China Minmetals Corp has negotiated a new investment plan with Australia's OZ Minerals to buy most assets of the miner after the Australian government rejected its earlier takeover proposal due to security concerns.
China's biggest metals trader will spend A$1.75 billion ($1.2 billion) to take over OZ Minerals' zinc, gold and copper projects in Australia and Laos and certain other exploration and development assets, OZ Minerals yesterday said in a statement on its website.
Minmetals last month offered the Australian miner 82.5 cents per share (a 50 percent premium) but the proposal was rejected by Australia's Federal Treasurer Wayne Swan since OZ Minerals' Prominent Hill mining operations were situated close to a sensitive weapons-testing site. But he agreed to consider the deal if that mine was excluded.
"While this is a structurally different proposal to the previous cash proposal from Minmetals ... we believe it represents an attractive offer for OZ Minerals and our shareholders," OZ Minerals Chairman Barry Cusack said in the statement.
Under the revised transaction, OZ will retain Prominent Hill and several other mines in Cambodia and Thailand and listed equity interests.
Andrew Michelmore, managing director and CEO of OZ Minerals, said Prominent Hill had significant upside potential and OZ Minerals would have the financial capacity to continue its development.
He expected the mine, which had commenced production, to become "cash flow positive" during the second half of this year. Jiao Jian, Minmetals' spokesman in Beijing, was unavailable for comment.
The company's president Zhou Zhongshu had said in an earlier interview that the global economic downturn presented opportunities for Chinese companies to make low-cost acquisitions abroad as the share prices of many international mineral companies had declined by over half from their peak.
Post the deal, OZ Minerals said it would have a cash balance of about A$600 million after repaying a debt of about A$1.1 billion. It said its bankers had agreed to refinance the loan that was due on Tuesday, for 13 months.