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OZ Minerals eyes another SA copper project

OZ Minerals

OZ Minerals has entered into an agreement with Havilah Resources, enabling the company the option to acquire the Kalkaroo copper project in South Australia.

The major miner can purchase 100 per cent of Kalkaroo for $205 million within 18 months of the agreement commencing, allowing it time to scope the project’s potential before pulling the trigger.

OZ Minerals can choose to not exercise the acquisition during the option period as long as 5000m has been drilled or a shortfall payment (metres not drilled multiplied by $400) is paid to Havilah.

A deferred contingent consideration of $65 million also applies, linked to a 30 per cent uplift in Kalkaroo’s measured and indicated resource estimate, while OZ Minerals could also pay a cumulative $135 million as part of an annual copper price linked contingent payment.

OZ Minerals will pay Havilah $1 million per month during the option period. Half of these payments will fund Havilah’s efforts in identifying and advancing nearby exploration opportunities within the Curnamona province within which Kalkaroo is located.

Including the monthly payment, OZ Minerals expects to spend up to $76 million during the option period to undertake studies and complete exploration activities at Kalkaroo.

“We are pleased to be working with Havilah and to have the opportunity to add an exciting project to our growth pipeline,” OZ Minerals managing director and chief executive officer Andrew Cole said.

“The agreement allows OZ Minerals to apply our experience of looking at projects in a different way to unlock value during the study phase, while providing Havilah the opportunity to continue to apply its extensive exploration experience across the province to identify new deposits.

“The agreement provides a low-cost option and flexibility to study the Kalkaroo project, while retaining the optionality to acquire 100 per cent of the project for a fixed acquisition price together with any deferred contingent consideration.

“If the study can demonstrate value creation for our stakeholders, the fixed component of the acquisition price ensures that OZ Minerals captures additional value identified through the study and provides Havilah shareholders with price certainty, while the deferred contingent consideration rewards Havilah for future value-enhancing milestones.”

OZ Minerals said it would implement a modern mining approach to the project, scoping out innovation opportunities, processing improvements and investing in local infrastructure along the way.

Kalkaroo’s current mineral resource estimate is 245 million tonnes at 0.45 per cent copper and 0.39 grams per tonne of gold, as announced by the company in 2018.  

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