Oz Minerals unveils $250m copper/gold acquisition


Oz Minerals unveils $250m copper/gold acquisition 
PERTH (miningweekly.com) − ASX-listed copper-miner Oz Minerals would pay $250-million for the Carrapateena copper/gold project, in South Australia, CEO Terry Burgess announced on Wednesday.

The project is controlled by mining personality Rudy Gomez, which owns 58%. Canadian diversified miner Teck owns 34%, and various minorities the balance.

The Carrapateena project is said to be one of the largest undeveloped copper projects in Australia, and Burgess believes that it would significantly add to Oz Minerals’ growth potential.

The project is located 250 km north-west of the company’s Prominent Hill mine and has the potential to produce between 50 000 t/y and 150 000 t/y of copper.

“Clearly synergies will be available to us as we move to develop this quality copper/gold asset,” Burgess stated.

Carrapateena comprises four exploration licences, covering 1 070 km2 in central South Australia, and is situated relatively close to the Adelaide and Darwin railway, through which Prominent Hill concentrates are currently transported.

Oz Minerals would pay a $10-million refundable deposit on the signing of a sale and purchase agreement, followed by a $240-million payment on the transfer of the licences.

Two further payments would be made once commercial production was reached. $50-million would be paid when copper, uranium, gold or silver, production started, and $25-million on the first commercial production of rare earths, iron or any other commodity.

Burgess said that it was difficult to estimate the exact project schedule, however, the first priority would be on further drilling to allow for a mineral resource estimate.

Development and drilling to the inferred resource stage was likely to take up to 24 months, he added.

A prefeasibility study would then be undertaken in tandem with the establishment of a mineral resource, and was anticipated to be completed within 24- to 36-months from purchase.

Should the prefeasibility study be positive, a full feasibility study, including detailed engineering design, would likely take a further 24 months.

The company would fund the acquisition from its current cash resources and head of business development Richard Hedstrom added that Oz Minerals still had $750-million which it would use to fund growth.

“We continue to pursue opportunities in line with our strategy,” he said.

But resources analyst Peter Strachan said it was unlikely that the company would look for another acquisition opportunity in the near future.

“I think they have their job cut out for them, and will be spending money on getting Carrapateena into production status,” he said in an interview with Mining Weekly Online.

Strachan said the miner could spend up to A$70-million on exploration efforts at the newly acquired project in the next few years, with further costs added to mining studies and infrastructure.

“They have given themselves a three-year timeframe to bring the project up to the point where they can look at taking it forward. And they could spend a lot of money doing this,” he added.

Shareholders reacted to the promised spend with shares dropping 2,5% on Wednesday to A$1,57 a share, down from Tuesday’s close of A$1,61 a share
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