treatment,
could be brought against BHP Brasil and other Group entities in Brazil or
other jurisdictions. The outcomes of these claims, investigations and
proceedings remain uncertain and continue to be disclosed as contingent
liabilities.
Commitments
Under the terms of the Samarco joint venture agreement, BHP Brasil does not
have an existing obligation to fund Samarco. However, under the Brazil
Agreement, while Samarco is the primary obligor for the Brazil Agreement
obligations, BHP Brasil and Vale are each secondary obligors of any obligation
that Samarco cannot fund (including as restricted by the terms of the Judicial
Reorganisation Plan) or perform in proportion to their shareholding at the
time of the dam failure, which is 50% each.
BHP Brasil has approved preliminary funding of up to US$1.3 billion to Samarco
for the Brazil Agreement obligations during calendar year 2026.
Key judgements and estimates
Judgements
The outcomes of litigation are inherently difficult to predict and significant
judgement has been applied in assessing the likely outcome of legal claims and
determining which legal claims require recognition of a provision or
disclosure of a contingent liability. The facts and circumstances relating to
these cases are regularly evaluated in determining whether a provision for any
specific claim is required.
Management has determined that a provision can be recognised at 31 December
2025 to reflect the estimated costs associated with obligations under the
Brazil Agreement, along with estimates associated with the United Kingdom
group action claim. It is not yet possible to provide a range of possible
outcomes or a reliable estimate of potential future exposures to BHP in
connection to the contingent liabilities noted above, given their status.
Estimates
The provision for the Samarco dam failure reflects the Group's estimate of the
costs to meet the Group's obligations under the Brazil Agreement, along with
estimates associated with the United Kingdom group action claim and requires
the use of significant judgements, estimates and assumptions.
While the provision has been measured based on the latest information
available, changes in facts and circumstances are likely in future reporting
periods and may lead to material revisions to these estimates and there is a
risk that outcomes may be materially higher or lower than amounts currently
reflected in the provision. However, it is currently not possible to determine
what facts and circumstances may change, therefore revisions in future
reporting periods due to the key estimates and factors outlined below cannot
be reliably measured.
The key estimates that may have a material impact upon the provision in the
next and future reporting periods include:
· the cost of compensation to individuals, small businesses,
Municipalities and Indigenous and Traditional communities;
· the extent to which Samarco is able to directly fund any future
obligations relating to the Brazil Agreement. Samarco's long-term cash flow
generation remains highly sensitive to factors including its ability to return
to full production capacity, commodity prices and foreign exchange rates; and
· the cash outflows associated with the United Kingdom group action
claim including the impacts of any appeals in relation to the first stage
trial and any findings from potential second and third stage trials regarding
whether losses were caused by the dam failure, the number of individuals able
to prove damage and any amounts to be awarded (including legal costs).
The provision may also be affected by factors including but not limited to
updates to foreign exchange and discount rates. To limit the Group's exposure
to potential Brazilian reais foreign exchange volatility, the Group has
entered into forward exchange contracts, predominantly covering the period up
to FY2028. A 0.5% change in the discount rate would, in isolation, change the
provision by approximately US$50 million.
In addition, the provision may be impacted by decisions in, or resolution of,
existing and potential legal claims in Brazil including in relation to
eligibility under, and adherence to, the Brazil Agreement and claims in other
jurisdictions, including the claim filed in the Netherlands against Vale and a
Dutch subsidiary of Samarco.
Given these factors, future actual cash outflows may differ from the amounts
currently provided and changes to any of the key assumptions and estimates
outlined above could result in a material impact to the provision in the next
and future reporting periods.
10. Subsequent events
On 20 January 2026, the Group announced that it had completed a detailed
review of cost and schedule estimates for Stage 1 of the Jansen potash project
and confirmed that the total investment estimate for Jansen Stage 1 will
increase to US$8.4 billion (including contingencies) and that the first
production schedule has reverted to the original schedule of mid CY2027. The
announcement also highlighted that the investment expenditure estimate for
Jansen Stage 2 remains under review.
The changes to the Jansen Stage 1 investment expenditure and schedule
estimates have been identified as an indicator of impairment and therefore the
carrying value of the Group's Jansen cash generating unit (CGU) was assessed
at 31 December 2025, with recoverable amount measured by reference to fair
value less costs of disposal (FVLCD).
Carrying value assessments require significant management judgement. When the
recoverable amount is measured by reference to FVLCD, in the absence of quoted
market prices or binding sale agreement, estimates are made regarding the
present value of future post-tax cash flows. These estimates are made from the
perspective of a market participant and include prices, future production
volumes, operating costs, capital expenditure, closure and rehabilitation
costs, taxes, risking factors applied to cash flows and discount rates.
All estimates require judgements and assumptions and are subject to risk and
uncertainty that may be beyond the control of the Group. While no impairment
charge was recognised at 31 December 2025, the carrying value of the Jansen
CGU is susceptible to changes in significant estimates in future reporting
periods, particularly in relation to capital expenditure in the shorter term
(given the ongoing review of the investment expenditure estimate for Jansen
Stage 2) and commodity prices, which may impact the recoverable amount of the
Jansen CGU.
On 28 January 2026, the Group entered into a US$850 million 5 year unsecured
syndicated term loan.
On 17 February 2026, the Group announced it had entered into a streaming
agreement with Wheaton Precious Metals. Under the streaming agreement, the
Group will receive a US$4.3 billion upfront cash payment in exchange for
silver deliveries calculated by reference to the Group's share of silver
produced at the Antamina mine.
Other than the matters outlined above or elsewhere in this Financial Report,
no matters or circumstances have arisen since the end of the half year that
have significantly affected, or may significantly affect, the operations,
results of operations or state of affairs of the Group in subsequent
accounting periods.
Directors' Report
The Directors present their report together with the half year Financial
Statements for the half year ended 31 December 2025 and the auditor's review
report thereon.
Review of Operations
A detailed review of the Group's operated and non-operated assets, the results
of those operations during the half year ended 31 December 2025 and likely
future developments are given on pages 1 to 27. The Review of Operations has
been incorporated into, and forms part of, this Directors' Report.
Principal Risks and Uncertainties
The principal risks affecting the Group are described on pages 66 to 71 of the
Group's Annual Report for the year ended 30 June 2025 (a copy of which is
available on the Group's website at www.bhp.com
(file:///C%3A/Users/chesp/AppData/Local/Temp/CDM/60752003251CDEEFF07D3941D93EA24AA0293E50909CC13C23FE77D68B3F09C8/www.bhp.com)
) and are grouped into the categories of risks listed below. Our principal
risks may occur as a result of our activities globally, including in
connection with our operated and non-operated assets, third parties engaged by
BHP or through our value chain. Our principal risks, individually or
collectively, could threaten our viability, strategy, business model, future
performance, solvency or liquidity and reputation. They could also materially
and adversely affect the health and safety of our people or members of the
public, the environment, the communities where we or our third-party partners
operate, or the interests of our stakeholders, which could in each case, lead
to litigation, regulatory investigation or enforcement action (including class
actions or actions arising from contractual, legacy or other liabilities
associated with divested assets), or a loss of stakeholder and/or investor
confidence. There are no material changes in those risk factors for the first
six months of this financial year except to the extent described in the
'Outlook' section.
· Operational events: Risks associated with operational events in
connection with our activities globally, resulting in significant adverse
impacts on our people, communities, the environment or our business.
· Significant social or environmental impacts: Risks associated
with significant impacts of our operations on and contributions to communities
and environments throughout the life cycle of our assets and across our value
chain.
· Optimising growth and portfolio returns: Risks associated with
our ability to position our asset portfolio to generate returns and value for
shareholders, including through acquisitions, mergers and divestments.
· Low-carbon transition: Risks associated with the transition to a
low-carbon economy.
· Accessing key markets: Risks associated with market concentration
and our ability to sell and deliver products into existing and future key
markets, impacting our economic efficiency.
· Adopting technologies and maintaining digital security: Risks
associated with adopting and implementing new technologies, and maintaining
the effectiveness of our existing digital landscape (including cyber defences)
across our value chain.
· Ethical misconduct: Risks associated with actual or alleged
deviation from societal or business expectations of ethical behaviour
(including breaches of laws or regulations) and wider or cumulative
organisational cultural failings, resulting in significant reputational
impacts.
· Inadequate business resilience: Risks associated with
unanticipated or unforeseeable adverse events and a failure of planning and
preparedness to respond to, manage and recover from adverse events (including
potential physical climate-related impacts).
Dividend
Full details of dividends are given on page 4 (#_Value_and_returns_1) .
Board of Directors
The Directors of BHP at any time during or since the end of the half year
ended 31 December 2025 are:
Ross McEwan - Chair since 31 March 2025 (a Director since April 2024)
Mike Henry - an Executive Director since 1 January 2020
Xiaoqun Clever-Steg - a Director since 1 October 2020
Gary Goldberg - a Director since 1 February 2020
Michelle Hinchliffe - a Director since 1 March 2022
Don Lindsay - a Director since May 2024
Christine O'Reilly - a Director since 12 October 2020
Catherine Tanna - a Director since 4 April 2022
Dion Weisler - a Director since 1 June 2020
Auditor's independence declaration
Ernst & Young in Australia are the auditors of BHP Group Limited. Their
auditor's independence declaration under Section 307C of the Australian
Corporations Act 2001 is set out on page 54 and forms part of this Directors'
Report.
Rounding of amounts
BHP Group Limited is an entity to which Australian Securities and Investments
Commission (ASIC) Corporations (Rounding in Financial/Directors' Reports)
Instrument 2016/191 applies. Amounts in the Directors' Report and half year
Financial Statements have been rounded to the nearest million dollars in
accordance with ASIC Instrument 2016/191.
Signed in accordance with a resolution of the Board of Directors.
Ross McEwan
Ross McEwan - Chair
Mike Henry
Mike Henry - Chief Executive Officer
Dated this 17th day of February 2026
Directors' Declaration of Responsibility
The half year Financial Report is the responsibility of, and has been approved
by, the Directors. In accordance with a resolution of the Directors of BHP
Group Limited, the Directors declare that:
(a) in the Directors' opinion and to the best of their
knowledge, the half year Financial Statements and notes, set out on pages 28
to 50, have been prepared in accordance with the Australian Corporations Act
2001, including:
(i) complying with applicable accounting standards and the
Australian Corporations Regulations 2001; and
(ii) giving a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group as at 31 December 2025
and of its performance for the half year ended on that date;
(b) for the purposes of the Disclosure Guidance and Transparency
Rules in the United Kingdom, to the best of the Directors' knowledge, the
Directors' Report, which incorporates the Review of Operations on pages 1 to
27, includes: a fair review of (i) the important events during the first six
months of the current financial year and their impact on the half year
Financial Statements; (ii) a description of the principal risks and
uncertainties for the remaining six months of the year; and (iii) related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the Group during that period, and changes in the
related party transactions described in the last annual report that could have
such a material effect; and
(c) in the Directors' opinion, there are reasonable grounds to
believe that BHP Group Limited will be able to pay its debts as and when they
become due and payable.
Signed on behalf of the Directors in accordance with a resolution of the Board
of Directors.
Ross McEwan
Ross McEwan - Chair
Mike Henry
Mike Henry - Chief Executive Officer
Dated this 17th day of February 2026
Auditor's Independence Declaration to the Directors of BHP Group Limited
Auditor's Independence Declaration to the Directors of BHP Group Limited
As lead auditor for the review of the financial report of BHP Group Limited
for the half year ended 31 December 2025, I declare to the best of my
knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the
Corporations Act 2001 in relation to the review;
b. No contraventions of any applicable code of professional conduct in
relation to the review; and
c. No non-audit services provided that contravene any applicable code of
professional conduct in relation to the review.
This declaration is in respect of BHP Group Limited and the entities it
controlled during the financial period.
Ernst & Young
Ernst & Young
Rodney Piltz
Rodney Piltz
Partner
Melbourne
17 February 2026
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards
Legislation
Independent Review Report
Independent auditor's review report to the members of BHP Group Limited
Conclusion
We have reviewed the accompanying half year financial report of BHP Group
Limited and its subsidiaries (collectively the Group), which comprises the
consolidated balance sheet as at 31 December 2025, the consolidated income
statement, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated cash flow statement for the
half year ended on that date, notes comprising material accounting policy
information and other explanatory information, and the directors' declaration.
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the half year financial report of the Group
does not comply with the Corporations Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the
Group as at 31 December 2025 and of its consolidated financial performance for
the half year ended on that date; and
b. Complying with International Accounting Standard IAS 34 Interim Financial
Reporting as issued by the International Accounting Standards Board (IASB),
Australian Accounting Standard AASB 134 Interim Financial Reporting and the
Corporations Regulations 2001.
Basis for conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial
Report Performed by the Independent Auditor of the Entity (ASRE 2410) and ISRE
2410 Review of Interim Financial Information Performed by the Independent
Auditor of the Entity (ISRE 2410). Our responsibilities are further described
in the Auditor's responsibilities for the review of the half year financial
report section of our report. We are independent of the Group in accordance
with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards
Board's APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to reviews of the half
year financial report of public interest entities in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Directors' responsibilities for the half year financial report
The directors of the Company are responsible for the preparation of the half
year financial report that gives a true and fair view in accordance with
International Accounting Standards as issued by the IASB, Australian
Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of
the half year financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
Auditor's responsibilities for the review of the half year financial report
Our responsibility is to express a conclusion on the half year financial
report based on our review. ASRE 2410 and ISRE 2410 require us to conclude
whether we have become aware of any matter that makes us believe that the half
year financial report is not in accordance with the Corporations Act 2001
including giving a true and fair view of the Group's financial position as at
31 December 2025 and its performance for the half year ended on that date, and
complying with International Accounting Standard IAS 34 Interim Financial
Reporting as issued by the IASB, Australian Accounting Standard AASB 134
Interim Financial Reporting and the Corporations Regulations 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards
Legislation
A review of a half year financial report consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with Australian Auditing
Standards or International Standards on Auditing issued by the International
Auditing and Assurance Standards Board and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Ernst & Young
Ernst & Young
Rodney Piltz
Rodney Piltz
Partner
Melbourne
17 February 2026
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards
Legislation
Non-IFRS Financial Information
Half year ended
31 December 2025
Non-IFRS financial information
We use various non-IFRS financial information to reflect our underlying
financial performance.
Non-IFRS financial information is not defined or specified under the
requirements of IFRS, but is derived from the Group's Consolidated Financial
Statements prepared in accordance with IFRS. The non-IFRS financial
information and the below reconciliations included in this document are
unaudited. The non-IFRS financial information presented is consistent with how
management review financial performance of the Group with the Board and the
investment community.
The "Definition and calculation of non-IFRS financial information" section
outlines why we believe non-IFRS financial information is useful and the
calculation methodology. We believe non-IFRS financial information provides
useful information, however should not be considered as an indication of, or
as a substitute for, statutory measures as an indicator of actual operating
performance (such as profit or net operating cash flow) or any other measure
of financial performance or position presented in accordance with IFRS, or as
a measure of a company's profitability, liquidity or financial position.
The following tables provide reconciliations between non-IFRS financial
information and their nearest respective IFRS measure.
Exceptional items
To improve the comparability of underlying financial performance between
reporting periods, some of our non-IFRS financial information adjusts the
relevant IFRS measures for exceptional items. Refer to the Group's Financial
Report for further information on exceptional items.
Exceptional items are those gains or losses where their nature, including the
expected frequency of the events giving rise to them, and impact is considered
material to the Group's Consolidated Financial Statements. The exceptional
items included within the Group's profit for the financial periods are
detailed below.
Half year ended 31 December 2025 2024
US$M US$M
Revenue − −
Other income 64 −
Expenses excluding net finance costs, depreciation, amortisation and (128) (524)
impairments
Depreciation and amortisation − −
Net (impairment)/reversal of impairment of property, plant and equipment, − 90
financial assets and intangibles
Profit/(loss) from equity accounted investments, related impairments and (196) (120)
expenses
Profit/(loss) from operations (260) (554)
Financial expenses (302) (208)
Financial income − −
Net finance costs (302) (208)
Profit/(loss) before taxation (562) (762)
Income tax (expense)/benefit − 96
Royalty-related taxation (net of income tax benefit) − −
Total taxation (expense)/benefit − 96
Profit/(loss) after taxation (562) (666)
Total exceptional items attributable to non-controlling interests − −
Total exceptional items attributable to BHP shareholders (562) (666)
Exceptional items attributable to BHP shareholders per share (US cents) (11.1) (13.1)
Weighted basic average number of shares (Million) 5,077 5,072
Non-IFRS financial information derived from Consolidated Income Statement
Underlying attributable profit
Half year ended 31 December 2025 2024
US$M US$M
Profit after taxation attributable to BHP shareholders 5,640 4,416
Total exceptional items attributable to BHP shareholders(1) 562 666
Underlying attributable profit 6,202 5,082
1 Refer to Exceptional items for further information.
Underlying basic earnings per share
Half year ended 31 December 2025 2024
US cents US cents
Basic earnings per ordinary share 111.1 87.1
Exceptional items attributable to BHP shareholders per share(1) 11.1 13.1
Underlying basic earnings per ordinary share 122.2 100.2
1 Refer to Exceptional items for further information.
Underlying EBITDA
Half year ended 31 December 2025 2024
US$M US$M
Profit from operations 12,260 9,126
Exceptional items included in profit from operations(1) 260 554
Underlying EBIT 12,520 9,680
Depreciation and amortisation expense 2,920 2,648
Net impairment/(reversal of impairment) of property, plant and equipment, 22 (56)
financial assets and intangibles
Exceptional items included in depreciation, amortisation and impairments(1) − 90
Underlying EBITDA 15,462 12,362
1 Refer to Exceptional items for further information.
Underlying EBITDA - Segment
Half year ended 31 December 2025 Copper Iron Ore Coal Group and unallocated items/ eliminations(2) Total Group
US$M
Profit from operations 6,786 6,208 (131) (603) 12,260
Exceptional items included in profit from operations(1) − 226 − 34 260
Depreciation and amortisation expense 1,165 1,042 355 358 2,920
Net impairment of property, plant and equipment, financial assets and 1 20 1 − 22
intangibles
Underlying EBITDA 7,952 7,496 225 (211) 15,462
Half year ended 31 December 2024 Copper Iron Ore Coal Group and unallocated items/ eliminations(2) Total Group
US$M
Profit from operations 3,883 6,034 289 (1,080) 9,126
Exceptional items included in profit from operations(1) − 162 − 392 554
Depreciation and amortisation expense 1,121 988 277 262 2,648
Net (reversal of impairment)/impairment of property, plant and equipment, 7 3 1 (67) (56)
financial assets and intangibles
Exceptional items included in depreciation, amortisation and impairments(1) − − − 90 90
Underlying EBITDA 5,011 7,187 567 (403) 12,362
1 Refer to Exceptional items for further information.
2 Group and unallocated items includes functions, other
unallocated operations, including Potash, Western Australia Nickel, legacy
assets and consolidation adjustments.
Underlying EBITDA - Group and unallocated items
Half year ended 31 December 2025 Profit from operations Exceptional items included in profit from operations(1) Depreciation and amortisation Net Exceptional items included in Depreciation, amortisation and impairments(1) Underlying EBITDA
US$M impairments
Potash (167) − 1 − − (166)
Western Australia Nickel (114) − − − − (114)
Other(2) (322) 34 357 − − 69
Total (603) 34 358 − − (211)
Half year ended 31 December 2024 Profit from operations Exceptional items included in profit from operations(1) Depreciation and amortisation Net Exceptional items included in Depreciation, amortisation and impairments(1) Underlying EBITDA
US$M (reversal of)/ impairments
Potash (134) − 1 − − (133)
Western Australia Nickel (623) 320 − (90) 90 (303)
Other(2) (323) 72 261 23 − 33
Total (1,080) 392 262 (67) 90 (403)
1 Refer to Exceptional items for further information.
2 Other includes functions, other unallocated operations, legacy
assets and consolidation adjustments.
Underlying EBITDA margin
Half year ended 31 December 2025 Copper Iron Ore Coal Group and unallocated items/ Total Group
US$M eliminations(1)
Revenue - Group production 11,922 12,042 2,430 4 26,398
Revenue - Third-party products 1,386 10 − 108 1,504
Revenue 13,308 12,052 2,430 112 27,902
Underlying EBITDA - Group production 7,926 7,496 225 (224) 15,423
Underlying EBITDA - Third-party products 26 − − 13 39
Underlying EBITDA(2) 7,952 7,496 225 (211) 15,462
Segment contribution to the Group's Underlying EBITDA(3) 51% 48% 1% 100%
Underlying EBITDA margin(4) 66% 62% 9% 58.4%
Half year ended 31 December 2024 Copper Iron Ore Coal Group and unallocated items/ Total Group
US$M eliminations(1)
Revenue - Group production 9,235 11,494 2,806 489 24,024
Revenue - Third-party products 1,030 14 − 108 1,152
Revenue 10,265 11,508 2,806 597 25,176
Underlying EBITDA - Group production 4,942 7,185 567 (406) 12,288
Underlying EBITDA - Third-party products 69 2 − 3 74
Underlying EBITDA(2) 5,011 7,187 567 (403) 12,362
Segment contribution to the Group's Underlying EBITDA(3) 39% 56% 5% 100%
Underlying EBITDA margin(4) 54% 63% 20% 51.1%
1 Group and unallocated items includes functions, other
unallocated operations, including Potash, Western Australia Nickel, legacy
assets and consolidation adjustments.
2 We differentiate sales of our production (which may include
third-party product feed) from direct sales of third-party products to better
measure our operational profitability as a percentage of revenue. We may buy
and sell third-party products to ensure a steady supply of product to our
customers where there is occasional production variability or shortfalls from
our assets.
3 Percentage contribution to Group Underlying EBITDA, excluding
Group and unallocated items.
4 Underlying EBITDA margin excludes third-party products.
Effective tax rate
2025 2024
Half year ended 31 December Profit before taxation Income tax expense % Profit before taxation Income tax expense %
US$M US$M US$M US$M
Statutory effective tax rate 11,555 (4,431) 38.3 8,669 (3,384) 39.0
Adjusted for:
Exchange rate movements − (7) − 48
Exceptional items(1) 562 − 762 (96)
Adjusted effective tax rate 12,117 (4,438) 36.6 9,431 (3,432) 36.4
1 Refer to Exceptional items for further information.
Non-IFRS financial information derived from Consolidated Cash Flow Statement
Capital and exploration expenditure
Half year ended 31 December 2025 2024
US$M US$M
Capital expenditure (purchases of property, plant and equipment) 5,070 5,006
Add: Exploration and evaluation expenditure 193 199
Capital and exploration expenditure (cash basis) 5,263 5,205
Free cash flow
Half year ended 31 December 2025 2024
US$M US$M
Net operating cash flows 9,372 8,317
Net investing cash flows (6,466) (5,669)
Free cash flow 2,906 2,648
Non-IFRS financial information derived from Consolidated Balance Sheet
Net debt and gearing ratio
31 Dec 2025 31 Dec 2024 30 June 2025
US$M US$M US$M
Interest bearing liabilities - Current 3,431 491 2,018
Interest bearing liabilities - Non-current 24,590 19,704 22,478
Total interest bearing liabilities 28,021 20,195 24,496
Comprising:
Borrowing 24,511 17,704 21,543
Lease liabilities 3,510 2,491 2,953
Less: Lease liability associated with index-linked freight contracts 759 56 333
Less: Cash and cash equivalents 13,466 9,560 11,894
Less: Net debt management related instruments(1) (722) (1,394) (595)
Less: Net cash management related instruments(2) (168) 180 (60)
Less: Total derivatives included in net debt (890) (1,214) (655)
Net debt 14,686 11,793 12,924
Net assets 55,465 49,597 52,218
Gearing 20.9% 19.2% 19.8%
1 Represents the net cross currency and interest rate swaps
included within current and non-current other financial assets and
liabilities.
2 Represents the net forward exchange contracts related to cash
management included within current and non-current other financial assets and
liabilities.
Net debt waterfall
31 Dec 2025 31 Dec 2024
US$M US$M
Net debt at the beginning of the period (12,924) (9,120)
Net operating cash flows 9,372 8,317
Net investing cash flows (6,466) (5,669)
Net financing cash flows (1,450) (5,270)
Net increase/(decrease) in cash and cash equivalents 1,456 (2,622)
Carrying value of interest bearing liability net (proceeds)/repayments (2,619) 161
Carrying value of debt related instruments settlements − 147
Carrying value of cash management related instruments proceeds (186) (261)
Fair value change on hedged loans 119 90
Fair value change on hedging derivatives (83) (17)
Foreign currency exchange rate changes on cash and cash equivalents 117 (317)
Lease additions (excluding leases associated with index-linked freight (357) (180)
contracts)
Other (209) 326
Non-cash movements (413) (98)
Net debt at the end of the period (14,686) (11,793)
Net operating assets
31 Dec 2025 31 Dec 2024
US$M US$M
Net assets 55,465 49,597
Less: Non-operating assets
Cash and cash equivalents (13,466) (9,560)
Trade and other receivables(1) (32) (10)
Other financial assets(2) (1,308) (1,648)
Current tax assets (419) (728)
Deferred tax assets (74) (61)
Add: Non-operating liabilities
Trade and other payables(3) 353 249
Interest bearing liabilities 28,021 20,195
Other financial liabilities(4) 1,343 1,521
Current tax payable 1,330 1,048
Non-current tax payable 3 3
Deferred tax liabilities 3,755 3,537
Net operating assets 74,971 64,143
1 Represents external finance receivable and accrued interest
receivable included within other receivables.
2 Represents cross currency and interest rate swaps, forward
exchange contracts related to cash management, investment in shares, other
investments, deferred receivable from divestment of subsidiaries and
operations and associated receivables contingent on outcome of future events
relating to realised commodity prices.
3 Represents accrued interest payable included within other
payables.
4 Represents cross currency and interest rate swaps and forward
exchange contracts related to cash management.
Other non-IFRS financial information
Principal factors that affect Revenue, Profit from operations and Underlying EBITDA
The following table describes the impact of the principal factors that
affected Revenue, Profit from operations and Underlying EBITDA for half year
ended 31 December 2025 and relates them back to our Consolidated Income
Statement.
Revenue Total expenses, other income and profit/(loss) from equity accounted Profit from operations Depreciation, amortisation and impairments and exceptional items Underlying
investments
US$M
US$M US$M EBITDA
US$M
US$M
Half year ended 31 December 2024
Revenue 25,176
Other income 222
Expenses excluding net finance costs (16,367)
Profit/(loss) from equity accounted investments, related impairments and 95
expenses
Total other income, expenses excluding net finance costs and profit/(loss) (16,050)
from equity accounted investments, related impairments and expenses
Profit from operations 9,126
Depreciation, amortisation and impairments 2,592
Exceptional item included in Depreciation, amortisation and impairments 90
Exceptional items 554
Underlying EBITDA 12,362
Change in sales prices 3,062 − 3,062 − 3,062
Price-linked costs − (84) (84) − (84)
Net price impact 3,062 (84) 2,978 − 2,978
Change in volumes (196) 37 (159) − (159)
Operating cash costs − 507 507 − 507
Exploration and business development − 15 15 − 15
Change in controllable cash costs(1) − 522 522 − 522
Exchange rates − (287) (287) − (287)
Inflation on costs − (270) (270) − (270)
Fuel, energy and consumable price movements − 69 69 − 69
Non-cash − 66 66 − 66
One-off items − − − − −
Change in other costs − (422) (422) − (422)
Asset sales − 7 7 − 7
Ceased and sold operations (473) 588 115 − 115
Other 333 (274) 59 − 59
Depreciation, amortisation and impairments − (260) (260) 260 −
Exceptional items − 294 294 (294) −
Half year ended 31 December 2025
Revenue 27,902
Other income 213
Expenses excluding net finance costs (16,075)
Profit/(loss) from equity accounted investments, related impairments and 220
expenses
Total other income, expenses excluding net finance costs and profit/(loss) (15,642)
from equity accounted investments, related impairments and expenses
Profit from operations 12,260
Depreciation, amortisation and impairments 2,942
Exceptional item included in Depreciation, amortisation and impairments −
Exceptional items 260
Underlying EBITDA 15,462
1 Collectively, we refer to the change in operating cash costs and
change in exploration and business development as Change in controllable cash
costs. Operating cash costs by definition do not include non-cash costs. The
change in operating cash costs also excludes the impact of exchange rates and
inflation, changes in fuel, energy costs and consumable costs, changes in
exploration and evaluation and business development costs and one-off items.
These items are excluded so as to provide a consistent measurement of changes
in costs across all segments, based on the factors that are within the control
and responsibility of the segment.
Underlying return on capital employed (ROCE)
31 Dec 2025 31 Dec 2024
US$M US$M
Profit after taxation 7,124 5,285
Exceptional items(1) 562 666
Subtotal 7,686 5,951
Adjusted for:
Net finance costs 705 457
Exceptional items included within net finance costs(1) (302) (208)
Income tax expense on net finance costs (122) (106)
Profit after taxation excluding net finance costs and exceptional items 7,967 6,094
Annualised profit after taxation excluding net finance costs and exceptional 15,934 12,188
items
Net assets at the beginning of the period 52,218 49,120
Net debt at the beginning of the period 12,924 9,120
Capital employed at the beginning of the period 65,142 58,240
Net assets at the end of the period 55,465 49,597
Net debt at the end of the period 14,686 11,793
Capital employed at the end of the period 70,151 61,390
Average capital employed 67,647 59,815
Underlying return on capital employed 23.6% 20.4%
1 Refer to Exceptional items for further information.
Underlying return on capital employed (ROCE) by segment
Half year ended 31 December 2025 Copper Iron Ore Coal Group and unallocated items/ eliminations(1) Total Group
US$M
Annualised profit after taxation excluding net finance costs and exceptional 8,268 8,770 (270) (834) 15,934
items
Average capital employed 36,826 14,658 6,563 9,600 67,647
Underlying return on capital employed 22% 60% (4%) − 23.6%
Half year ended 31 December 2024 Copper Iron Ore Coal Group and unallocated items/ eliminations(1) Total Group
US$M
Annualised profit after taxation excluding net finance costs and exceptional 4,228 8,864 438 (1,342) 12,188
items
Average capital employed 31,938 13,005 6,864 8,008 59,815
Underlying return on capital employed 13% 68% 6% − 20.4%
1 Group and unallocated items includes functions, other
unallocated operations including Potash, Western Australia Nickel, legacy
assets and consolidation adjustments.
Underlying return on capital employed (ROCE) by asset
Half year ended Antamina Escondida Western Australia Iron Ore Pampa Norte Copper South Australia BHP Mitsubishi Alliance New South Wales Energy Coal(1) Western Australia Nickel(2) Potash(3) Other Total Group
31 December 2025
US$M
Annualised profit after taxation excluding net finance costs and exceptional 874 5,790 8,838 606 1,262 22 (104) (226) (338) (790) 15,934
items
Average capital employed 1,647 12,018 20,337 4,485 15,998 6,544 (49) (163) 9,222 (2,392) 67,647
Underlying return on capital employed 53% 48% 43% 14% 8% 0% − − − − 23.6%
Half year ended Antamina Escondida Western Australia Iron Ore Pampa Norte Copper South Australia BHP Mitsubishi Alliance New South Wales Energy Coal(1) Western Australia Nickel(2) Potash(3) Other Total Group
31 December 2024
US$M
Annualised profit after taxation excluding net finance costs and exceptional 500 3,148 8,828 330 440 250 212 (750) (302) (468) 12,188
items
Average capital employed 1,451 10,717 19,855 4,280 15,085 6,749 (11) 110 6,803 (5,224) 59,815
Underlying return on capital employed 34% 29% 44% 8% 3% 4% − − − − 20.4%
1 NSWEC ROCE has not been shown as it is distorted by negative
capital employed due to the rehabilitation provision being the primary balance
remaining on Balance Sheet following previous impairments.
2 Western Australia Nickel ROCE has not been shown following
transition into temporary suspension.
3 Potash ROCE has not been shown because it is distorted as the
asset is non-producing and in its development phase.
Unit costs
Unit costs do not include the re-allocation to assets in HY2026 and HY2025 of
the costs associated with the employee entitlements and allowances review
conducted in FY2023, which were reported in Group and Unallocated in that
period.
The calculation of Escondida, Spence and Copper South Australia unit costs are
set out in the tables below.
Escondida unit costs Spence unit costs Copper South Australia
unit costs
US$M HY2026 HY2025 HY2026 HY2025 HY2026 HY2025
Revenue 7,924 5,828 1,302 1,254 2,615 2,083
Underlying EBITDA 5,642 3,468 720 565 1,251 742
Gross costs 2,282 2,360 582 689 1,364 1,341
Less: by-product credits 563 336 89 64 1,010 728
Less: freight 107 120 22 29 14 15
Less: government royalties 68 58 − − 103 70
Less: re-allocation of costs associated with the employee entitlements and − − − − − 1
allowances review
Net costs 1,544 1,846 471 596 237 527
Sales (kt) 624 629 104 135 146 152
Sales (Mlb) 1,376 1,387 230 297 322 335
Cost per pound (US$)(1) 1.12 1.33 2.05 2.01 0.74 1.57
1 HY2026 based on average realised exchange rates of USD/CLP 947
(HY2025 USD/CLP 947) and on an average realised exchange rate of AUD/USD 0.66
(HY2025 AUD/USD 0.66).
The calculation of WAIO and BMA unit costs are set out in the table below.
WAIO unit costs BMA unit costs
US$M HY2026 HY2025 HY2026 HY2025
Revenue 11,976 11,430 1,667 1,853
Underlying EBITDA 7,499 7,140 257 391
Gross costs 4,477 4,290 1,410 1,462
Less: freight 1,106 1,152 23 14
Less: government royalties 859 796 248 291
Less: re-allocation of costs associated with the employee entitlements and 1 18 − 1
allowances review
Net costs 2,511 2,324 1,139 1,156
Sales (kt, equity share) 129,339 127,749 8,885 8,999
Cost per tonne (US$)(1) 19.41 18.19 128.19 128.46
1 HY2026 based on an average realised exchange rate of AUD/USD
0.66 (HY2025 AUD/USD 0.66).
Definition and calculation of Non-IFRS financial information
Non-IFRS financial information Reasons why we believe the non-IFRS financial information is useful Calculation methodology
Underlying attributable profit Allows the comparability of underlying financial performance by excluding the Profit after taxation attributable to BHP shareholders excluding any
impacts of exceptional items and is also the basis on which our dividend exceptional items attributable to BHP shareholders.
payout ratio policy is applied.
Underlying basic earnings per share On a per share basis, allows the comparability of underlying financial Underlying attributable profit divided by the weighted basic average number of
performance by excluding the impacts of exceptional items. shares.
Underlying EBITDA Used to help assess current operational profitability excluding the impacts of Earnings before net finance costs, depreciation, amortisation and impairments,
sunk costs (i.e. depreciation from initial investment). Each is a measure that taxation expense, Discontinued operations and exceptional items. Underlying
management uses internally to assess the performance of the Group's segments EBITDA includes BHP's share of profit/(loss) from investments accounted for
and make decisions on the allocation of resources. using the equity method, including net finance costs, depreciation,
amortisation and impairments and taxation expense/(benefit).
Underlying EBITDA margin Underlying EBITDA excluding third-party product EBITDA, divided by revenue
excluding third-party product revenue.
Underlying EBIT Used to help assess current operational profitability excluding net finance Earnings before net finance costs, taxation expense, Discontinued operations
costs and taxation expense (each of which are managed at the Group level) as and any exceptional items. Underlying EBIT includes BHP's share of
well as Discontinued operations and any exceptional items. profit/(loss) from investments accounted for using the equity method,
including net finance costs and taxation expense/(benefit).
Profit from operations Earnings before net finance costs, taxation expense and Discontinued
operations. Profit from operations includes Revenue, Other income, Expenses
excluding net finance costs and BHP's share of profit/(loss) from investments
accounted for using the equity method, including net finance costs and
taxation expense/(benefit).
Capital and exploration expenditure Used as part of our Capital Allocation Framework to assess efficient Purchases of property, plant and equipment and exploration and evaluation
deployment of capital. Represents the total outflows of our operational expenditure.
investing expenditure.
Non-IFRS financial information Reasons why we believe the non-IFRS financial information is useful Calculation methodology
Free cash flow It is a key measure used as part of our Capital Allocation Framework. Reflects Net operating cash flows less net investing cash flows.
our operational cash performance inclusive of investment expenditure, which
helps to highlight how much cash was generated in the period to be available
for the servicing of debt and distribution to shareholders.
Net debt Net debt shows the position of gross debt less index-linked freight contracts Interest bearing liabilities less liability associated with index-linked
offset by cash immediately available to pay debt if required and any freight contracts less cash and cash equivalents less net cross currency and
associated derivative financial instruments. Liability associated with interest rate swaps less net cash management related instruments for the Group
index-linked freight contracts, which are required to be remeasured to the at the reporting date.
prevailing freight index at each reporting date, are excluded from the net
debt calculation due to the short-term volatility of the index they relate to
not aligning with how the Group uses net debt for decision making in relation
to the Capital Allocation Framework. Net debt includes the fair value of
derivative financial instruments used to hedge cash and borrowings to reflect
the Group's risk management strategy of reducing the volatility of net debt
caused by fluctuations in foreign exchange and interest rates.
Net debt, along with the gearing ratio, is used to monitor the Group's capital
management by relating net debt relative to equity from shareholders.
Gearing ratio Ratio of Net debt to Net debt plus Net assets.
Net operating assets Enables a clearer view of the assets deployed to generate earnings by Operating assets net of operating liabilities, including the carrying value of
highlighting the net operating assets of the business separate from the equity accounted investments and predominantly excludes cash balances, loans
financing and tax balances. This measure helps provide an indicator of the to associates, interest bearing liabilities, derivatives hedging our net debt,
underlying performance of our assets and enhances comparability between them. assets held for sale, liabilities directly associated with assets held for
sale and tax balances.
Underlying return on capital employed (ROCE) Indicator of the Group's capital efficiency and is provided on an underlying Profit after taxation excluding exceptional items and net finance costs (after
basis to allow comparability of underlying financial performance by excluding taxation) divided by average capital employed.
the impacts of exceptional items.
Profit after taxation excluding exceptional items and net finance costs (after
taxation) is profit after taxation excluding exceptional items, net finance
costs and the estimated taxation impact of net finance costs. These are
annualised for a half year end reporting period.
The estimated tax impact is calculated using a prima facie taxation rate on
net finance costs (excluding any foreign exchange impact).
Average capital employed is calculated as the average of net assets less net
debt for the last two reporting periods.
Non-IFRS financial information Reasons why we believe the non-IFRS financial information is useful Calculation methodology
Adjusted effective tax rate Provides an underlying tax basis to allow comparability of underlying Total taxation expense/(benefit) excluding exceptional items and exchange rate
financial performance by excluding the impacts of exceptional items. movements included in taxation expense/(benefit) divided by Profit before
taxation excluding exceptional items.
Unit costs Used to assess the controllable financial performance of the Group's assets Ratio of net costs of the assets to the equity share of sales tonnage. Net
for each unit of production. Unit costs are adjusted for site specific costs is defined as revenue less Underlying EBITDA and excludes freight,
non-controllable factors to enhance comparability between the Group's assets. re-allocation of the costs associated with the employee entitlements and
allowance review in FY2023, and other costs, depending on the nature of each
asset. Freight is excluded as the Group believes it provides a similar basis
of comparison to our peer group. The re-allocation to assets in subsequent
periods of the costs associated with the employee entitlements and allowances
review in FY2023 are excluded in asset unit costs as these costs were already
recognised in Group and Unallocated in FY2023.
Escondida, Spence and Copper South Australia unit costs exclude:
· by-product credits being the favourable impact of by-products
(such as gold or silver) to determine the directly attributable costs of
copper production
· government royalties, as these are costs that are not deemed to
be under the Group's control and the Group believes exclusion provides a
similar basis of comparison to our peer group
WAIO and BMA unit costs exclude:
· government royalties, as these are costs that are not deemed to
be under the Group's control and the Group believes exclusion provides a
similar basis of comparison to our peer group
Definition and calculation of principal factors
The method of calculation of the principal factors that affect the period on
period movements of Revenue, Profit from operations and Underlying EBITDA are
as follows:
Principal factor Method of calculation
Change in sales prices Change in average realised price for each operation from the prior period to
the current period, multiplied by current period sales volumes.
Price-linked costs Change in price-linked costs (mainly royalties) for each operation from the
prior period to the current period, multiplied by current period sales
volumes.
Change in volumes Change in sales volumes for each operation multiplied by the prior year
average realised price less variable unit cost.
Controllable cash costs Total of operating cash costs and exploration and business development costs.
Operating cash costs Change in total costs, other than price-linked costs, exchange rates,
inflation on costs, fuel, energy and consumable price movements, non-cash
costs and one-off items as defined below for each operation from the prior
period to the current period.
Exploration and evaluation and business development Exploration and evaluation and business development expense in the current
period minus exploration and business development expense in the prior period.
Exchange rates Change in exchange rate multiplied by current period local currency revenue
and expenses.
Inflation on costs Change in inflation rate applied to expenses, other than depreciation and
amortisation, price-linked costs, exploration and business development
expenses, expenses in ceased and sold operations and expenses in new and
acquired operations.
Fuel, energy and consumable price movements Fuel and energy expense and price differences above inflation on consumables
in the current period minus fuel and energy expense in the prior period.
Non-cash Change in net impact of capitalisation and depletion of deferred stripping
from the prior period to the current period.
One-off items Change in costs exceeding a pre-determined threshold associated with an
unexpected event that had not occurred in the last two years and is not
reasonably likely to occur within the next two years.
Asset sales Profit/(loss) on the sale of assets or operations in the current period minus
profit/(loss) on sale of assets or operations in the prior period.
Ceased and sold operations Underlying EBITDA for operations that ceased (including temporary suspension)
or were sold in the current period minus Underlying EBITDA for operations that
ceased (including temporary suspension) or were sold in the prior period.
New and acquired operations Underlying EBITDA for operations that were acquired in the current period
minus Underlying EBITDA for operations that were acquired in the prior period.
Share of profit/(loss) from equity accounted investments Share of profit/(loss) from equity accounted investments for the current
period minus share of profit/(loss) from equity accounted investments in the
prior period.
Other Variances not explained by the above factors.
Technical Assessment Report
Vicuña Joint Venture
Technical Assessment Report
Vicuña Joint Venture
Copper-Gold Project
Argentina - Chile
Report prepared for
BHP Group Limited
(ABN 49 004 028 077)
171 Collins Street, Melbourne
VICTORIA 3000 AUSTRALIA
A version of this document with the figures contained in the Technical
Assessment Report - Vicuña Joint Venture has today been submitted to the FCA
National Storage Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
Report prepared by:
Practitioner Specific type of activity and area of accountability
Kirk Hanson Mining and Economic Analysis
Dustin Smiley All sections excluding mining, economic analysis, geology and Mineral
Resources
Cole Mooney Geology and Mineral Resources
Competent Person Specific type of activity and area of accountability
Luke Evans Filo del Sol Mineral Resource Estimate, drilling, sampling and data validation
Sean Horan Josemaria Mineral Resource Estimate
Paul Daigle Josemaria drilling, sampling and data validation
Cautionary statements
This Technical Assessment has been prepared at a scoping‑study level and is
preliminary in nature. The assessment is based on Mineral Resources, including
a material proportion of Inferred Mineral Resources, which are subject to a
high degree of geological uncertainty. Inferred Mineral Resources include a
level of geological uncertainty that is not sufficient to demonstrate a high
confidence over technical and economic modifying factors.
No Ore Reserves have been declared for the Project.
The development concepts, operating assumptions, production schedules,
economic outcomes, and processing options described in this Report are
conceptual in nature and have been prepared for evaluation purposes only. They
are not based on detailed engineering or feasibility‑level analysis. The
information contained herein does not demonstrate economic or technical
viability and should not be interpreted as a development plan or a basis for
decision‑making.
Economic metrics such as NPV, IRR, cash flows, capital costs, operating costs,
and product assumptions are indicative only and are subject to significant
uncertainty. They do not represent forecasts, projections, or assurances of
future performance. Actual outcomes may differ materially from those presented
due to changes in geological understanding, engineering design, metallurgical
performance, permitting requirements, market conditions, or financing
assumptions.
Where the Report references potential products, market studies, pricing
assumptions, or revenue parameters, these are provided solely for contextual
purposes and do not imply product marketability, off‑take readiness, or
commercial agreements.
The Report does not constitute a valuation, investment recommendation,
financial advice, or a commitment to proceed with any development scenario.
The conclusions and opinions expressed reflect the information available at
the time of preparation and may change as additional data, technical studies,
environmental assessments, and stakeholder engagements are completed. Further
drilling, metallurgical testwork, engineering, and permitting studies will be
required to advance the Project and reduce the current level of uncertainty.
Table of Contents
Executive summary (#_Toc221895685)
1. Introduction (#_Toc221895686)
2. Property description (#_Toc221895687)
2.1 Property location (#_Toc221895688)
2.2 Physiography (#_Toc221895689)
2.3 Access (#_Toc221895690)
2.4 Climate and length of operating season (#_Toc221895691)
2.5 Ownership interest (#_Toc221895692)
2.6 Agreements (#_Toc221895693)
2.7 Mineral tenure (#_Toc221895694)
2.7.1 Argentina (#_Toc221895695)
2.7.2 Chile (#_Toc221895696)
2.7.3 Tenure status (#_Toc221895697)
2.8 Surface rights (#_Toc221895698)
2.8.1 Argentina (#_Toc221895699)
2.8.2 Chile (#_Toc221895700)
2.8.3 General considerations (#_Toc221895701)
2.9 Water rights (#_Toc221895702)
2.9.1 Argentina (#_Toc221895703)
2.9.2 Chile (#_Toc221895704)
2.10 Royalties (#_Toc221895705)
2.10.1 Argentina (#_Toc221895706)
2.10.2 Chile (#_Toc221895707)
3. Geology and Mineral Resources (#_Toc221895708)
3.1 Property and production history (#_Toc221895709)
3.1.1 Exploration and study history (#_Toc221895710)
3.1.2 Past production (#_Toc221895711)
3.2 Regional geology (#_Toc221895712)
3.3 Local geology (#_Toc221895713)
3.4 Deposit geology (#_Toc221895714)
3.4.1 Deposit dimensions (#_Toc221895715)
3.4.2 Lithologies (#_Toc221895716)
3.4.3 Structure (#_Toc221895717)
3.4.4 Alteration (#_Toc221895718)
3.4.5 Weathering (#_Toc221895719)
3.4.6 Mineralization (#_Toc221895720)
3.5 Exploration activities (#_Toc221895721)
3.6 Drilling (#_Toc221895722)
3.7 Sample preparation and analysis (#_Toc221895723)
3.8 Quality assurance and quality control (#_Toc221895724)
3.9 Data verification (#_Toc221895725)
3.10 Mineral Resource estimation (#_Toc221895726)
3.11 Reasonable prospects of eventual economic extraction (#_Toc221895727)
3.12 Mineral Resource statement (#_Toc221895728)
3.13 Factors that may affect the Mineral Resource estimate (#_Toc221895729)
4. Technical Assessment (#_Toc221895730)
4.1 Ore Reserves (#_Toc221895731)
4.2 Mine plan (#_Toc221895732)
4.2.1 Subset of the Mineral Resource estimate in the mine plan
(#_Toc221895733)
4.2.2 Geotechnical assumptions (#_Toc221895734)
4.2.3 Hydrogeological assumptions (#_Toc221895735)
4.2.4 Mine designs (#_Toc221895736)
4.2.5 Equipment requirements (#_Toc221895737)
4.2.6 Production schedule (#_Toc221895738)
4.3 Metallurgical Testwork (#_Toc221895739)
4.3.1 Testwork (#_Toc221895740)
4.3.2 Variability assessment (#_Toc221895741)
4.3.3 Metallurgical recovery forecasts (#_Toc221895742)
4.3.4 Deleterious elements (#_Toc221895743)
4.4 Process Method (#_Toc221895744)
4.4.1 Process plant design (#_Toc221895745)
4.4.2 Reagents and consumables (#_Toc221895746)
4.4.3 Power (#_Toc221895747)
4.4.4 Water (#_Toc221895748)
4.5 Infrastructure (#_Toc221895749)
4.5.1 Overview (#_Toc221895750)
4.5.2 Logistics (#_Toc221895751)
4.5.3 Waste rock (#_Toc221895752)
4.5.4 Stockpiles (#_Toc221895753)
4.5.5 Tailings storage (#_Toc221895754)
4.5.6 Built infrastructure (#_Toc221895755)
4.5.7 Camps and accommodation (#_Toc221895756)
4.5.8 Water management and water supply (#_Toc221895757)
4.6 Environmental considerations (#_Toc221895758)
4.6.1 Baseline studies (#_Toc221895759)
4.6.2 Monitoring requirements (#_Toc221895760)
4.6.3 Closure considerations (#_Toc221895761)
4.6.4 Permitting considerations (#_Toc221895762)
4.6.5 Social and heritage considerations (#_Toc221895763)
4.7 Capital cost estimate (#_Toc221895764)
4.8 Operating Cost Estimate (#_Toc221895765)
4.9 Closure Cost Estimate (#_Toc221895766)
5. Market Assumptions (#_Toc221895767)
5.1 Market Studies (#_Toc221895768)
5.2 Commodity and Exchange Rate Forecasts (#_Toc221895769)
5.3 Contracts (#_Toc221895770)
6. Evaluation (#_Toc221895771)
6.1 Economic Analysis (#_Toc221895772)
6.2 Sensitivity Analysis (#_Toc221895773)
6.3 Taxation and Royalties (#_Toc221895774)
6.3.1 Royalties in Argentina (#_Toc221895775)
6.3.2 Taxes in Argentina (#_Toc221895776)
6.3.3 Royalties in Chile (#_Toc221895777)
6.3.4 Taxes in Chile (#_Toc221895778)
7. Risk and Mitigation (#_Toc221895779)
7.1 Geological and Resource Risks (#_Toc221895780)
7.2 Mining and Geotechnical Risks (#_Toc221895781)
7.3 Metallurgical and Processing Risks (#_Toc221895782)
7.4 Infrastructure and Execution Risks (#_Toc221895783)
7.5 Environmental, Social, and Permitting risks (#_Toc221895784)
7.6 Market and Economic Risks (#_Toc221895785)
8. Conclusions (#_Toc221895786)
9. Declarations and Consents (#_Toc221895787)
10. References (#_Toc221895788) (#_Toc221895788)
Executive summary
This Technical Assessment Report in relation to the Vicuña Joint Venture (a
non-operated joint venture (NOJV) in which BHP Canada holds investments) has
been prepared for public disclosure in accordance with the VALMIN Code (2015),
with reference to the JORC Code (2012) for Mineral Resource reporting. The
report summarises the indicative technical, environmental, and economic basis
of the Vicuña Joint Venture copper-gold project (the Project) and provides a
scoping-level assessment of its development potential, risks, and
opportunities. The Scoping Study has been completed with cost estimates
developed to an order of magnitude level, appropriate for this stage of
evaluation. The study is preliminary in nature and is based on a significant
proportion of Inferred Mineral Resources.
The Project is a proposed large-scale, long-life copper-gold development
located along the Argentina-Chile border in the central Andes. It integrates
the Josemaría and Filo del Sol deposits under Vicuña Corp., a 50:50 joint
venture between BHP Investments Canada Inc (BHP Canada) and Lundin Mining
Corporation (Lundin Mining). The Project comprises of two large undeveloped
copper-gold resources and is characterised by district-scale mineralisation,
multiple mineralisation types, and a complex binational operating environment.
The Project is supported by Mineral Resources, defined through decades of
exploration, drilling, metallurgical testwork, and technical studies.
Mineralisation comprises copper-gold porphyry and high-sulphidation epithermal
styles. Both the Josemaría and Filo del Sol deposits remain open at depth and
along strike. No Ore Reserves are estimated, and the current assessment relies
on Mineral Resources, including a large proportion of Inferred Mineral
Resources. In the opinion of the Competent Persons, it is reasonable to expect
that the majority of Inferred Mineral Resources could be upgraded to Indicated
Mineral Resources with continued exploration, however due to the uncertainty
of Inferred Mineral Resources, it should not be assumed that such upgrading
will occur.
Development of the Project has been assessed at a conceptual level using a
staged strategy to manage capital intensity, technical risk, and execution
complexity. The conceptual development sequence includes Stage 1 sulphide
flotation processing, initially fed by mineralization from Josemaría; Stage 2
heap leaching of oxide and mixed material at Filo del Sol producing copper
cathode and gold-silver doré; Stage 3 development inclusive of sourcing
sulphide mineralization from Filo del Sol, facilities to treat high-arsenic
concentrate, a mill expansion and supporting infrastructure including power
supply, desalinated water supply and concentrate transport.
Metallurgical testwork completed to date has informed the conceptual selection
of distinct processing routes for sulphide and oxide material. Elevated
arsenic levels within portions of the Filo del Sol sulphide Mineral Resource
represent a key technical challenge and have prompted conceptual evaluation of
concentrate roasting to produce a low-arsenic copper calcine that may be
suitable for broader smelter acceptance. This approach has implications for
infrastructure, permitting, operating costs, and environmental management
requiring further detailed study.
The Project has been assessed at conceptual level requiring substantial
infrastructure development, including access roads, power transmission, water
supply systems, tailings storage facilities, waste rock storage areas,
processing plants, and workforce accommodation. The binational nature of the
Project introduces additional complexity in logistics, permitting, and
regulatory coordination but also allows for consideration of alternatives in
infrastructure configuration and export routes.
Environmental and social considerations are integral to the Project's
development. Comprehensive baseline studies have been completed across
physical, biological, and socio-economic disciplines to support environmental
impact assessment and permitting in both Argentina and Chile. Closure planning
has been incorporated at a conceptual level, with a focus on long-term
physical and chemical stability and compliance with jurisdictional regulatory
requirements.
A scoping-level economic analysis has been undertaken to evaluate potential
economic outcomes and to compare development options. Capital and operating
cost estimates are preliminary and subject to significant uncertainty.
Economic outcomes are sensitive to key assumptions, including metal prices,
capital intensity, operating costs, metallurgical performance, infrastructure
execution, and permitting outcomes.
The Project is exposed to a range of technical, environmental, social, market,
and execution risks, reflecting its scale, complexity, and early stage of
development. Conceptual risk management measures considered to date include a
staged development approach, continued technical de-risking through drilling
and metallurgical testwork, early and ongoing stakeholder engagement, and
progressive refinement of engineering and environmental studies.
In summary, the Vicuña Project represents a large copper-gold Mineral
Resource with the potential for future development subject to technical
studies, environmental assessment, permitting, and stakeholder engagement.
Ongoing work is required to progressively reduce uncertainty and to inform
future development decisions.
1. Introduction
This Report has been prepared in accordance with the Australasian Code for
Public Reporting of Technical Assessments and Valuations of Mineral Assets
(VALMIN Code, 2015 edition). The technical assessment has been completed using
the principles of Competence, Materiality and Transparency as defined by the
VALMIN Code. Neither the fact that the report has been prepared for BHP Group
Limited (BHP), nor the analysis contained in the report should be interpreted
as acts of management or control over the NOJV's activities.
Where Mineral Resources and Exploration Results are referenced, these have
been prepared and disclosed in accordance with the JORC Code (2012 Edition) or
other applicable reporting standards by appropriately qualified Competent
Persons who are members of Recognised Professional Organisations. The Mineral
Resource information referenced in this Report has been prepared by Mr. Luke
Evans, M.Sc., P.Eng. (Professional Engineers Ontario), Mr. Sean Horan, P.Geo.
(Professional Geoscientists Ontario), and Mr. Paul Daigle, P.Geo. (Engineers
and Geoscientists British Columbia), each of whom has relevant experience
appropriate to the style of mineralisation and type of deposit described. This
Report includes an update to the Mineral Resources as of 31 December 2025.
The technical assessment expressed in this Report has been prepared by
independent experts. The Competent Persons responsible for Mineral Resource
estimates relied upon in this Report are also independent.
Other authors contributing to this Report are employed by Vicuña Corp and are
therefore not independent. Their contributions are limited to the preparation
of technical, factual and descriptive information.
The authors have prepared this Report in accordance with the VALMIN Code, and,
to the best of their knowledge, there are no material conflicts of interest
that would reasonably be expected to influence the conclusions of this Report.
In preparing the Report, reliance has been placed, where appropriate, on
information, interpretations and data prepared by suitably qualified experts
in specialist disciplines. Such reliance is considered reasonable given the
scale and complexity of the Project, and responsibility for those specialist
inputs remains with the respective contributors.
This Report has been prepared for public disclosure and is intended for use by
investors, professional advisers, and other stakeholders seeking a high-level
technical assessment of the Project. It does not constitute an Ore Reserve
statement, a feasibility study, or a recommendation to proceed with
development and should not be relied upon for any purpose other than that for
which it was prepared.
2. Property description
The Vicuña Project was formed by combining two former project areas, the Filo
del Sol and the Josemaría projects, each with its own ownership history and
internal property subdivisions resulting from acquisitions and the presence of
provincial and international boundaries.
The Property spans the border between Argentina and Chile. Chilean mineral
tenures are situated approximately 140 km southeast of Copiapó in Region III,
while Argentinean mineral tenures lie roughly 350 km northwest of San Juan
City within the Iglesia Department, San Juan Province.
2.1 Property location
The Vicuña Project is located in the central Andes along the international
border of Argentina and Chile, within the Vicuña District. The Project area
lies within the San Juan Province in Argentina and the Atacama Region in
Chile.
The Project comprises a group of mineral properties that include the Filo del
Sol and Josemaría deposits, which are situated approximately 350 km northwest
of the city of San Juan, Argentina, and approximately 150 km southeast of the
city of Copiapó, Chile. The Project is located in a high-altitude Andean
setting, with elevations generally exceeding 4,000 m above sea level.
Regional access to the Project area is provided by a combination of paved and
gravel roads connecting from established population centres in Argentina and
Chile. Existing infrastructure in the region includes public road networks,
border crossings, and nearby towns that provide logistical support for
exploration and development activities.
The location of the Project, including national and provincial boundaries,
nearby towns, access routes, and the positions of the deposits, is shown in
Figure 2-1.
Figure 2-1: Vicuña Project location
2.2 Physiography
The Project is located in a region characterised by rugged mountainous
terrain, high elevations, and steep relief. The Project area lies along the
crest and eastern flank of the Andean Cordillera, with elevations typically
ranging from approximately 4,000 m to over 5,500 m above sea level.
Topography within the Project area is dominated by steep ridges, narrow
valleys, and high-altitude plateaus. Drainage is generally poorly developed
and consists of ephemeral streams and snowmelt-fed channels that flow
seasonally, primarily during warmer months. Surface water availability is
limited and highly variable due to climatic conditions and elevation.
The region experiences an arid to semi-arid alpine climate, with low annual
precipitation, most of which falls as snow at higher elevations. Vegetation is
sparse and largely restricted to isolated patches in protected areas and along
drainage corridors. Large areas of exposed bedrock, colluvium, and surficial
deposits are present across the Project area.
Physiographic conditions, including elevation, climate, and terrain, influence
access and logistics and are important considerations in the planning and
execution of activities within the Project area.
2.3 Access
The Project is accessible from regional centres in San Juan Province,
Argentina, and from northern Chile via a combination of paved highways,
secondary roads, and site access tracks. Regional access is provided by
established public road networks connecting the Project area to nearby towns
and cities that serve as logistical hubs for personnel, supplies, and
services.
Access to the Project area is achieved using a network of maintained gravel
roads and exploration tracks that have been developed over successive
exploration campaigns. These routes provide access to key areas within the
Project and are generally suitable for standard light vehicles under normal
operating conditions. Due to the high elevation, mountainous terrain, and
climatic conditions, access may be subject to seasonal limitations,
particularly during periods of snowfall or adverse weather. Access conditions
can vary year to year depending on weather patterns and maintenance
requirements.
Air access is available via regional airports located in San Juan Province and
northern Chile, with helicopter support used periodically to facilitate access
to remote areas, to transport personnel, and support exploration activities.
2.4 Climate and length of operating season
The Project is located in a high-altitude Andean environment characterised by
an arid to semi-arid climate, cold temperatures, low precipitation, and strong
seasonal variability. Elevations across the Project area generally exceed
4,000 m above sea level, resulting in Andean climatic conditions.
Precipitation is generally low and occurs predominantly as snowfall during the
austral winter months. Snow accumulation, freezing temperatures, strong winds,
and rapidly changing weather conditions can affect access and field
operations, particularly during winter.
Exploration activities have historically been concentrated during the austral
summer and shoulder seasons, when weather conditions are generally more
favourable. However, recent exploration programs have demonstrated that
drilling can be conducted during winter months in selected areas, subject to
local conditions, access, and appropriate logistical and safety controls.
The length and continuity of the effective operating season for exploration
activities therefore varies across the Project area and from year to year,
depending on elevation, terrain, weather patterns, and the specific nature of
the work being undertaken. Seasonal and climatic constraints remain an
important consideration in planning and scheduling exploration programs.
2.5 Ownership interest
The Vicuña Project is held under a joint venture arrangement between two
parties, with each party holding an equal ownership interest in the Project.
The joint venture structure governs the exploration, evaluation, and
development activities within the Project area.
The Project is owned and operated by Vicuña Corp., which was formed following
a series of corporate transactions completed in January 2025 that resulted in
the consolidation of ownership of the Josemaría and Filo del Sol deposits
under a single operating entity. The joint venture between BHP Canada and
Lundin Mining is governed by a shareholders' agreement that defines
governance, operator designation, funding and capital contribution
obligations, approval of programs and budgets, and decision-making processes.
The Project comprises a group of mineral properties located in Argentina and
Chile, with ownership interests held through locally registered, wholly owned
subsidiaries in each jurisdiction, in accordance with applicable national and
provincial laws. These subsidiaries hold the relevant mineral concessions,
surface access agreements, and contractual rights associated with the Project.
Ownership interests in the Project are subject to the terms and conditions of
the joint venture and related agreements, which define the rights and
obligations of the parties with respect to funding, management,
decision-making, and transfer of interests.
The Mineral Resource estimates presented in this report are stated on a 100%
Project basis. Attributable interests are derived by applying the relevant
ownership percentages to the reported Mineral Resources. The Mineral Resource
estimates include an update from the estimates reported by BHP in the Annual
Report.
2.6 Agreements
The Vicuña Project is subject to a number of material agreements that govern
mineral tenure, surface access, royalties, and cross-border activities. These
agreements provide the legal and contractual framework under which exploration
and evaluation activities are conducted within the Project area.
Material agreements applicable to the Project include mineral tenure
agreements, option and acquisition agreements associated with certain
properties, net smelter return royalty arrangements on selected concessions,
and agreements relating to surface access and infrastructure corridors. These
agreements are typical of large, multi-property mineral projects and reflect
the historical evolution of land tenure and exploration activity within the
Project area.
The Project is also subject to the Mining Integration and Complementation
Treaty between Chile and Argentina, which establishes a legal framework to
facilitate mining activities in designated border regions. Under this treaty,
specific additional protocols may be established to govern exploration and
development activities for binational mining projects.
Exploration activities at the Josemaría and Filo del Sol deposits have been
conducted within the framework of a specific additional protocol established
under the treaty. The treaty and associated protocols provide for coordination
between the two jurisdictions with respect to permitting, access, and
regulatory oversight applicable to cross-border mining activities.
The agreements described above are considered customary for projects of this
nature and stage and do not, in themselves, constitute a guarantee of future
development or project advancement.
2.7 Mineral tenure
Mineral tenure for the Project comprises granted exploration and exploitation
concessions located in both Argentina and Chile. The Project is located
within a binational setting along the Argentina-Chile border, and mineral
tenure is therefore governed by the respective national and provincial mining
legislation in each jurisdiction.
2.7.1 Argentina
In Argentina, mineral concessions are administered by the provincial mining
authority of San Juan Province. The Project includes multiple granted
exploitation concessions (minas) and exploration permits (cateos) covering the
areas hosting the Josemaría and Filo del Sol deposits.
Mineral tenure in Argentina is held by locally registered entities and
consists primarily of exploitation concessions, together with a smaller number
of exploration permits. The Mineral Resource estimate for the Josemaría
deposit is predominantly hosted within a single exploitation concession, with
minor overlap into adjacent concessions. The portion of the Filo del Sol
deposit located in Argentina is hosted within a group of contiguous
exploitation concessions. The relationship between the deposits and the
Argentine mineral tenure is shown in Figure 2-3.
Figure 2-3: Mineral tenure location plan. Argentina
2.7.2 Chile
In Chile, mineral tenure comprises granted mining concessions, including both
exploitation and exploration concessions, administered in accordance with
Chilean mining legislation. The Chilean portion of the Project includes
multiple granted concessions covering the area of the Filo del Sol deposit.
The Mineral Resource estimate for the Chilean portion of the Filo del Sol
deposit is located within a defined group of granted mining concessions. The
relationship between the deposit and the Chilean mineral tenure is shown in
Figure 2-4.
Figure 2-4: Mineral tenure location plan. Chile
2.7.3 Tenure status
All material mineral concessions comprising the Project were confirmed to be
current and in good standing as of the effective date of this report, subject
to ongoing compliance with applicable legislative requirements, including the
payment of fees and fulfilment of statutory obligations.
2.8 Surface rights
Surface rights required for exploration activities within the Project area are
secured through a combination of ownership, statutory rights associated with
mineral tenure, easements, and negotiated access agreements with relevant
landholders and government authorities.
2.8.1 Argentina
In Argentina, mineral concessions forming part of the Project are located
within a multiple-use area of the San Guillermo Provincial Reserve, where
mining activities are permitted in accordance with applicable provincial
regulations. Certain areas of the Project are subject to environmental
oversight requirements associated with the Guillermo Provincial Reserve and
its designated buffer zones. Access and exploration activities within these
areas are conducted subject to compliance with applicable environmental
approvals and supervision requirements.
Surface access and infrastructure requirements in Argentina are supported by
occupancy easements granted or requested through the provincial mining
authority. These easements relate to activities such as access roads,
infrastructure placement, and water use. Some easements have been granted,
while others remain subject to ongoing administrative processes. The current
status of surface rights and easements does not preclude the conduct of
authorized exploration activities.
2.8.2 Chile
In Chile, surface access to the Project area is secured through a combination
of statutory rights associated with granted mining concessions and negotiated
access agreements. Agreements are in place to provide surface access to the
Tamberías property (Figure 2-4) and other areas of the Chilean tenure
holdings, in accordance with Chilean mining and land access legislation.
2.8.3 General considerations
Surface access arrangements across the Project area consider existing land
uses, environmental protection measures, and regulatory requirements
applicable in each jurisdiction. Surface rights are managed in a manner
consistent with the stage of exploration and evaluation of the Project.
2.9 Water rights
Water resources applicable to the Project are regulated under
jurisdiction-specific legislative frameworks in Argentina and Chile.
2.9.1 Argentina
In the Province of San Juan, water resources are owned by the province and are
administered by the relevant provincial authorities. Water use for exploration
activities within the Project area is currently supported by temporary water
permits issued in accordance with applicable regulations. These permits are
typical for exploration-stage activities and are subject to regulatory
conditions, monitoring, and renewal requirements.
2.9.2 Chile
In Chile, water rights are privately held and are regulated under Chilean
water legislation. The Project does not currently rely on permanent water
rights in Chile for exploration activities. Water supply options for potential
future stages of the Project have been evaluated in technical studies and
include a range of alternatives consistent with regulatory requirements and
environmental considerations.
These alternatives include the potential use of desalinated seawater sourced
from the Chilean coast and conveyed to the Project area via a pipeline. Such
options remain subject to further technical evaluation, permitting, and
regulatory approvals and do not form part of the current exploration-stage
water supply arrangements.
2.10 Royalties
The Project is subject to royalties arising under applicable Argentine and
Chilean fiscal regimes, as well as contractual royalties associated with
certain mineral tenures.
2.10.1 Argentina
Mineral tenure within Argentina are subject to statutory royalties in
accordance with provincial mining legislation. In addition, certain tenures
are subject to contractual royalty arrangements.
Contractual royalties applicable to the Argentine portion of the Project
include net profit interest (NPI) royalties on specific properties that host
portions of the Mineral Resource, primarily within the area of the Josemaría
deposit. A smaller portion of the Mineral Resource associated with the Filo
del Sol deposit is subject to a one-time contingent payment obligation
triggered upon the commencement of commercial production within specified
concessions.
These contractual royalty arrangements are considered customary for properties
of this nature and stage and would apply only in the event of future mining
operations.
2.10.2 Chile
Mineral tenures within Chile are subject to statutory royalties under Chilean
mining and fiscal legislation. In addition, certain Chilean concessions
forming part of the Project are subject to a contractual net smelter return
(NSR) royalty under an option agreement relating to the Tamberías property.
The contractual NSR royalty would apply to mineral production from the
relevant concessions. If the option is exercised and the concessions are
acquired. The royalty terms include provisions that allow for modification or
extinguishment of the royalty under specified conditions.
3. Geology and Mineral Resources
3.1 Property and production history
3.1.1 Exploration and study history
Exploration activity within the Project area was conducted intermittently over
several decades and has included surface geochemical sampling, geophysical
surveys, geological mapping, and diamond and reverse circulation drilling
programs undertaken by several operators.
Early-stage exploration primarily focused on regional reconnaissance and
surface evaluation, including mapping and geochemical sampling, aimed at
identifying areas of potential mineralisation. These activities informed the
targeting of subsequent drilling programs.
More systematic exploration drilling was undertaken during later campaigns,
incorporating both reverse circulation and diamond drilling methods. Drilling
programs were designed to test geological, alteration, and mineralisation
concepts interpreted from surface work and early drilling results. Drill hole
data collected during these programs contributed to evolving geological
interpretations of the deposit area.
As exploration advanced, additional drilling was completed to further define
the spatial distribution of mineralisation and to provide data suitable for
mineral resource estimation. Geological modelling, assay data analysis, and
supporting technical work were undertaken concurrently with these drilling
programs by the project operators and their consultants.
Mineral Resource estimates were prepared and updated periodically as
additional drilling and technical data became available. These estimates were
completed by independent consultants in accordance with applicable reporting
standards current at the time of preparation.
Subsequent technical studies, including conceptual economic studies, were
completed to evaluate potential development scenarios based on the available
geological, metallurgical, and engineering information. These studies
incorporated assumptions and inputs appropriate to their respective study
levels and were prepared using the data available at the time.
Exploration drilling and technical studies have continued in parallel with
ongoing geological interpretation and data review. The current understanding
of the Project reflects the cumulative outcome of these exploration and study
activities.
3.1.2 Past production
No mining, bulk sampling for commercial sale, or processing of mineralised
material for production purposes has been undertaken.
There has been no historical or current commercial mineral production from the
Project area to date.
3.2 Regional geology
The Project is located within the Andean Cordillera of northern Chile and
western Argentina, a region characterised by long-lived magmatic, tectonic,
and metallogenic activity associated with subduction along the western margin
of the South American plate. The Project's regional geological setting is
illustrated in Figure 3-1.
Figure 3-1: Regional geological setting of the Vicuña Project (after Devine,
2025).
The regional geological setting comprises a sequence of volcanic,
volcaniclastic, and intrusive rocks of predominantly Mesozoic to Cenozoic age,
which have been affected by multiple phases of deformation, magmatism, and
hydrothermal alteration, resulting in a variety of mineral deposit styles
across the broader region.
Regional-scale structures, including faults and lineaments, reflect a complex
tectonic history involving compressional and extensional regimes. These
structures have influenced the emplacement of intrusive bodies and the
distribution of alteration and mineralisation at a regional scale.
Magmatic activity within the region is represented by a range of intrusive and
extrusive lithologies, including intermediate to felsic compositions.
Hydrothermal systems associated with this magmatism have locally resulted in
alteration assemblages and mineralisation typical of Andean metallogenic
belts.
The regional geology provides a geological framework for the Project area;
however, mineralisation is controlled by local geological, structural, and
hydrothermal factors, which are described in subsequent sections.
3.3 Local geology
The Project area is underlain by a sequence of volcanic, volcaniclastic,
sedimentary, and intrusive rocks that have been mapped and interpreted based
on surface mapping, drill core logging, and supporting geophysical and
geochemical data. The local geological setting of the Project area is shown
in Figure 3-2.
Figure 3-2: Local geological map of the Vicuña Project area (after Vicuña,
2025).
Volcanic and volcaniclastic units form a significant component of the local
stratigraphy and comprise a range of intermediate to felsic compositions.
These units occur as flows, tuffs, and volcaniclastic sequences and exhibit
variable degrees of alteration and deformation. Sedimentary units are present
locally and include clastic lithologies deposited in continental to shallow
marine environments.
Intrusive rocks occur within the Project area as stocks, dykes, and irregular
intrusive bodies of intermediate to felsic composition. These intrusions have
been identified through surface mapping and drilling and are spatially
associated with zones of alteration and mineralisation described in subsequent
sections.
The Project area has been affected by multiple phases of deformation,
resulting in the development of faults and fracture systems at a range of
orientations and scales. Structural features observed include major faults and
subsidiary structures, which locally influence lithological contacts and
alteration patterns. The relative timing and kinematics of these structures
have been interpreted based on field observations and drill core data.
Hydrothermal alteration is widespread within the Project area and includes
assemblages typical of magmatic-hydrothermal systems. Alteration intensity and
assemblage types vary spatially and are observed across multiple lithologies.
Alteration styles and their spatial distribution are described in more detail
in the mineralisation section of this report.
The local geological interpretation reflects the current understanding derived
from cumulative exploration activities and technical studies completed to
date. Ongoing exploration and data collection may result in refinement to this
interpretation.
3.4 Deposit geology
3.4.1 Deposit dimensions
Mineralisation within the Project area occurs within two principal deposits,
Filo del Sol and Josemaría, which together comprise multiple mineralised
zones delineated through surface exposure and drilling completed to date. The
dimensions described below reflect the current interpreted spatial extent of
mineralisation based on available drilling and geological information and do
not imply continuity beyond the limits of data and may be refined as
additional drilling or technical work is completed.
The Filo del Sol deposit, including the Tamberías, Aurora, and Bonita zones,
extends over an approximate strike length of 6.5 km in a northeast-southwest
orientation. In plan view, the width of mineralisation varies along strike and
reaches a maximum of approximately 1.5 km in the Aurora zone. Drilling has
intersected mineralisation to depths of up to approximately 1.8 km below
surface, with the vertical extent varying across the deposit. Based on
drilling completed to date, mineralisation at Filo del Sol remains open to the
north, south, east, west, and at depth.
The Josemaría deposit is partly exposed at surface and has an interpreted
plan extent of approximately 1.0 km east-west by 1.5 km north-south, as
defined by surface mapping and drilling. Mineralisation at Josemaría has been
intersected to vertical depths of approximately 600 m to 700 m below surface,
with the depth extent constrained by the limits of current drilling. The
deposit remains open to the south beneath a thickening cover of
post-mineralised volcanic rocks and also at depth.
3.4.2 Lithologies
At Filo del Sol, lithologies include a complex assemblage of volcanic and
volcaniclastic units of intermediate to felsic composition, together with
intrusive rocks that occur as stocks, dykes, and irregular intrusive bodies.
Volcanic and volcaniclastic units comprise lava flows, tuffs, breccias, and
reworked volcaniclastic material, which display variable textures, grain
sizes, and degrees of alteration. These units are intercalated locally with
sedimentary horizons.
Intrusive rocks at Filo del Sol have been intersected in multiple drill holes
and intrusions vary in geometry and texture and include porphyritic and
equigranular phases. Contacts between intrusive and volcanic or volcaniclastic
units are locally irregular and have been interpreted based on drilling and
geological observations.
At the Josemaría deposit, lithologies are dominated by volcanic and
volcaniclastic rocks intruded by intermediate to felsic intrusive bodies.
Volcanic units include flows and volcaniclastic sequences that are variably
altered and locally overprinted by intrusive phases. Intrusive rocks occur as
stocks and dykes and have been identified through surface exposure and
drilling.
Across both deposits, lithological contacts are variably affected by
deformation and hydrothermal alteration, resulting in locally diffuse or
modified boundaries between units. Lithological interpretations are based on
the integration of surface mapping, drill core logging, and supporting
geological data.
The lithological framework described above reflects the current geological
interpretation derived from available data. Ongoing drilling and geological
studies may result in refinement to lithological boundaries and unit
classifications.
Maps showing the Filo del Sol and Josemaria geology are provided in Figure 3-3
and Figure 3-4 respectively.
Figure 3-3: Deposit geological map, Filo del Sol (after Vicuña, 2025).
Figure 3-4: Deposit geological map, Josemaria.
3.4.3 Structure
The Project area has been affected by multiple phases of deformation,
resulting in the development of structural features at a range of orientations
and scales. Structural interpretations are based on surface mapping, drill
core logging, and the analysis of drill hole data.
Observed structural features include faults, fracture zones, and joint sets
that locally influence lithological contacts and alteration patterns. Faults
occur at a range of orientations and displacements and are expressed variably
in surface exposures and drill intersections. Some faults are interpreted to
be regionally significant, while others appear to be more local and associated
with the mineralisation.
Fracturing and jointing are widespread and vary in intensity across different
lithologies and alteration zones. These features have been identified through
drill core observations and surface mapping and contribute to local variations
in rock fabric and competency.
Structural complexity varies across the deposits and reflects the cumulative
effects of deformation, intrusion, and hydrothermal alteration. Structural
interpretations remain subject to refinement as additional drilling and
geological data become available.
3.4.4 Alteration
Hydrothermal alteration is widespread within the Project area and has been
identified through surface mapping, drill core logging, and supporting
geological studies. Alteration assemblages vary spatially and are observed
across multiple lithologies and structural domains.
At the Filo del Sol deposit, alteration includes assemblages typically
associated with magmatic-hydrothermal systems and comprises a range of
alteration styles, including potassic, phyllic, argillic, advanced argillic,
and propylitic alteration. These alteration styles occur in differing
proportions and intensities across the deposit and locally overprint earlier
lithological and structural features. Zones of intense alteration are observed
in both near-surface and deeper parts of the system, as defined by drilling
and surface exposure.
At the Josemaría deposit, alteration assemblages include potassic, phyllic,
and propylitic styles, together with locally developed argillic alteration.
Alteration is variably developed across the deposit and has been identified in
association with both volcanic and intrusive lithologies. The distribution and
intensity of alteration at Josemaría have been interpreted based on surface
mapping and drill core observations.
Across both deposits, alteration boundaries are locally diffuse and may be
modified by later deformation and superimposed alteration events. Alteration
interpretations reflect the current understanding derived from available
geological data and are subject to refinement as additional drilling and
geological studies are completed.
3.4.5 Weathering
Weathering has affected the upper portions of the deposits within the Project
area and is expressed by oxide and transitional zones overlying less weathered
material at depth. The depth and intensity of weathering vary across the
deposits and reflect a combination of geological, structural, and topographic
factors.
At the Filo del Sol deposit, weathering extends from surface to variable
depths below surface, as defined by drilling and surface exposure. The
weathered profile locally includes zones of strong oxidation and leaching,
together with transitional intervals where weathering effects decrease with
depth. The thickness and continuity of weathering vary spatially across the
deposit.
At the Josemaría deposit, weathering is generally less extensive and is
influenced by surface exposure and local geological conditions. Weathered
material occurs near surface and transitions to less weathered rock at depth,
with the depth to fresh rock varying across the deposit.
The boundaries between weathered, transitional, and less weathered material
are locally diffuse. The weathering profile described above reflects the
current understanding based on available drilling and surface data and may be
refined as additional information becomes available.
3.4.6 Mineralization
Mineralisation within the Project area comprises copper and gold, with arsenic
present as an associated element, occurring in multiple mineralised zones
within the Filo del Sol and Josemaría deposits.
At the Filo del Sol deposit, mineralisation occurs in several zones, including
the Tamberías, Aurora, and Bonita zones, and is present in both near-surface
and at depth. Copper mineralisation is observed in oxide, transitional, and
sulphide forms, while gold mineralisation occurs in association with both
oxidised and sulphide material. Arsenic is present locally within mineralised
intervals and has been identified in association with sulphide mineralisation.
The distribution of mineralisation varies spatially and reflects the complex
geological setting of the deposit as defined by drilling and geological
interpretation.
At the Josemaría deposit, mineralisation is characterised by copper and gold,
and arsenic occurring as an associated element. Mineralisation occurs within
both volcanic and intrusive host rocks and has been intersected from surface
to depth in multiple drill holes. Mineralisation occurs in oxidised and
sulphide forms, with transitional material present locally.
Across both deposits, mineralisation boundaries are irregular and locally
diffuse. Variations in metal content, associated elements, mineral
assemblages, and oxidation state are observed both laterally and vertically,
and continuity of mineralisation varies within and between zones. The
descriptions provided above reflect the current interpretation based on
available drilling and surface data and do not imply continuity beyond the
limits of existing information.
3.5 Exploration activities
Exploration activities within the Project area were conducted in multiple
phases by various operators and included geological mapping, geochemical
sampling, geophysical surveys, and drilling. These activities were undertaken
to improve the geological understanding and to delineate mineralised zones
identified through surface exposure and subsurface data.
Early exploration work focused on regional and local scale geological mapping
at scales ranging from 1:5,000 to 1:10,000 and surface sampling, including
8,207 talus, 2,296 rock chip and 3,729 trench and road cut samples to
characterise lithologies, structures, and alteration. This work contributed to
the identification of prospective areas within the Project boundary and
informed the location of subsequent exploration programs.
Geophysical surveys, including airborne and ground-based methods such as
induced polarization, resistivity, magnetic, magneto telluric data acquisition
(MIMDAS), and controlled source audio magneto telluric surveys, were completed
over portions of the Project area at various stages of exploration.
These surveys were used to assist in the interpretation of subsurface geology
and structural features and to support drill targeting. The coverage,
resolution, and survey parameters vary between programs and areas.
Exploration activities were conducted in accordance with applicable regulatory
requirements and industry practices at the time they were undertaken. The
exploration data generated through these activities form the basis for the
current geological interpretations and technical studies; however, the results
and interpretations are subject to the limitations inherent in the spacing,
depth, and distribution of exploration data.
3.6 Drilling
Drilling within the Project area was undertaken over multiple exploration
phases by different operators using a combination of diamond drilling and
reverse circulation drilling. Drilling programs were designed to test
geological interpretations derived from surface mapping, geophysical data, and
prior drilling results, and to evaluate mineralisation at depth.
As of 31(st) October 2025, a total of 1,029 drill holes comprising
approximately 378,662 m of drilling had been completed across the Project area
(Figure 3-8).
Figure 3-8: Drill collar location map, Vicuña Project Area
This total includes exploration drilling completed at the Josemaría and Filo
del Sol deposits, together with additional drilling undertaken for purposes
such as potential site infrastructure investigations, hydrogeological studies,
and water supply. Not all drill holes were included in the geological or
mineralisation datasets used for technical studies. Drill core obtained from
diamond drilling was also used, where appropriate, for geotechnical logging,
hydrogeological observations, and the collection of samples for metallurgical
testwork.
At the Filo del Sol deposit, drilling was conducted across multiple
mineralised zones, including the Tamberías, Aurora, and Bonita zones. Drill
holes were collared from surface and oriented to test mineralisation over a
range of depths and spatial extents. The Filo Mineral Resource estimate is
supported by 236 diamond drill holes (186,588.5 m), and 196 reverse
circulation drill holes (47,491 m).
Drilling continues at Filo del Sol however, data from the post-cut-off
drilling has not been incorporated the technical studies.
At the Josemaría deposit, drilling was completed from surface and tested
mineralisation across the interpreted extent of the deposit. Drill hole
locations, orientations, and depths vary across the deposit and reflect the
geological understanding at the time of drilling. Drilling used to support the
estimation of Mineral Resources consists of 195 diamond drill holes (89,966.2
m) and 48 reverse circulation drill holes (17,538 m). No additional drilling
has been completed at Josemaría since December 2022.
Diamond drilling provides continuous core for geological logging and sampling,
while RC drilling has been used primarily for shallower drilling and as
pre-collars for deeper diamond drill holes. Drill hole locations,
orientations, and depths are recorded in the Project database and form the
basis for geological interpretation and subsequent technical evaluations.
Drilling coverage, spacing, and depth vary across the Project area, and the
level of geological confidence differs accordingly.
Standardised logging protocols and specialised software were employed to
systematically document geological and geotechnical data. This could include
lithology, alteration characteristics, structural features, mineralisation
descriptions, sulphide content percentages, mineralogical analysis,
spectrometry (ASD), X-ray fluorescence, magnetic susceptibility and electrical
conductivity, core photography, rock quality designation (RQD), recovery
rates, and specific gravity measurements.
The diamond drill holes at Filo del Sol achieved an overall average core
recovery rate of 95%. Sample recovery varies according to the level of
oxidation from 91% in oxide and 95% in sulphur. The drill core obtained from
the Josemaría deposit consistently demonstrates high competency. Core
recovery rates showed minimal variation across drilling programs, with
averages ranging between 94% and 95%.
Differential global positioning system (GPS) instruments were used to locate
drill collars. Instrumentation used for down-hole surveys varied by
campaign, and included Reflex multi-shot instruments, SRG-gyroscope surveys,
and Champ Navigator tools. Down hole survey depths varied from 10-50 m
intervals.
For both copper and silver at Filo del Sol, drilled widths are essentially
true widths, as the steep to vertical drill holes pierce the zones at
near-perpendicular angles. Gold distribution is more complex, manifesting in
both disseminated, sub-horizontal layers and presumed steep, structurally
controlled zones. The drilled widths for the disseminated and sub-horizontal
gold-bearing zones are essentially true widths, similar to those for copper
and silver; however, the drilled width of the structurally controlled zones
are likely to exceed the true widths. Josemaría is classified as a porphyry
deposit. The reported and described interval thicknesses are regarded as
representing true thicknesses.
3.7 Sample preparation and analysis
Sampling and assaying within the Project area were conducted over multiple
exploration phases by different operators using procedures consistent with
industry practices at the time the work was undertaken. Samples primarily on
consists of diamond drilling and reverse circulation drilling.
For diamond drilling, core was typically cut using a core saw, with a portion
of the core retained for reference and the remaining portion submitted for
analysis. Core samples ranged from 1-2 m lengths. Over the course of the
Project's exploration history, the retained reference portion evolved from
half-core to quarter-core practices, reflecting changes in sampling protocols
implemented at different times. Sampling intervals were generally selected
based on geological boundaries, with sample lengths varying according to
lithology, alteration, and mineralisation characteristics. Reverse circulation
samples were collected at regular intervals and handled using standard
procedures appropriate for the method of drilling
For reverse circulation drilling, samples were collected at the drill rig at
regular intervals. At Josemaría, RC samples were typically collected over
two-metre intervals, with bulk sample weights of approximately 40 kg. At Filo
del Sol, RC samples were typically collected over one-metre intervals, with
bulk sample weights of approximately 30 kg to 40 kg. In both cases, samples
were split at the rig, with representative sub-samples of approximately 5 kg
submitted for laboratory analysis. In some programs, consecutive RC intervals
were composited prior to submission. Sample handling, splitting, and transport
were conducted using industry-accepted practices applicable at the time of
drilling.
Bulk density measurements were collected on diamond drill core during multiple
exploration campaigns at both the Josemaría and Filo del Sol deposits.
Density determinations were typically completed using the water immersion
(Archimedes) method on unsealed core samples. During portions of the 2021 and
2022 programs at Josemaría, some samples were wrapped in plastic film prior
to immersion; however, this practice was discontinued after it was determined
that trapped air introduced a positive bias in the results. Density
measurements affected by this practice were excluded from use in Mineral
Resource estimation. Density data were collected across a range of
lithologies, alteration styles, oxidation states, and mineralisation types and
were stored in the project database for use in Mineral Resource estimation.
Beginning in 2024, bulk density determinations were routinely completed by ALS
Global as part of the laboratory sample preparation workflow, rather than
being measured on site by project personnel. The density measurement
procedures were reviewed by the SLR Competent Person during site visits and
were found to be consistent with standard industry practice.
Sample preparation and analytical work were undertaken by independent
commercial laboratories, including ALS Global, SGS Minerals Services, and
Bureau Veritas Commodities, or their predecessor entities, depending on the
timing of individual exploration programs. These laboratories are independent
of BHP, Lundin Mining and their related entities.
The laboratories used for sample preparation and analysis operate facilities
accredited to internationally recognised quality management standards,
including ISO/IEC 17025 or equivalent accreditation applicable at the time the
work was completed.
Samples were dried, crushed, and pulverized. Crushing and pulverization
sizes varied by campaign. Crushing included >70% passing -2 mm mesh, and
85% passing 10 mesh sizes. Pulverizing included >85% passing -75 µm
screen, 85% passing 200 mesh, and 95% passing 200 mesh sizes,
Analytical methods employed were appropriate for the determination of copper,
gold, silver, arsenic, and other elements of interest. The specific analytical
techniques and detection limits varied between programs and laboratories and
reflect the analytical standards and practices in place at the time of
analysis. Gold was typically determined using fire assay and an atomic
absorption spectroscopy (AAS) finish. Other elements, including copper and
silver, were determined using a multi-element analysis (suite of elements
varied from 27 to 48). Copper and silver could also be determined
individually with an AAS finish. Acid-soluble and cyanide-soluble copper were
determined from sequential analysis in some campaigns.
3.8 Quality assurance and quality control
Quality assurance and quality control (QA/QC) procedures were implemented
during sampling and assaying programs to monitor analytical performance and
data quality. QA/QC practices were applied by different operators over
multiple exploration phases and reflect industry-accepted practices in place
at the time the work was undertaken.
QA/QC measures included the routine insertion of certified reference materials
(standards), blanks, and duplicate samples into the sample stream at
predetermined frequencies. These control samples were used to assess
analytical accuracy, precision, and potential contamination during sample
preparation and analysis. The types and frequencies of QA/QC samples varied
between programs over time and included blanks, standards and field-, pulp-
and assay duplicates. For assay quality control, certified reference
materials, blanks, and duplicate samples were typically inserted at a
frequency of approximately one control sample per ten routine assay samples,
while bulk density determinations submitted to the laboratory were processed
in batches of approximately 50 samples, with five samples randomly
re-submitted in each batch to monitor measurement repeatability.
QA/QC results were reviewed on an ongoing basis as part of exploration and
technical evaluation workflows. Where identified, anomalous results or
departures from expected performance were investigated and addressed in
accordance with established procedures, which included re-analysis or
resampling where appropriate.
Based on reviews completed to date, the analytical data generated from the
sampling and assaying programs are considered suitable for use in geological
interpretation and subsequent technical studies.
3.9 Data verification
Data used in geological interpretation and technical studies for the Project
have been generated through exploration activities conducted over multiple
phases by different operators. Data verification has been undertaken through a
combination of routine internal processes and targeted third-party reviews
completed for specific technical purposes.
Verification activities included checks of drilling, sampling, and assay data
during data capture and database management processes. These checks comprised
reviews of collar locations, downhole survey data, sample intervals, and assay
results to identify potential errors, inconsistencies, or omissions. Database
validation procedures and internal consistency checks were applied as part of
ongoing data management and technical workflows.
In addition to routine internal verification, selected aspects of the Project
data and geological interpretations were subject to external technical review.
These reviews included assessments of geological models, inputs to Mineral
Resource, and underlying drilling and sampling data, and were undertaken to
support technical evaluation and study work. The reviews were limited in scope
to their stated purposes and did not constitute independent audits of the
Project data as a whole.
As part of recent data management activities, the drill hole and sampling
database was reviewed to support data integrity, validation, and internal
consistency within the current database structure. This work focused on data
completeness, structure, and logical consistency and did not include
independent verification of geological interpretation or analytical results.
The data verification activities described above are considered appropriate
for the nature and stage of the Project and form the basis for the geological
interpretations and technical studies referenced herein, subject to the
inherent limitations associated with data density, spatial distribution, and
historical exploration practices.
3.10 Mineral Resource estimation
Mineral Resource estimates were prepared for the Josemaría and Filo del Sol
deposits using geological, drilling, sampling, and analytical data generated
through multiple phases of exploration. The estimates were completed as part
of formal technical studies and were prepared in accordance with the JORC Code
(2012).
Geological models were developed for each deposit based on interpretations of
lithology, alteration, mineralisation, and structure derived from drilling
data and supporting studies. These models defined geological and mineralised
domains that formed the framework for grade estimation.
At Filo del Sol, Mineral Resource estimation was carried out using
conventional block modelling techniques. Assay data were composited to
appropriate lengths prior to estimation, considering the variability of the
mineralisation. Variography was undertaken within defined geological domains
to inform the selection of estimation parameters and interpolation strategies.
Grade interpolation methods were selected based on the spatial characteristics
of the mineralisation and the available data density, supported by statistical
analysis of assay data.
At Josemaría, the Mineral Resource estimate was developed using conditional
simulation techniques to better represent grade variability and uncertainty
within the deposit. Assay data were composited prior to simulation,
considering the variability of the deposit, and variograms modelling was
undertaken to characterise spatial continuity within the defined geological
domains. Simulated grade realisations formed part of the estimation workflow
and informed classification decisions consistent with the geological
understanding of the deposit and the available data.
For both deposits, bulk density values were assigned to the Mineral Resources
based on available density measurements collected from drill core and other
relevant data. Density domains were defined where appropriate to reflect
variations associated with lithology, alteration, and oxidation state
Model validations were undertaken as part of the estimation process and
included comparisons of estimated grades against input drill hole data, visual
inspection of grade distributions in plan and section, and statistical checks
to assess global and local agreement between input data and model outputs.
These validations assessed the reasonableness of the Mineral Resource
estimates relative to the underlying data and geological interpretation.
Mineral Resources were classified into appropriate categories based on the
level of geological confidence, taking into account factors such as drilling
density and spacing, data quality, geological continuity, and the reliability
of the geological and estimation models. Classification criteria were
supported by stochastic simulation studies.
3.11 Reasonable prospects of eventual economic extraction
Mineral Resources for the Project have been reported with consideration of
reasonable prospects for eventual economic extraction in accordance with the
JORC Code (2012). The assessment of reasonable prospects was undertaken using
conceptual open pit constraints informed by the scoping study and supporting
technical studies.
For both deposits, Mineral Resources were constrained within conceptual open
pit shells optimised on net smelter return (NSR). NSR values were calculated
on a block-by-block basis and incorporated long-term metal price assumptions,
estimated metallurgical recoveries, concentrate treatment and refining
charges, transportation and logistics costs, royalties, and operating cost
assumptions appropriate to each deposit and mineralisation type.
Conceptual pit optimisations were completed using industry-standard
optimisation techniques and geotechnical slope assumptions derived from
site-specific studies. Processing and general and administrative costs were
applied as the primary pit discard criteria, with blocks required to
demonstrate a positive or marginal NSR value to be included within the
reporting constraints. Where relevant, revenue deductions associated with
deleterious elements were incorporated into the NSR calculations.
At Filo del Sol, conceptual pit shells were generated based on block model
estimates using appropriate economic and technical parameters. At Josemaría,
reasonable prospects were evaluated through pit optimization applied to each
realization of the stochastic simulation, with Mineral Resources reported as
the average of multiple optimized outcomes.
The resulting optimised pit shells are conceptual in nature and are not
intended to represent mine designs or Ore Reserves. However, they provide a
reasonable basis for demonstrating that the reported Mineral Resources have
potential for eventual economic extraction under assumed technical and
economic conditions. Mineral Resources are reported in situ and do not include
modifying factors such as dilution, mining recovery, or detailed production
scheduling, which will be addressed in subsequent stages of project
evaluation.
3.12 Mineral Resource statement
The Mineral Resources for the Project are reported on an in-situ basis and are
reported in accordance with JORC Code (2012). The Mineral Resource estimates
comprise the combined estimates for the Josemaría and Filo del Sol deposits
and form the basis for subsequent technical and economic evaluations
referenced in this report.
The Mineral Resource estimates for both Filo del Sol and Josemaria deposits
are stated as at December 31, 2025. The information in this report that
relates to Mineral Resource estimates for the Vicuña Project was prepared by
Competent Persons Mr. Luke Evans for Filo del Sol and Mr. Sean D. Horan and
Mr. Paul Daigle for the Josemaría estimate.
Mr Evans is a full-time employee of SLR Consulting (Canada). Mr Evans has
sufficient experience that is relevant to the style of mineralisation and type
of deposit under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the 'Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr
Evans consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
Mr Horan is a full-time employee of Resource Modeling Solution Ltd. Mr Horan
has sufficient experience that is relevant to the style of mineralisation and
type of deposit under consideration and to the activity being undertaken to
qualify as a Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves'. Mr Horan consents to the inclusion in the report of the matters
based on his information in the form and context in which it appears.
Mr Daigle is a full-time employee of AGP Mining Consultants Inc. Mr Daigle has
sufficient experience that is relevant to the style of mineralisation and type
of deposit under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the 'Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr
Daigle consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
The detailed Mineral Resource statement, including a breakdown by deposit,
zone, and classification, is presented in Table 3-1.
Table 3-1: Vicuña Project Mineral Resource as of 31 December 2025
Deposit Zone Category Tonnes Grades Contained Metal
(Mt)
Cu Au Ag Cu Au Ag
(%)
(g/t)
(g/t)
(kt)
(Moz)
(Moz)
Josemaría Sulphide Measured 648 0.33 0.25 1
Indicated 961 0.25 0.15 1
Inferred 683 0.22 0.11 1
Total 2,290 0.26 0.17 1
Filo del Sol Gold Oxide Measured - - - -
Indicated 301 - 0.25 3
Inferred 711 - 0.18 3
Total 1,010 - 0.20 3
Copper Oxide Measured - - - -
Indicated 467 0.32 0.27 3
Inferred 431 0.23 0.20 2
Total 898 0.28 0.24 2
Silver Oxide Measured - - - -
Indicated 71 0.36 0.36 120
Inferred 95 0.08 0.14 35
Total 166 0.20 0.23 71
Sulphide Measured - - - -
Indicated 1,730 0.46 0.34 6
Inferred 8,720 0.34 0.18 3
Total 10,500 0.36 0.21 3
Vicuña Project Total Measured 648 0.33 0.25 1
Indicated 3,530 0.34 0.27 6
Inferred 10,600 0.30 0.18 3
Total 14,800 0.31 0.20 4 46,600 97.4 1,780
Notes:
1. Mineral Resources reported in accordance with the JORC Code (2012)
2. Mineral Resources are reported in situ. The Filo del Sol estimates
were current at December 31, 2025, and the Josemaría estimates were current
at December 31, 2025.
3. Mineral Resources are reported on a 100% basis. The Project is a
50:50 joint venture between Lundin Mining and BHP Canada. BHP Canada's
attributable interest in the Mineral Resource estimate is 50%.
4. The Competent Person for the Filo del Sol estimates is Mr. Luke
Evans, M.Sc., P.Eng., an SLR Consulting (Canada) Ltd. employee. The Competent
Persons for the Josemaría estimate are Mr. Sean D. Horan, P.Geo., a Resource
Modelling Solutions Ltd. employee and Mr. Paul Daigle, P.Geo. a AGP Mining
Consultants Inc. employee,
5. Mineral Resource estimates for Filo del Sol were constrained within
a pit shell with pit slope angles of up to 45(o). Metal prices used were
US$4.60/lb. copper, US$2,875/oz gold, and US$32.50/oz silver. Net smelter
return (NSR) cut-off values and metallurgical recoveries varied by zone, and
included:
• Gold Oxide: 73% gold; 63% silver recoveries with an NSR
cut-off value of US$10.68/t;
• Copper and Silver Oxide: 67% copper, 63% gold, and 78% silver
recoveries with an NSR cut-off value of US$16.58/t;
• Sulphide: 78% copper, 62% gold, and 62% silver recoveries with
an NSR cut-off value of $9.84/t.
• Mining cost: $1.64/t (base cost at 4885 m) + incremental costs
of $0.049/t/bench below and $0.031/t/bench above
• Processing cost: $7.78/t (gold oxide); $14.13/t (copper and
silver oxides); $4.74/t (sulphide)
• Water cost: $2.19/t processed
• Tailing cost: $0.19/t processed
• G&A cost: $1.64/t processed
• Stockpile reclaiming cost: $0.79/t reclaimed
• ROM hauling cost: $0.36/t processed (gold oxide)
• Sustaining mining cost: $0.33/t mined
• Sustaining tailing & mill cost: $1.09/t processed
• Refining costs: $0.07/lb. (copper); $5.0/oz. (gold); $0.5/oz.
(silver)
• Treatment costs: $70.0/dmt
• Royalties: 3.0% of gross payable revenue
6. Mineral Resource estimates for Josemaría were constrained within a
pit shell with pit slope angles of up to 45o. Metal prices used were
US$4.60/lb. copper, US$2,875/oz gold, US$32.50/oz silver and an NSR cut-off
value of US$9.59/t. Other inputs included average metallurgical recoveries of
82%, 60% and 56% for Cu, Au and Ag respectively
• Mining cost: $1.86/t (base cost at 4535 m) + incremental costs
of $0.049/t/bench below and $0.031/t/bench above
• Water cost: $2.19/t processed
• Processing cost: $4.48/t processed
• Tailing cost: $0.19/t processed
• G&A cost: $1.64/t processed
• Sustaining mining cost: $0.33/t mined
• Sustaining tailing & mill cost: $1.09/t processed
• Refining costs: $0.07/lb. (copper); $5.0/oz. (gold); $0.5/oz.
(silver)
• Treatment costs: $70.0/dmt
• Royalties: 3.0% of gross payable revenue
9. MI = Measured and Indicated
3.13 Factors that may affect the Mineral Resource estimate
The Mineral Resource estimates for the Project are subject to a range of
factors that may affect their reliability, continuity, classification, and
potential future modification. These factors are inherent to mineral
exploration and resource estimation and reflect the nature and stage of
development of the Project.
Mineral Resource estimates are based on geological interpretations derived
from drilling, sampling, and analytical data. Uncertainty remains in the
interpretation of geological domains, structural controls, and the continuity
of mineralisation, particularly in areas with wider drill spacing or limited
data coverage. Additional drilling may result in changes to the interpreted
geometry, grade distribution, and extent of mineralisation.
Sampling and analytical results are subject to limitations associated with
sample recovery, sample representativity, analytical precision, and laboratory
performance. While quality assurance and quality control procedures have been
applied, such measures do not eliminate all sources of uncertainty inherent in
the data.
Estimation methodologies rely on assumptions regarding spatial continuity,
grade variability, and bulk density. The selection of compositing lengths,
variogram models, interpolation parameters, simulation approaches, and density
assignments involves professional judgement and may influence estimated
grades, tonnages, and classifications.
Mineral Resource classification reflects the level of geological confidence at
the time of estimation and is influenced by factors such as drilling density,
data quality, geological complexity, and model reliability. Changes to any of
these factors, including the incorporation of new data, may result in
reclassification of Mineral Resources.
The assessment of reasonable prospects for eventual economic extraction
incorporates assumptions relating to mining methods, processing options,
metallurgical performance, geotechnical conditions, and economic parameters.
Changes in these assumptions, or in external factors such as commodity prices,
costs, regulatory requirements, environmental considerations, or social and
permitting conditions, may impact the consideration of reasonable prospects of
eventual economic extraction.
Mineral Resource estimates are reported in situ and do not account for
modifying factors such as mining dilution, mining recovery, detailed mine
design, or production scheduling. As the Project advances through further
technical studies, the Mineral Resource estimates may be refined,
re-estimated, or converted to Ore Reserves, or portions of the Mineral
Resources may not ultimately be economically extractable.
4. Technical Assessment
4.1 Ore Reserves
No Ore Reserves are estimated for the Vicuña project.
This Technical Assessment report discusses the results of a Scoping Study
based on Mineral Resources. The Scoping Study is based on low-level technical
and economic assessments and is insufficient to support estimation of Ore
Reserves or to provide assurance of an economic development case at this
stage, or to provide certainty that the conclusions of the Scoping Study will
be realised.
4.2 Mine plan
4.2.1 Subset of the Mineral Resource estimate in the mine plan
At the current stage of the Technical Assessment, the Vicuña Project has been
evaluated at a conceptual level using a multi-phase, district-scale plan
integrating the Josemaría and Filo del Sol deposits along the Argentina-Chile
border. The proposed development sequence prioritises early contribution from
the Josemaria deposit, leveraging its shallow, high-grade core and
comparatively low strip ratio to enable accelerated cash flow generation. This
sequencing will provide additional time at Filo del Sol to advance infill
drilling to upgrade resource confidence, expand metallurgical testwork to
better define domain-specific processing performance, and progress engineering
for arsenic removal from concentrate while confirming long-term stabilization
of arsenic for safe disposal. The approach also allows for staged waste
stripping at Filo, where higher strip requirements are necessary to expose
higher-grade mineralization, thereby enhancing overall project value and
reducing early technical and execution risk.
Stage 1 (Sulphide Mill) assumes run-of-mine material processed through a
crush-grind-flotation concentrator at an average nominal throughput of
approximately 175,000 tonnes per day (tpd), producing a copper concentrate
with gold credits. Initial mineralization is sourced from the Josemaría
deposit, considering conventional truck-and-shovel open-pit mining,
transitioning to mineralization from Filo del Sol later in the production
schedule, once appropriate supporting infrastructure is available (including
material transfer via an approximately 12 km overland conveyor system between
the mine sites).
Stage 2 (District Leaching) have been evaluated considering the option of
oxide processing at the Filo del Sol site via leach based methods. Indicative
processing rates of up to approximately 90,000 tpd with copper cathode and
gold/silver doré as potential products. The production assumption and
economic assessments apply a seasonal derating factor (limited operations to
approximately nine months annually) reflecting winter limitations for on/off
pad leaching operations at high elevation.
Stage 3 (Sulphide Expansion) have been evaluated considering the option of
processing Filo del Sol sulphide mineralisation via staged integration with
the Josemaría concentrator, including material transfer via an approximately
12 km overland conveyor system between the mine sites. A subsequent expansion
will increase total processing capacity to approximately 293,000 tpd.
At this stage, the specific proportions of Measured, Indicated and Inferred
Mineral Resources supporting the conceptual production profile, and the subset
of the Mineral Resource estimate incorporated into each phase of the mine
plan, are pending confirmation of the controlling Mineral Resource
estimate(s), pit optimisation outputs, and scheduling assumptions.
Over 97% of the Mineral Resource recoverable metal reporting in the conceptual
production schedule during the initial payback period consists of Measured and
Indicated Resources. The proportion of material as Measured, Indicated and
Inferred is shown in Figure 4-1. Blue and purple colours represent Measured
and Indicated Resources while orange and yellow represent Inferred Resources.
Measured and Indicated Resources represent greater than 97% of revenues from
the proposed production schedule during the initial payback period. The
payback metric is derived from a preliminary Scoping Study cash‑flow model,
and the conceptual production schedule is illustrative only and subject to a
high level of uncertainty. No Ore Reserves have been declared.
Figure 4-1: Vicuña Production Schedule by Measured, Indicated and Inferred
Resources
4.2.2 Geotechnical assumptions
Conceptual development scenarios have been evaluated considering open pit
mining is planned for the Josemaría deposit and for the Filo deposit, based
on high level assumptions with a conventional large-scale truck-and-shovel
open pit approach. At this stage of the Technical Assessment, slope design
criteria, bench geometry, inter-ramp and overall slope angles, geotechnical
domain definitions, rock mass classification parameters, and design acceptance
criteria are based on geotechnical studies and conceptual mine design.
The conceptual mine design for both pits is based on 15 m benches (often
double benching), with slope angles ranging from 33-45º. Stack heights of
60-120 m were implemented into pit mine designs to decouple potential failure
planes and reduce likelihood of large-scale, deep-seated instability.
4.2.3 Hydrogeological assumptions
Pit inflows have been assessed and are conceptually expected to comprise of
the following potential sources:
· Direct precipitation: The annual average precipitation is
approximately 240 mm. Precipitation occurs as rainfall in the summer months,
and snow in the winter. Most precipitation occurs as snowfall during the
austral winter from May to August.
· Runoff from surrounding watershed: The principal water source is
anticipated to be snowmelt. The majority of infiltration is expected to
evaporate from soil moisture; some may infiltrate to groundwater, while some
may flow as shallow interflow toward creeks.
· Groundwater seepage (discharge): Groundwater inflows to the pit
are anticipated to increase over time as the pit deepens, and additional
groundwater flow is intercepted. Seepage is likely to occur along geological
contacts, fractures, and faults where most groundwater flow should occur.
Preliminary hydrogeological assessment and available data indicate overall
groundwater flows are projected to remain low, at less than 3 L/s.
Water pumped from dewatering wells and discharge from horizontal drains: These
flows will be directed to sumps, tanks, or channels and subsequently conveyed
to sumps or sedimentation ponds.
4.2.4 Mine designs
Conceptual open pit limits were established using industry-standard pit
optimisation techniques including Lerchs-Grossmann and direct block scheduling
algorithms applied to the block model Mineral Resource estimate. Indicative
revenue factors were derived from long-term consensus metal price assumptions
and metallurgical recovery projections, with NSR values calculated for each
block for evaluation purposes. High level mining, processing, general and
administrative, and selling costs were incorporated to derive indicative
economic cut-off values. Preliminary geotechnical slope parameters were
applied by sector and lithological domain based on available geotechnical
investigations.
A series of nested pit shells was generated to define the preliminary ultimate
economic envelope and to support staged development planning scenario. The
selected pit limits reflect a balance between maximising economic value and
deferring stripping requirements as much as practical, haulage geometry, and
operational constraints while enabling consistent plant feed and production
rates.
Conceptual mine designs were prepared for most phases, incorporating high
level operational and safety criteria including bench heights, berm widths,
inter-ramp and overall slope angles, ramp gradients, haul road widths, and
minimum mining widths compatible with the selected equipment fleet. Practical
mining shapes suitable for scoping level study evaluation replaced theoretical
optimisation shells to reflect constructability considerations. Figure 4-2
shows pit phasing of the Josemaria deposit while Figure 4-3 shows pit phasing
of the Filo deposit.
Figure 4-2: Josemaria pit phasing plan view (colours represent different pit
phases)
Figure 4-3: Filo pit phasing Planview (colours represent different pit phases)
4.2.5 Equipment requirements
Conceptual development scenarios have been evaluated considering that mining
will be based on conventional large-scale open pit truck-shovel methods
supported by drill-and-blast operations. A shared mobile equipment fleet is
assumed to be deployed across the Josemaria and Filo del Sol deposits,
allowing equipment to be transferred between operating areas as development
progresses and providing flexibility to match phased production requirements.
Indicative mining assumptions include potential use of ultra-class haul trucks
(360 t payload) loaded by a combination of electric rope shovels and large
hydraulic excavators. At assumed steady-state operations in development
scenario used for evaluation purposes, the fleet could start at approximately
20-30 haul trucks, and may eventually consist of about 90-100 haul trucks,
supported by 8-10 primary loading units (electric rope shovels and hydraulic
excavators combined), sufficient to sustain peak annual material movements
approaching 300 Mtpa of ore and waste. Wheel loaders are assumed for stockpile
management, rehandle, and supplementary loading duties. Production drilling is
assumed to be conducted using large-diameter rotary blast hole drills (270
mm), with an indicative requirement of 8-10 production drills to maintain
advance drilling rates consistent with planned mining volumes for development
scenario.
High level assumptions of ancillary equipment support conceptual mining
activities, including dozers for dump construction and push operations,
graders for haul road maintenance, water trucks for dust suppression, and
service and maintenance equipment. These support units were scaled
proportionally to the primary fleet and assumed material movement rates for
development scenario.
Conceptual consideration has also been given to the operating philosophy
including autonomous haulage, with semi-autonomous drilling, while auxiliary
equipment is assumed to be manually operated. This approach may have potential
to improve utilisation, reduce operating costs, and enhance safety performance
however no operating model has been selected and further technical, economic
and regulatory assessment would be required prior to any development decision.
4.2.6 Production schedule
Conceptual development scenario has been evaluated only assuming a staged
approach to optimise capital deployment and resource extraction sequencing.
The scenario prioritises sulphide concentrator development (Stage 1) with
initial production from Josemaría, followed by oxide leaching production at
Filo del Sol (Stage 2), and later sulphide expansion with integrated
processing of both Josemaría and Filo del Sol sulphide ores (Stage 3).
Stage 1 concentrator throughput is assumed to be approximately 175,000 tpd.
The Stage 2 leach facilities are assumed to be approximately for 90,000 tpd;
however, the derived production scenario applied a seasonal derating to
approximately nine months of annual operation for on/off pad leaching at high
elevation.
The Stage 3 expansion will increase the combined processing capacity to
approximately 293,000 tpd, expanding the concentrator configuration to
increase capacity for crushing, grinding, flotation, regrinding, concentrate
handling, and tailings management. Supporting infrastructure to transition
sulphide mill feed to Filo del Sol occurs during this stage, including
development of an approximately 12 km overland conveyor (including tunnels).
This conceptual development scenario is preliminary in nature and has been
prepared for evaluation scenario analysis only. It is based on a Mineral
Resource of which more than 50% is classified as Inferred Resources, which are
subject to a high level of geological uncertainty. There is no certainty that
further exploration work will result in the determination of Indicated or
Measured Resources, or that the conceptual production schedule will be
realised. No Ore Reserves have been declared, and economic viability has not
been demonstrated.
Key outputs from conceptual development scenario are shown in Table 4-3. Metal
output from the first 30 years of a conceptual production schedule is shown in
Figure 4-4.
Table 4-3: Conceptual development scenario key outputs
Item Unit Value
Potential life of mine (based on resources only) years ~74
Production schedule mill feed - concentrator Bt ~7.0
Production schedule grades (ROM) through concentrator
Copper percent ~0.36
Gold grams per tonne ~0.25
Silver grams per tonne ~3.7
Production schedule mill feed - leaching Mt ~660
Production schedule grades (ROM) leaching
Copper percent ~0.24
Gold grams per tonne ~0.28
Silver grams per tonne ~17.9
Production schedule waste tonnes Bt ~7.1
Production schedule strip ratio (waste: ore) ratio ~0.9:1
Production schedule average annual payable metal production
Copper tonnes per year (000's) ~300
Gold ounces per year (000's) ~500
Silver ounces per year (000's) ~10,000
Proportion of scenario duration feed classified as inferred % ~50%
Proportion of feed classified as measured and indicated during scenario % ~97%
payback period
Figure 4-4: Initial 30-year conceptual production schedule metal output
4.3 Metallurgical Testwork
4.3.1 Testwork
Preliminary metallurgical testwork program was undertaken to characterise the
processing response of the Josemaría and Filo del Sol mineralisation across
oxide, transitional, and sulphide domains. Testwork was conducted
progressively over several years and included contributions from multiple
accredited laboratories.
For Josemaría sulphide material, testwork programs included comminution
testing (JK drop weight, Bond ball mill work index), mineralogical
characterisation, batch flotation testing, locked-cycle flotation testing, and
concentrate quality analysis. These programs support preliminary concentrator
sizing, grinding circuit selection, and recovery forecasting.
For Filo del Sol oxide material, testwork focused on column and bottle leach
tests to evaluate copper and gold leach kinetics, acid consumption, and
recovery variability across oxide and mixed oxide-sulphide material. Results
inform the conceptual selection of heap leaching with solvent
extraction-electrowinning (SX-EW) for copper recovery and Merrill-Crowe
processing for precious metals.
For Filo del Sol sulphide material, metallurgical testwork included conceptual
mineralogical studies, flotation response testing, regrind sensitivity
testing, and concentrate impurity analysis, with a particular focus on arsenic
deportment.
Testwork confirmed that conventional flotation alone would result in elevated
arsenic levels in concentrate, indicating additional concentrate treatment.
The scope and results of metallurgical testwork are considered appropriate for
a scoping-level assessment and have been used to inform conceptual process
option and recovery assumption subject to significant uncertainty and further
test work.
4.3.2 Variability assessment
Metallurgical variability has been assessed at scoping level through a
structured program of testing across multiple lithological units, alteration
styles, grade ranges, and mineralisation types. Variability testing has been
undertaken to inform an understanding of potential influence of the impact of
mineralogy, grain size, and sulphide assemblage on comminution
characteristics, flotation performance, and leach kinetics.
Josemaría sulphide material generally indicates relatively consistent
flotation performance across the majority of the mineral resource, with
variability observed primarily associated with changes in alteration intensity
and sulphide mineral proportions. Comminution variability has been used to
inform preliminary grinding circuit design assumptions.
Filo del Sol oxide material displays greater variability in leach kinetics and
acid consumption, particularly in transitional zones where partial sulphide
content influences leach behaviour. Variability testing has informed the
conceptual assumption of crush size, lift height, and irrigation rates for
heap leaching.
Filo del Sol sulphide material shows significant variability in arsenic
content and mineralogical associations, which has implications for flotation
performance, concentrate quality, and downstream treatment requirements.
Variability data have been used to inform into preliminary recovery models and
high-level process assumptions.
4.3.3 Metallurgical recovery forecasts
Indicative Metallurgical recovery assumptions have been developed for scoping
level evaluation based on the results of testwork completed to date and
preliminary recovery modelling for each conceptual processing stage. These
recovery assumptions have been applied solely to inform comparative assessment
of conceptual processing scenarios and do not represent forecasts or expected
operating performance.
For Stage 1 sulphide processing, indicative life-of-mine average recoveries of
approximately 83-85% for copper and 60-65% for gold are assumed. Recovery is
influenced by grind size, mineralogy, and sulphide liberation characteristics.
For Stage 2 oxide processing, indicative copper recoveries are expected to be
high for oxide material, with gold and silver recovered through downstream
Merrill-Crowe circuits. Recovery forecasts consider variability in leach
kinetics and acid consumption.
For Stage 3 sulphide processing expansion, indicative flotation recoveries are
impacted by mineralogical complexity and arsenic deportment. Preliminary
recovery forecasts inform the conceptual combined flotation and concentrate
treatment flowsheet, with overall metal recovery dependent on roasting
performance and downstream handling.
Recovery forecasts remain preliminary and will be refined through additional
testwork, pilot testing, and process optimisation in subsequent study phases.
4.3.4 Deleterious elements
Arsenic is the principal deleterious element affecting portions of the Filo
del Sol sulphide resource. Arsenic occurs primarily within enargite and
related copper-arsenic sulphide minerals, resulting in elevated arsenic
concentrations in conventional flotation concentrates.
The presence of arsenic limits the marketability of untreated concentrate and
exposes the Project to penalty charges and smelter acceptance constraints. To
address this issue, the Scoping Study assumes the use of a dedicated
concentrate roasting facility to thermally treat high-arsenic concentrates and
produce a low-arsenic copper calcine. The scoping study assumes conceptual
costs associated with building and operating a roaster; this solution will be
further evaluated in future study phases.
Metallurgical testwork and conceptual engineering studies indicate that
roasting can effectively reduce arsenic levels to within acceptable smelter
specifications while producing a stable arsenic-bearing residue suitable for
disposal. This approach is consistent with industry practice for similar
high-arsenic concentrates.
4.4 Process Method
4.4.1 Process plant design
The conceptual process plant design for the Vicuña Project was developed
considering the distinct metallurgical characteristics of the Josemaría and
Filo del Sol deposits, and to support a staged development strategy. Different
processing routes were assumed for sulphide and oxide material, reflecting
mineralogy, grade distribution, and product requirements.
Stage 1 processing will consist of a conventional sulphide concentrator
incorporating primary crushing, secondary crushing, grinding, and flotation.
The grinding circuit configuration was selected based on comminution testwork
and includes a combination of semi-autogenous grind (SAG) and ball milling to
achieve the target grind size required for effective sulphide liberation. The
flotation circuit will include rougher, scavenger, and cleaner stages to
produce a copper-gold concentrate suitable for downstream treatment.
Stage 2 processing will focus on oxide and mixed oxide-sulphide material and
will use heap leaching as the primary extraction method. Ore will be crushed
to a suitable size and placed on lined leach pads, where it will be irrigated
with leach solution to dissolve copper and precious metals. Pregnant leach
solutions will be processed through SX-EW circuits to produce copper cathode,
while gold and silver will be recovered via Merrill-Crowe processing.
Stage 3 processing will include an expansion of concentrator capacity.
Sulphide processing is expected to transition to sourcing feed from the Filo
del Sol deposit during this stage and the addition of concentrate treatment
facilities to manage elevated arsenic levels is required. This stage will
include regrinding of flotation concentrates and thermal treatment through
roasting to produce a low-arsenic copper calcine.
4.4.2 Reagents and consumables
Reagents and consumables required for conceptual processing will include
grinding media, flotation reagents (collectors, modifiers), leaching reagents
(sulphuric acid), cyanide for precious metal recovery, lime for pH control,
and fuels and lubricants for plant operation. Standard flotation and leaching
reagents will be used.
Preliminary reagent consumption estimates were developed based on
metallurgical testwork results and benchmarking against comparable operations.
Consumables usage will vary by processing stage, with sulphide flotation
requiring a different reagent suite to heap leaching and concentrate roasting.
The availability, transport, and storage of reagents were considered at a
conceptual level, particularly in light of the Project's remote, high-altitude
location. Final reagent selection and consumption rates will be confirmed
during detailed engineering.
4.4.3 Power
Power demand for the process plants will be significant and reflects the scale
of comminution, flotation, electrowinning, and concentrate treatment
operations. The highest power consumption will occur during sulphide
processing stages, particularly in grinding and roasting circuits.
The Scoping Study contemplates connection to high-voltage transmission
networks in both Argentina and Chile, providing redundancy and flexibility in
power supply. Power distribution within the processing facilities will include
substations, transformers, and motor control centres designed to support
staged expansion.
Power supply strategies, including potential use of renewable energy sources,
will be evaluated further as part of future study phases.
4.4.4 Water
Water is a critical input to the processing facilities, used for grinding,
flotation, leaching, solution management, and dust suppression. Water demand
will vary significantly between processing stages, with sulphide flotation and
heap leaching representing the largest consumers.
The water supply strategy incorporates a staged approach, with initial
reliance on permitted groundwater abstraction and longer-term supplementation
through desalinated seawater sourced from the Chilean coast. Extensive water
recycling within the process plants was incorporated into conceptual designs
to minimise freshwater demand.
Process water quality requirements and water balance assumptions were
evaluated at a high level and will be refined through detailed water balance
modelling in subsequent study phases.
4.5 Infrastructure
4.5.1 Overview
The Vicuña Project requires extensive on-site and off-site infrastructure to
be constructed to support potential large-scale, long-life mining and
processing operations in a high-altitude, remote, and binational setting.
Conceptual infrastructure development was planned in a staged manner to align
with the staged Project development strategy, and to manage capital intensity,
permitting complexity, and construction risk.
Infrastructure elements will include access roads, processing facilities,
tailings storage facilities, waste rock storage areas, power transmission and
distribution systems, water supply and distribution systems, concentrate and
product transport infrastructure, camps and accommodation, and supporting
services. The design and location of infrastructure are strongly influenced by
topography, climate, seismicity, environmental constraints, and the
Argentina-Chile border.
4.5.2 Logistics
Logistics planning for the Project reflects the need to support major
construction activities, ongoing operations, and product transport over long
distances and challenging terrain. Construction materials, consumables, fuel,
and equipment will be transported to site primarily via established road
networks in Argentina and Chile, with upgrades and new alignments required in
certain areas.
For product transport, multiple logistics corridors were evaluated. Copper
concentrate and calcine products are planned to be transported westward to
Chilean ports for export. Logistics options considered include road haulage,
overland conveyors, and slurry pipelines, with selection driven by topography,
environmental considerations, permitting requirements, and operating cost.
The binational nature of the Project requires coordination of customs, border
controls, and regulatory compliance for cross-border movements. Logistics
planning remains at a conceptual level and will be refined as Project design
advances.
4.5.3 Waste rock
Waste rock management strategies were developed based on geochemical
characterisation, geotechnical considerations, and long-term closure
objectives. Waste rock storage facilities are planned to accommodate large
volumes of material generated during open pit mining and are designed to
ensure physical stability and chemical integrity.
Geochemical testwork indicates that a proportion of waste rock has the
potential to generate acid and metalliferous drainage. As a result, waste rock
storage designs incorporate segregation, encapsulation, and water management
measures to mitigate long-term environmental risks.
Waste rock storage facilities will be constructed in stages and integrated
with mine scheduling. Detailed waste rock management plans will be developed
during future study phases.
4.5.4 Stockpiles
Ore stockpiles are incorporated into the conceptual mine plan to provide
operational flexibility, manage grade variability, and support blending
requirements for different processing streams. Stockpile locations were
selected based on proximity to pits and processing facilities, topography, and
material handling efficiency.
Stockpile designs consider material characteristics, oxidation potential, and
drainage management. Stockpiles will be managed to minimise rehandling and
maintain ore quality.
4.5.5 Tailings storage
Tailings storage is a critical component of the Project infrastructure and was
evaluated in the context of large-scale sulphide processing, seismic
conditions, and long-term closure requirements. Multiple tailings storage
facilities are planned to manage flotation tailings and leach residues
generated during different Project stages.
Conceptual tailings storage facility designs incorporate staged construction,
centreline or downstream embankment configurations, and robust seepage control
systems. Design criteria reflect applicable international standards and
guidelines, including those related to seismic design and dam safety.
Tailings management strategies will be refined through detailed geotechnical
investigations, dam break analyses, and operational risk assessments in
subsequent study phases.
4.5.6 Built infrastructure
Built infrastructure includes processing plants, maintenance workshops,
warehouses, laboratories, offices, control rooms, fuel storage facilities, and
other support buildings required for construction and operations.
Facility layouts have been developed at a conceptual level to optimise
material flow, maintenance access, and operational efficiency while
considering safety and environmental requirements. Detailed layout and
building design will be undertaken during future engineering stages.
4.5.7 Camps and accommodation
Construction and operations camps are planned to accommodate the workforce
during different stages of the Project. Camp design considers workforce size,
roster arrangements, high-altitude working conditions, and health and safety
requirements.
Camps are expected to include accommodation, catering, medical facilities,
recreation areas, and supporting services. The scale and configuration of
camps will evolve as construction and operational workforce requirements are
refined.
4.5.8 Water management and water supply
Water management infrastructure may include collection and diversion systems
for contact and non-contact water, process water distribution systems, reclaim
water systems, and water treatment facilities where required.
Water supply infrastructure could be developed in stages, initially supporting
groundwater abstraction and subsequently incorporating desalinated seawater
delivered from the Chilean coast. Water management strategies prioritise
recycling, minimisation of freshwater abstraction, and prevention of
uncontrolled discharge.
Detailed water balance modelling and infrastructure design will be completed
in future study phases.
4.6 Environmental considerations
4.6.1 Baseline studies
Preliminary environmental baseline studies were undertaken across the Vicuña
Project area to support environmental impact assessment, permitting, and
long-term environmental management. Baseline programs were conducted over
multiple years and seasons to capture natural variability and to address the
binational nature of the Project.
Completed baseline studies encompassed physical, biological, and
socio-economic components and include surface water and groundwater hydrology,
hydrogeochemistry, air quality, noise, climate, soils, flora and fauna,
aquatic ecology, and socio-economic conditions. Studies were designed and
executed in accordance with regulatory requirements in both Argentina and
Chile.
The high-altitude Andean setting presents specific environmental
sensitivities, including fragile ecosystems, limited water availability, and
seasonal climatic extremes. Baseline data will be used to establish
pre-development conditions and provide the foundation for impact prediction,
mitigation design, and monitoring program development.
4.6.2 Monitoring requirements
Environmental monitoring requirements were defined at a conceptual level based
on baseline study findings, regulatory expectations, and the scale and nature
of proposed mining and processing activities. Monitoring programs are intended
to verify impact predictions, assess the effectiveness of mitigation measures,
and ensure ongoing compliance with permit conditions.
Proposed monitoring programs include surface water and groundwater quality and
quantity, air quality (including particulate matter), noise and vibration,
biodiversity indicators, tailings and waste rock facility performance, and
social and community indicators. Monitoring locations, frequencies, and
parameters will be refined during detailed environmental assessment and in
consultation with regulatory authorities.
4.6.3 Closure considerations
Conceptual mine closure planning will be integrated into Project development
from an early stage to ensure that environmental and social considerations are
addressed throughout the life of the operation. Closure concepts were
developed for key infrastructure elements, including open pits, waste rock
storage facilities, tailings storage facilities, heap leach pads, processing
plants, access roads, and camps.
Closure strategies will aim to achieve long-term physical stability, chemical
stability, and, where practicable, progressive rehabilitation will be
undertaken. Design considerations include landform stability, erosion control,
water quality protection, and post-mining land use consistent with stakeholder
expectations and regulatory requirements.
Closure planning remains at a conceptual level and will be further developed
through detailed closure studies, cost estimation, and engagement with
regulators and communities.
4.6.4 Permitting considerations
The Vicuña Project is subject to environmental permitting and approval
processes in both Argentina and Chile. Permitting pathways differ by
jurisdiction and reflect national and provincial regulatory frameworks, as
well as the binational characteristics of the Project.
In Argentina, the Project is subject to provincial environmental impact
assessment processes administered by the San Juan provincial authorities.
Permits and approvals are required for mining, processing, water use, waste
management, and supporting infrastructure. Historical exploration activities
at the Josemaria and Filo del Sol deposits have been conducted under approved
Declaración de Impacto Ambiental (DIAs), which have been periodically
updated. The most recent update to the Josemaria exploration DIA is currently
under review. Separate exploitation-phase DIAs, which are required prior to
commencement of major earthworks, plant construction and operations, remain to
be obtained and form part of the planned development schedule.
In Chile, environmental permitting is administered through the Sistema de
Evaluación de Impacto Ambiental (SEIA), with requirements for Environmental
Impact Studies (EIA) covering processing facilities, water supply
infrastructure, concentrate treatment facilities, and transport corridors.
Permitting schedules and critical path considerations have been evaluated at a
high level. Ongoing engagement with regulatory authorities is intended to
support timely permitting and alignment of approvals across jurisdictions.
At the date of this Technical Assessment, no material permitting impediments
were identified that would preclude advancement of the Project in accordance
with the proposed staged development strategy. Outstanding permits are
considered typical for projects at the current stage of study and are expected
to be obtained through the normal course of regulatory review.
4.6.5 Social and heritage considerations
Social and cultural considerations are a key component of Project development,
given the proximity of local communities and the presence of cultural and
heritage values within the region. Stakeholder engagement programs were
implemented to inform communities about Project activities and to identify and
address potential concerns.
Completed baseline social studies include assessments of local demographics,
livelihoods, land use, and cultural heritage. Engagement activities aim to
build long-term relationships, support local development opportunities, and
ensure that Project benefits are shared in a manner consistent with
stakeholder expectations.
Cultural heritage management plans will be developed to identify, protect, and
manage archaeological and cultural sites in accordance with applicable
legislation in Argentina and Chile.
4.7 Capital cost estimate
Capital cost estimates for the Vicuña Project were prepared at a
scoping-study level AACE Class 5 (+50%/-35%) and intended to support
evaluation of conceptual development scenario. The development scenario
adopted staged development strategy, large scale of the operation, and
binational infrastructure requirements. Estimates were developed using a
combination of conceptual engineering, preliminary equipment sizing, vendor
quotations where available, and benchmarking against comparable large-scale
copper-gold projects.
Capital costs include direct costs associated with mining, processing,
tailings storage facilities, waste rock storage facilities, power and water
infrastructure, access roads, camps, and other site facilities. Indirect costs
included engineering, procurement, construction management, temporary
facilities, freight, construction services, and contractor overheads. Owner's
costs, such as project management, permitting, study, and contingency costs,
were also included.
For evaluation purposes, capital estimates were prepared in real terms (2026
basis) and have been grouped into indicative development stages corresponding
to conceptual Sulphide and Oxide processing scenarios, including Stage 1
sulphide development, Stage 2 oxide leaching, Stage 3 sulphide expansion
(inclusive of Filo del Sol sulphide development and supporting
infrastructure). Given the early stage of Project definition, capital cost
estimates are subject to a high level of uncertainty and will be refined
through subsequent study phases.
The conceptual capital cost estimate is shown in Table 4-4.
Table 4-4: Initial Capital Cost Estimate (US$ B)
WBS Description Stage 1 (Sulphide Mill)* Stage 2 District Leaching Stage 3 Filo Sulphides
Mine 1.0 0.3 0.8
Process 1 0.2 1.2 0.9
Process 2 0.9 0 1.5
Tailing Management 0.2 0 0.1
On-Site Infrastructure 0.5 0.5 0.1
Off-Site Infrastructure 0.8 0 0.3
Sub Total Direct 3.7 2.1 3.8
Indirect Cost 2.0 1.0 1.8
Sub Total Direct and Indirect 5.6 3.1 5.7
Owner Cost 0.5 0.1 0.1
Contingency 0.9 0.7 1.4
Total Capital Cost estimate 7.1 3.9 7.1
*Costs are from FID (assumed as close of calendar year 2026)
Where references are made to development 'stages', these are used solely as
analytical groupings for comparative evaluation of conceptual development
scenarios. They do not represent an adopted development sequence, approved
execution plan, or committed capital schedule
4.8 Operating Cost Estimate
Operating cost estimates were prepared at a conceptual level to support
scoping-level economic analysis. Operating costs included mining, processing,
tailings and waste rock management, power and water supply, logistics, site
services, general and administrative costs, and sustaining capital.
Mining operating costs reflected large-scale open pit operations using
truck-and-shovel fleets, with cost drivers including material movement rates,
haul distances, equipment productivity, and fuel consumption. Processing
operating costs varied by stage and processing route, with sulphide flotation,
heap leaching, SX-EW, and concentrate roasting each exhibiting distinct cost
profiles.
Infrastructure-related operating costs included power transmission charges,
desalination and water transport costs, tailings facility operation, and
maintenance of access roads and camps. Logistics costs include transport of
concentrates, calcine, cathode, and consumables.
Operating cost estimates were prepared in real terms (2026 basis) and exclude
royalties, taxes, and financing costs.
Operating costs will be refined through detailed engineering, scheduling, and
contracting strategies in future study phases.
A summary of the operating costs is shown in Table 4-5.
Table 4-5: Initial Operating Cost Estimate (all costs US$)
Area Unit Unit Costs
Mine $/t mined 2.94
Concentrator and roaster $/t JM sulphide throughput 7.80
Leach process $/t leach throughput 11.16
Site services and water $/total throughput 3.67
G&A miscellaneous $/t total throughput 1.62
Product transport and freight $/t total throughput 1.76
Total $/t total throughput 19.60
Note: Costs do not total evenly due to differences between the various unit
bases
Operating cost assumptions are indicative only and have been prepared at a
scoping‑study level for evaluation purposes. The breakdown reflects
conceptual operating activities and processing options evaluated and does not
represent adopted operating strategies, defined production stages, or
steady‑state operations. Operating costs are subject to significant
uncertainty and will be refined through subsequent study phases
Stage 3 infrastructures, including desalinated water supply, concentrate
pipeline transport, port handling and a concentrate roaster, was assumed to be
developed under a build-own-operate or third-party service delivery model
rather than being owned and directly operated. While these facilities will be
established through capital investment at the time of construction, ongoing
access to the services was treated as contracted operating expenditure.
Under this structure, the initial capital outlay could be borne by the
infrastructure provider and recovered through long-term service agreements,
with the Project incurring fixed annual charges and unit rates based on
throughput (e.g., per cubic metre of water delivered or per tonne of
concentrate transported). As a result, these costs were incorporated within
operating costs rather than sustaining capital and were reflected in the
financial model as recurring annual payments over the potential life of mine.
This treatment was consistent with common practice for large-scale Andean
mining operations where shared or third-party infrastructure reduces upfront
capital intensity and transfers construction, financing and operating risk to
specialist providers. For evaluation purposes, the resulting charges were
modelled as predictable fixed and variable operating costs that scale with
production rather than as direct capital expenditures.
4.9 Closure Cost Estimate
Closure cost estimates were developed at a conceptual level to support
evaluation of development scenario and are aligned with the closure strategies
described in Section 4.6.3. Closure costs reflect the activities required to
achieve long-term physical and chemical stability and to meet regulatory and
stakeholder expectations in both Argentina and Chile.
Closure cost components included decommissioning and demolition of processing
facilities, reshaping and rehabilitation of waste rock and tailings storage
facilities, heap leach pad closure, water management and treatment where
required, access road decommissioning, camp closure, and long-term monitoring,
treating and maintenance.
Closure costs were estimated in real terms (2026 basis) and are based on
high-level assumptions regarding closure methodologies, equipment
requirements, labour, and materials. These costs are assumed to occur within
the financial model at the end of the prospective project life.
Closure cost estimates will be refined in accordance with jurisdictional
regulatory requirements and updated as closure plans are further developed.
A preliminary closure cost estimate is provided in Table 4-6.
Table 4-6: Initial Closure Cost Estimate (US$ B)
Area Cost
TSF 0.8
Plant and Infrastructure 0.4
Mining 0.3
Water Treatment 1.6
Total 3.0
5. Market Assumptions
5.1 Market Studies
Market studies were reviewed to provide high level context regarding the
long-term supply and demand fundamentals for copper, gold, and silver and to
inform indicative market parameters for the Project's anticipated product
streams. These studies drew on publicly available market data, consultant
reports, and internal analyses and were intended to support a scoping-level
economic assessment.
The conceptual project development scenario is expected to produce a suite of
products, including copper concentrate, roasted copper calcine, copper
cathode, and gold-silver doré. Market studies considered the size and growth
of global copper demand, driven by electrification, renewable energy
deployment, and decarbonisation trends, together with constraints on new
supply arising from declining grades, permitting challenges, and capital
intensity.
Precious metals markets were assessed in the context of global investment
demand, industrial use, and central bank activity.
The completed market studies remain high-level and are not intended to
represent price forecasts.
5.2 Commodity and Exchange Rate Forecasts
Commodity price and exchange rate assumptions are required for economic
evaluation but remain preliminary at the time of this report. Long-term price
assumptions for copper, gold, and silver were based on consensus market views
and publicly available forecasts and were expressed in real terms (2026
basis). The metal prices used in the economic analysis are shown in Table 5-1.
Table 5-1: Metal Prices used in Scoping-Level Economic Analysis
Metal Units Value
Copper US$/lb 4.60
Gold US$/oz 3,300
Silver US$/oz 40.00
Exchange rate assumptions reflected the binational nature of the Project and
the exposure to multiple currencies, including the Argentine peso, Chilean
peso, and US dollar. Inflation assumptions and escalation factors will be
applied consistently across capital and operating cost estimates.
The capital cost estimate was stated in United States dollars (USD or US$) at
the Q2 2025 currency exchange rate of 1USD : 1,300ARS where converted from
local currency.
The exchange rates were used to convert currencies of origin (vendors and
contractors) to the reporting currency.
High levels of inflation have persisted in Argentina throughout the latter
part of the 20(th) century and throughout the entirety of the 21st century
with interspersed periods of hyperinflation. In 2023, Argentina experienced
another round of hyperinflation which has recently decreased owing to economic
reforms put in place by the current government, although it has still been at
levels well above those seen in developed economies. The Project assumes
that under the new RIGI investment regime (see Section 6.3), the impact of
inflation on project economics will become much less prevalent than in the
past with the allowance for US$ rather than Argentine peso book-keeping, the
improvements in value-added tax treatment and unshackling the ability of
foreign companies to freely keep and/or move export revenue outside of
Argentina's borders.
5.3 Contracts
Marketing and offtake arrangements for the Project's products have not yet
been finalised. Market studies assume that products will be sold into
prevailing spot and contract markets consistent with industry practice.
For copper concentrate and calcine, assumptions reflect treatment and refining
charge structures, penalties for deleterious elements, and logistics costs to
port. For copper cathode and gold-silver doré, assumptions reflect refined
metal pricing and standard marketing deductions.
Contractual arrangements, including offtake agreements, transport contracts,
and concentrate treatment arrangements, will be developed as the Project
advances. JOGMEC has an option to purchase an offtake of 40% of Josemaria
concentrate at prevailing market prices should they choose to exercise the
right, subject to the terms and conditions of the relevant agreement.
6. Evaluation
6.1 Economic Analysis
An economic analysis was undertaken at a scoping-study level to assess the
potential economic outcomes for the conceptual development scenario of the
Vicuña Project and to inform comparison of development options. The analysis
is based on preliminary capital and operating cost estimates, conceptual mine
plans, metallurgical recovery assumptions, and high-level market assumptions.
It does not represent an investment recommendation and does not demonstrate
economic viability since no Ore Reserves have been declared.
The economic model for the conceptual development scenario reflects the staged
development strategy. The analysis includes estimates of revenue, operating
costs, sustaining capital, closure costs and high-level taxation but excludes
financing structures.
Economic results are preliminary and subject to a high degree of uncertainty
due to the early stage of Project definition and reliance on Inferred Mineral
Resources.
For clarity and consistency with the annual budgeting cycle, the evaluation
reference date for the economic analysis is 1 January 2027, which corresponds
to the start of the first full fiscal year following assumed project start
date.
Costs used in the calculation of economic metrics are provided from the
evaluation date moving forward.
This evaluation has relied in part on Inferred Mineral Resources which carry
high uncertainty and may never yield the metal or characteristics that
eventually result in Ore Reserves and metal production.
The after-tax net present value, at an 8% discount rate assuming mid-year
discounting is US$9.5 B. The internal rate of return, after-tax, is 14.8%.
The payback period is 8.4 years from start of processing.
A summary of the preliminary cashflow analysis is provided in Table 6-1.
Table 6-1: Preliminary Economic Summary
Project Metric Units Indicative Value
After-tax NPV @ 8% US$ billion 9.5
After tax IRR percent 14.8
Undiscounted after-tax cash flow (project duration) US$ billion 86
Payback period from start of processing years 8.4
(undiscounted, real after-tax cash flow)
Sustaining capital expenditure (excluding closure) for project duration US$ billion 21.9
C1 cash costs (net of byproducts) US$/lb Cu 0.74
All-in sustaining cash costs (net of byproducts) US$/lb Cu 1.38
6.2 Sensitivity Analysis
Sensitivity analyses were conducted at a high level to evaluate the Project's
exposure to variations in key input assumptions. Sensitivities typically
considered changes in metal prices, operating costs, capital costs, and
metallurgical recoveries.
Sensitivity results were used to identify key value drivers and risk areas
rather than to provide definitive evaluation outcomes.
6.3 Taxation and Royalties
6.3.1 Royalties in Argentina
San Juan Provincial Royalty
San Juan provincial royalties will be applicable to all copper concentrate
sales. According to current legislation, the rate of provincial royalty is
capped at 3% of pithead value. The pithead value has been calculated by
deducting all site operating costs (processing, infrastructure and G&A),
except mining operating costs, from project net revenue. Ongoing
negotiations with the provincial government of San Juan are progressing
towards allowing the province of San Juan to declare the powerline and access
road of provincial interest which would allow Vicuña to offset the
significant expenditure in powerline and access road against 70% of royalty
payments, reducing the provincial payment for a number of years until that
investment is fully paid off. At the end of the life of the mine, Vicuña
would turn ownership of the access road and powerline over to the province.
The updated RIGI law (refer to Section 6.3.2) allows the provinces to charge
up to 5% royalties to a mining project. It is believed that the provincial
trust fund (discussed below) would be considered as part of the maximum
royalty. The ultimate rate of provincial royalty, infrastructure funding
requirements and associated offsets for infrastructure costs incurred by the
Project will be mutually agreed between Vicuña and the Government of the
Province of San Juan in conjunction with the project approvals and permitting
process.
San Juan Provincial Trust Fund
Recently the government of San Juan enacted a 1.5% of gross sales "provincial
trust fund" payment on mining properties under its jurisdiction, including the
Veladero mine located nearby to Josemaria. Based on negotiations between
Vicuña and the San Juan government, it is assumed that this fee will be
enacted on Vicuña and has hence been modelled in the financial model.
Lirio DPMA Royalty
One private royalty was considered in accordance with advice received from
Josemaria Resources. This royalty, Lirio DPMA, is applicable to the majority
of the lease, and was modelled as applying to all sales. It consists of a
$2M lump-sum payable in the third year of production and 0.5% net profit
royalty for the subsequent 10 years of production.
6.3.2 Taxes in Argentina
Incentive Framework for Large Investments (RIGI)
A bill for a new tax law known in Spanish as the "Regimen de Incentivo para
Grandes Inversiones" (RIGI) or Incentive Framework for Large Investments was
passed by the Argentine congress on June 28, 2024. This law applies to
projects soliciting new foreign investment of US$200M or more with maximum
benefits afforded to Long-Term Strategic Export Projects requiring in excess
of US$2B of foreign investment, known as RIGI PEELP. The Vicuña Project has
made an application to enter into the RIGI PEELP fiscal stability program to
be eligible for the maximum benefits.
Notable benefits include the following:
· Corporate income tax rate: change from 35% to 25%.
· Export duties: change from a sliding scale based on copper
price to 0%.
· Value-added tax: gives the special-purpose vehicle the ability
to pay value-added taxes by federally endorsed Tax Credit Certificates that do
not require any outlay of actual money, therefore reducing value-added tax
impacts on working capital and inflation erosion to zero;
· Debits and credits tax: debits and credits become can be 100%
offset against corporate income tax.
· Allows inflation adjustments for income tax assessments pursuant
to Argentina's Consumer Price Index and allowance for book-keeping in US$.
· Carry forward of net operating losses for future application
against income taxes without any time limit.
Foreign proceeds from exports will become freely available to the enterprise
after four years of enrolment in RIGI (the stage 1 construction project will
take at least four years, so revenue will be fully available to the enterprise
as soon as production commences).
In order to access the RIGI benefits, the local special-purpose vehicle must
submit an investment plan for the operation and must agree to spending at
least 20% of the minimum amount for the application (20% of $2 B) over the
following two years but can be retroactive to the time when the bill passed
congress (June 2024); Vicuña will spend $400M in the year of 2026 to meet
this initial requirement.
Tax Stability
Under the Federal Mining Investment Law and RIGI, tax/fiscal stability for
mining projects is granted for a period of 30-40 years (40 years for Long-Term
Strategic Export Projects, applicable to Vicuña) which ensures the mining
company maintains a consistent taxation regime over the enforceable period.
Tax stability dispute resolution is conducted under the rules of ICC or ICSID
with arbitrators who are neither Argentine nor nationals of the investor's
country.
Corporate Tax
Corporate income tax was modelled in a simplified manner, as is appropriate
for a scoping-level of study. The current rate of Argentina corporate income
tax is 35%; however, RIGI reduces this rate to 25%. Accordingly, the rate of
corporate income tax applied in the base case model is 25%.
RIGI has full allowance for tax losses to be carried forward with accounting
in US$, protecting Vicuña from currency depreciation.
Federal Export Tax
The current legislation provides for the application of an export tax, levied
on sales of up to 8% based on a sliding scale of copper prices, however, the
RIGI tax bill negates this tax. This tax is unlikely to be relevant for
Vicuña.
Value Added Tax
The RIGI law allows Long-Term Strategic Export Projects to pay value-added
taxes to vendors with federally endorsed tax credits which means no money
changes hands. This negates the previous regime which would require the
company to pay value-added taxes up front in pesos and then reclaim it from
the government in pesos later subjecting the value to currency depreciation in
addition to the impact from the time value of money.
Debits and Credits Tax
This tax is applicable on certain debits and credits on bank accounts opened
with local financial institutions (that act as withholding agents) and on
movements of funds through organized payment systems replacing the use of bank
accounts. The main exemptions related to the project are the collection of
export proceeds and credits for loans received from financial institutions.
The applicable rate is 0.6% per debit and 0.6% per credit. RIGI allows for
100% of this tax to be deductible from income taxes thus rendering the tax
with effectively no impact.
Wealth Tax
The Argentina wealth tax is a 0.5% annual tax on equity which can be
depreciated on book value of capital costs via reserve units of production
once production begins.
6.3.3 Royalties in Chile
The mining royalty taxation is structured as a hybrid tax consisting of two
main components that target both gross revenue and operational profitability.
The ad valorem component is applied to copper producers whose annual sales
exceed 50,000t of fine copper; annual copper sales are subject to a flat 1%
tax rate. If the mine is not profitable this tax is adjusted and, in some
cases, doesn't need to be paid to support struggling operations.
The profitability-based royalty is applied to the miner's RIOMA (Renta
Imponible Operacional Minera Ajustada), a Spanish acronym for an adjusted
measure of mining operating income derived from the corporate income tax base.
RIOMA is calculated by adjusting the corporate tax base as follows:
· Add back interest expenses, tax loss carries forwards,
accelerated depreciation and amortization, and payments made to third parties
for access to the mineral resource (such as royalties, leases, mining loans,
or production-sharing agreements).
· Deduct non-mining income and related costs, as well as the Ad
Valorem royalty component.
The applicable royalty rate is determined by the Mining Operational Margin
(MOM), which is calculated as RIOMA divided by gross mining revenues. It
ranges from 0% when production is less than 50,000 tonnes of fine copper and
from 5% for mines with low operating margins and less than 50% revenues from
copper, which goes up to a maximum of 26% for mines with greater than 50%
proportional income from copper and operating margins above 46%.
6.3.4 Taxes in Chile
There are various withholding, capital gains, transfer pricing and thin-cap
taxes relevant at the Vicuña corporate and shareholder levels which depend on
decisions around financing structure and parent company dividend disbursements
which are not part of the scope of this report and are therefore not modelled
in the financial model. Maximum tax burden is limited to a total of 45.5% -
46.5% of taxable income (depending on sales). The actual taxation applied at
Vicuña will be subject to a binational agreement adhering to the
Argentina-Chile binational treaty for mine development; assumptions have been
made in the financial model which will be verified and potentially modified by
this agreement.
Corporate Income Tax
Corporate income tax in Chile is applied at a rate of 27% on annual net
taxable income. Tax losses are deductible and can be carried forward
indefinitely. Chilean tax code allows for accounting in US$ to limit impacts
of changes in currency valuation.
Value Added Tax
VAT is applied at a rate of 19% but is refundable for mining exporters on
goods and services directly related to export activities through credit
offsets and cash refunds.
Stamp Tax
Stamp tax of 0.8% of principle applies to foreign loans paid upfront at the
time of each drawdown; this tax is deductible from corporate income tax and
has not been modelled in the financial model.
Regional Development Tax
A one-time fee of 1% of development will be applied on fixed assets and
acquisition values at the end of the first year in which a project generates
operational income.
Other Taxes
Export duties and municipal taxes are generally not applicable to mining
companies and have therefore not been modelled in the financial model.
7. Risk and Mitigation
This section summarises the principal risks identified for the Vicuña Project
at a scoping-study level and outlines high-level mitigation strategies. The
risks described below are derived from the technical, environmental,
commercial, and jurisdictional factors discussed in Sections 3 through 6 of
this report. The identification of risks and mitigation measures is intended
to inform stakeholders of key uncertainties and value drivers rather than to
provide a comprehensive risk register.
Given the early stage of Project definition, the relative significance of
individual risks may change as additional technical work, permitting
activities, and commercial evaluations are completed.
7.1 Geological and Resource Risks
Geological and resource risks include uncertainty associated with Mineral
Resource estimates, particularly the reliance on Inferred Mineral Resources in
mine planning and economic analysis. Geological complexity, grade variability,
and structural controls may impact resource confidence classification and
geological and grade continuity assumptions.
Mitigation strategies include continued infill drilling, refinement of
geological and grade models, and conversion of Inferred Mineral Resources to
higher confidence classifications through additional data collection and
analysis.
7.2 Mining and Geotechnical Risks
Assumptions are at scoping level, and staged pit development allowing for
refinement of designs as additional data become available.
7.3 Metallurgical and Processing Risks
Metallurgical risks include variability in metallurgical performance across
different ore types, particularly at Filo del Sol, and the presence of
deleterious elements such as arsenic in sulphide mineralization.
Mitigation strategies include extensive metallurgical testwork, staged
development of processing routes, concentrate treatment through roasting to
manage arsenic levels, and ongoing optimisation of process parameters.
7.4 Infrastructure and Execution Risks
Infrastructure and execution risks arise from the scale, complexity, and
binational nature of the Project. These include risks associated with
construction in a remote, high-altitude environment, logistics constraints,
and coordination of infrastructure development across Argentina and Chile.
Mitigation measures include staged infrastructure development, early
engagement with regulators and stakeholders, optimisation of logistics
corridors, and adoption of proven construction and project management
practices.
7.5 Environmental, Social, and Permitting risks
Environmental and social risks include potential impacts on water resources,
sensitive ecosystems, and local communities, as well as the complexity of
obtaining and maintaining permits in two jurisdictions.
Mitigation strategies include comprehensive baseline studies, robust
environmental and social management plans, early and ongoing stakeholder
engagement, and proactive coordination with regulatory authorities in
Argentina and Chile.
7.6 Market and Economic Risks
Market and economic risks include exposure to commodity price volatility,
changes in treatment and refining charges, foreign exchange movements, and
inflationary pressures affecting capital and operating costs.
Mitigation measures include staged development to manage capital exposure,
sensitivity analysis to identify key value drivers, and flexibility in
processing and marketing strategies.
8. Conclusions
The Vicuña Project represents a large- copper-gold Mineral Resource combining
the Josemaría and Filo del Sol deposits within a single, staged conceptual
development framework.
This Technical Assessment Report is preliminary in nature and is based on
Mineral Resource, extensive technical work, and a clear conceptual development
scenario. However, the Project remains at an early stage of evaluation, with
no Ore Reserves declared and economic outcomes subject to a high degree of
geological, technical, permitting and economic uncertainty.
Advancement of the Project will require continued technical de-risking through
additional drilling, metallurgical optimisation, detailed engineering,
environmental assessment, and permitting. Conceptual staged development
scenario has been considered to provide flexibility to manage risk, capital
intensity, and execution complexity as the Project progresses.
Overall, the Vicuña Project represents potential for future development
subject to technical studies, environmental assessment, permitting, and
stakeholder engagement. Ongoing work is required to progressively reduce
uncertainty and to inform future development decisions.
9. Declarations and Consents
This Technical Assessment Report was prepared for public disclosure in
accordance with the VALMIN Code (2015).
The information in this report that relates to the Technical Assessment of the
Vicuña Project Mineral Assets reflects information compiled and conclusions
derived by Cole Mooney, Dustin Smiley and Kirk Hanson.
Cole Mooney is an employee of Vicuña Corp. and has sufficient experience
relevant to the Technical Assessment of the Mineral Assets under consideration
and to the activity which he is undertaking to qualify as a Practitioner as
defined in the 2015 edition of the Australasian Code for the Public Reporting
of Technical Assessments and Valuations of Mineral Assets (VALMIN Code). Cole
Mooney consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
Dustin Smiley is an employee of Vicuña Corp. and has sufficient experience
relevant to the Technical Assessment of the Mineral Assets under consideration
and to the activity which he is undertaking to qualify as a Practitioner as
defined in the 2015 edition of the Australasian Code for the Public Reporting
of Technical Assessments and Valuations of Mineral Assets (VALMIN Code).
Dustin Smiley consents to the inclusion in the report of the matters based on
his information in the form and context in which it appears.
Kirk Hanson is not an employee of Vicuña Corp. and has sufficient experience
relevant to the Technical Assessment of the Mineral Assets under consideration
and to the activity which he is undertaking to qualify as a Practitioner as
defined in the 2015 edition of the Australasian Code for the Public Reporting
of Technical Assessments and Valuations of Mineral Assets (VALMIN Code). Kirk
Hanson consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
10. References
Devine, F. 2025. Figures 3.1, 3.2, 3.3 and 3.4 in this Report: SLR
Consulting (Canada) Ltd. 2025. NI 43-101 Technical Report on the Vicuña
Project, Argentina and Chile: report prepared for Lundin Mining Corporation,
effective date 16 June 2025.
1 (#_ftnref1) Data includes former OZL (except former OZL
Brazil assets), except where specified otherwise. Data is subject to non
financial assurance review.
2 (#_ftnref2) Combined employee and contractor frequency per
1 million hours worked. HY25 data for HPIF restated due to ongoing
verification activities resulting in the reclassification of 1 HPI after the
HY25 reporting period.
3 (#_ftnref3) Our operational GHG emissions are the Scopes 1
and 2 emissions from our operated assets. Baseline year data and performance
data has been adjusted for acquisitions, divestments and methodology changes
up to the end of FY25. HY25 data has been restated primarily due to the
finalisation of surrender of Renewable Energy Certificates (RECs), as updated
within the reporting of our FY25 results. We are transitioning to a residual
mix factor (RMF) for market-based reporting of Scope 2 emissions as applicable
for our Australian operated assets during FY26, with the baselines year data
to be adjusted accordingly, and this will be reflected in the reporting of
FY26 results.
4 (#_ftnref4) Baseline year data and performance data have
been adjusted to only include voyages associated with the transportation of
commodities currently in BHP's portfolio due to the data availability
challenges of adjusting by asset or operation for CY08 and subsequent year
data. GHG emissions intensity calculations currently include the
transportation of copper, iron ore, steelmaking coal, energy coal, molybdenum,
uranium and nickel.
5 (#_ftnref5) Based on a 'point in time' snapshot of
employees as at the end of the relevant reporting period.
6 (#_ftnref6) We define gender balance as a minimum 40% women
and 40% men in line with the definitions used by entities such as the
International Labour Organization.
7 (#_ftnref7) Indigenous employee participation for Australia
is at Minerals Australia operations; for Chile is at Minerals Americas
operations in Chile; and for Canada is at the Jansen Potash project and
operations in Canada.
8 (#_ftnref8) Area under stewardship that has a formal
management plan that includes conservation, restoration or regenerative
practices. This metric is measured on an annual basis and an update will be
provided in the full year results for FY26. HY25 data restated primarily due
to identification of additional former OZL land holdings and areas where we
hold sub-surface mineral rights.
9 (#_ftnref9) Nature-positive is defined by the TNFD Glossary
version 1.0 as 'A high-level goal and concept describing a future state of
nature (e.g. biodiversity, ecosystem services and natural capital) which is
greater than the current state'. We understand it to include land and water
management practices that halt and reverse nature loss - that is, supporting
healthy, functioning ecosystems.
10 (#_ftnref10) Excluding areas we hold under greenfield
exploration licences (or equivalent tenements), which are outside the area of
influence of our existing mine operations. 30% will be calculated based on the
areas of land and water that we steward at the end of FY30.
11 (#_ftnref11) USD amounts reflect those included in the
announcement of the Brazil Agreement calculated based on actual transactional
(historical) exchange rates related to funding provided to Fundação Renova
for investment to date with future spend calculated using the 28 June 2024
BRL/USD exchange rate of 5.56.
The following footnotes apply to this Results Announcement:
i (#_ednref1) Combined employee and contractor frequency
per 1 million hours worked. HY20 excludes former OZL Australian assets
(acquired 2 May 2023), which are included in HY26 and H2 FY25.
ii (#_ednref2) BHP internal analysis based on WAIO C1
reported unit costs compared to publicly available unit costs reported by
major competitors (including Fortescue, Rio Tinto and Vale), adjusted based on
publicly available financial information.
iii (#_ednref3) We use various non-IFRS financial information
to reflect our underlying financial performance. For further information on
the reconciliations of certain non-IFRS financial information measures to our
statutory measures, reasons for usefulness and calculation methodology, please
refer to non-IFRS financial information.
iv (#_ednref4) The Copper segment has contributed >50% of
Group Underlying EBITDA for the first time since the Copper segment was
introduced in FY13.
v (#_ednref5) Based on the Corporate Tax Transparency
Report 2023-2024 published by the Australian Taxation Office on 2 October
2025.
vi (#_ednref6) Compound annual growth rate (CAGR) from FY27
to FY35 is calculated based on attributable copper equivalent (CuEq)
production, excluding NSWEC, Carajás and WA Nickel, at fixed long-term UBS
consensus prices as of December 2025: copper US$4.37/lb, gold US$2,824/oz,
iron ore US$84/t, steelmaking coal US$199/t, potash US$352/t.
vii (#_ednref7) On a total operations basis. 25-year average
includes all half-year reporting periods from HY02 to HY26 (inclusive).
viii (#_ednref8) Capital and exploration expenditure guidance is
subject to movements in exchange rates.
ix (#_ednref9) Credit ratings are forward-looking opinions on
credit risk. Moody's and Fitch's credit ratings express the opinion of each
agency on the ability and willingness of BHP to meet its financial obligations
in full and on time. A credit rating is not a recommendation to buy, sell or
hold securities and may be subject to suspension, reduction or withdrawal at
any time by an assigning rating agency. Any credit rating should be evaluated
independently of any other information.
x (#_ednref10) The information in this section is based on
BHP data, analysis and desktop research on public data sources.
xi (#_ednref11) Represents our current aspiration for BHP
group attributable copper production, and not intended to be a projection,
forecast or production target. Includes potential increases in production
rates, as well as potential production from non-operated joint ventures and
exploration programs. The pathway is subject to the completion of technical
studies to support Mineral Resource and Ore Reserves estimates, capital
allocation, regulatory approvals, market capacity, and, in certain cases, the
development of exploration assets, in which factors are uncertain.
xii (#_ednref12) The pathway to increase potential production
at Copper South Australia is subject to regulatory approvals, market capacity
and, in certain cases, the development of exploration assets, which factors
are uncertain. The pathway represents our current aspiration for Copper South
Australia, and is not intended to be a projection, forecast or production
target. Copper equivalent production includes potential increases in
production rates and contribution from by-products, as well as potential
impacts from our exploration program. Copper equivalent production is
calculated using UBS 2026 long term (real) consensus prices as of December
2025 of US$4.37/lb for copper, US$2,824/oz for gold, US$34/oz for silver and
US$73/lb for uranium.
xiii (#_ednref13) Based on CY24 production.
xiv (#_ednref14) FY26 and medium-term unit cost guidance ranges
are based on exchange rates of AUD/USD 0.65 and USD/CLP 940, and for Copper SA
by-product prices of US$2,900/oz for gold, and US$70/lb for uranium.
xv (#_ednref15) Calculation based on long term consensus copper
price of US$4.50/lb.
xvi (#_ednref16) Subject to movements in exchange rates; +/- 50%
in any given year over the medium term.
xvii (#_ednref17) BMA on a 100% basis. Source: Wood Mackenzie 2025
Q4 dataset.
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