BHP Billiton delivered with an upgrade of its huge Olympic Dam mine in South Australia when it released its released 2007 annual report today but the market followed the usual buy on the rumour, sell on the fact pattern and the shares were down 90c to $43.70 at 11.30am today.

Those claims about the world’s biggest gold deposit turned out to be just claims. Lasseter’s Reef it isn’t, despite the market hype yesterday. There is a lot of gold: more than in any other mine in Australia, but the copper and uranium are worth much, much more to the company. Gold is just a byproduct.

Punters had chased the shares up sharply this week: they rose $1.46 yesterday to a record close of $44.60. Fool’s gold for those punters who managed to snap up the shares at $45.09 yesterday.

BHP had driven the wider market through record closes on Monday and yesterday but the major indices were up around 4 to 5 points this morning as BHP took a breather.

Lower copper, nickel and oil prices also helped send BHP lower and news of a worsening in new home sales in the US (now at a five year low) didn’t help the market, nor an Australian dollar which jumped past 87 USc overnight.

But the news from Olympic Dam was pretty spectacular — copper, gold and uranium resources are 75% higher than its previous estimate — and makes it easier to understand why the company created a separate division for the project when new CEO, Marius Kloppers, revealed his new management structure two months ago.

BHP Billiton has outlined 117 million tonnes of non-sulphide gold resources (an ore resource estimate is a broad calculation of minerals contained underground, while a reserve estimate is a measure of minerals that can be mined profitably), or around 78 million ounces of gold contained in the ground. But that is short of the world’s biggest gold resource in Uzbekistan which contains around 175 million ounces in resources (not reserves)

The resource of copper at the mine rose to 67 million tonnes of metal, from last year’s estimate of 48.7 million tonnes. The uranium resource rose to 2.2 million tonnes of uranium oxide, from 1.7 million tonnes.

The mine produced about 182,500 tonnes of copper, 3,486 tonnes of uranium oxide and 91,700 ounces of gold during fiscal year 2007. The idea of the expansion is to lift copper output to 500,000 tonnes a year, and to do that more uranium and gold would be produced.

BHP has so far indicated that it could spend more than $5 billion expanding Olympic Dam. A feasibility study is continuing, but is running late as it argues with the South Australian Government about whether a copper smelter should be located in the state. Water is also another big concern and the plans to draw water from the Great Artesian Basin. If built the mine would come on stream around 2013.