I know, I know. If you’re watching the market, you’re already watching BHP. However, yesterday’s production report means BHP bears a closer look over the next few trading days.

BHP surprised on iron ore. Both Rio and Fortescue reported production drops for Q1 2014 vs Q4 2013, mainly due to poor weather conditions. However, BHP reported a 1% increase – a clear outperformance. Unfortunately, this was offset by a drop in copper production, and fairly soft energy output. It’s easy to view all of this as priced in by the 0.4% lift in BHP’s share price following the announcement.

None of this is a reason to have BHP on the radar. The real reason is a slow burner – at least relative to the relentless 24 hour news cycle. Buried in the 46 page report was the news that BHP’s estimate of the Escondida resource increased by a whopping 28% after further exploration.

Escondida is the largest copper mine in the world. As analysts feed this increase into their models, valuations will go up. As this news hits fund managers’ inboxes over the next two weeks it is likely to have a positive effect. Easter and school holidays mean that the full impact of this change may not be reflected in BHP’s price for another couple of weeks, making it one to watch.

chart of bhp