OZ Minerals Ltd. (OZL), Australia’s third-biggest copper producer, may consider selling all of the country’s largest unmined deposit, which has a planned development cost of A$3 billion ($2.8 billion).
“All options are on the table” for its Carrapateena project in South Australia, outgoing Chief Executive Officer Terry Burgess said today on a media conference call. About 12 interested parties are in a data room and receiving presentations and site tours of the asset, he said.
OZ Minerals, which fell to a 12-year low in December, has been dogged by writedowns and production target cuts. Producers are seeking sources of new output as banks including Societe Generale SA (GLE) forecast supply shortages.
“I’ve talked to people in the data room who’ve said it’s very difficult to find quality copper resources in countries where the sovereign risks are low and where you have proper infrastructure,” said Burgess, who will be replaced by next February.
OZ Minerals, which said in February that it would consider selling a majority stake in Carrapateena, rose 4.5 percent to A$3.92 at 1:36 p.m. in Sydney, advancing 25 percent this year.
Efforts by major producers to divest assets, led by Glencore Xstrata Plc’s deal to sell its Las Bambas copper project in Peru for $5.85 million, may provide OZ Minerals with an opportunity to make an acquisition, according to Burgess.
Carrapateena may cost as much as A$3 billion to build and produce as much as 110,000 metric tons of copper a year with a mine life of 20 years, the company said in a May. It may contain as much as 6.3 million tons of copper and 8.4 million ounces of gold, according to a November filing.
The copper market may slide into deficit from 2017 and the shortage may exceed 2 million tons by 2020, Michael Widmer, an analyst at Bank of America Corp. said April 9 in a Santiago presentation.
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