OZ Minerals sells Indonesian gold project to pay debt

06 March 2010 | 03:05 Code : 19056 Geoscience events
Australia’s OZ Minerals Ltd (OZL.AX: Quote) has agreed to sell its Martabe...

Australia’s OZ Minerals Ltd (OZL.AX: Quote) has agreed to sell its Martabe gold prospect in Indonesia to China Sci-Tech Holdings (0985.HK: Quote), further dismantling the company as it wrestles with a hefty debt burden.The $211 million price tag is in line with what OZ Minerals’ chief executive Andrew Michelmore earlier this month said the prospect was worth.The sale of the undeveloped mine in north Sumatra will help OZ to pay off more than A$1 billion ($714 million) in debts incurred by a collapse in commodities markets.Hong Kong-listed China Sci-Tech, a finance holding company, would fund the purchase from cash on hand, OZ Minerals said in a statement.China Sci-Tech has agreed to pay a deposit of $10 million on and the balance on completion of the transaction, expected by early June 2009, OZ said."The proceeds from this sale will make an important contribution to addressing OZ Minerals’ refinancing issues," OZ’s Michelmore said in a statement.OZ Minerals is in talks with its lenders to extend a debt refinancing deadline by two months to June 30.The sale still needs the consent of Australian foreign investment regulators, even though Martabe is in Indonesia, and approval from the company’s lenders, who have been rolling over the company’s debts since late last year to give OZ time to negotiate asset sales.OZ shares rose 7.1 percent to A$0.675 on Friday, having hit a peak of A$0.685 following the news.At peak operation, Martabe is expected to yield 200,000 ounces of gold and 2 million ounces of silver a year for at least nine years.Oz has already brokered the sale of most of the company’s assets to China’s Minmetals for $850 million, excluding Martabe, to satisfy more than a half-dozen lenders owed money.It plans to keep operating its one remaining mine, the Prominent Hill copper and gold lode in Australia.Prominent Hill was originally among the assets being sold to Minmetals until Australia demanded it be excluded for national security reasons because it sits close to a military installation and former atomic bomb test site. ($1=A$1.40) (Editing by James Thornhill)

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