A rare bit of good news for OZ Minerals that’s unconnected with bank debt, loan rollovers, takeover bids and asset sales.
The company’s sole remaining asset, the $1.1 billion Prominent Hill copper and gold mine in western Australia is turning out to be bigger and better than first expected.
In fact it confirms the optimism that the Oxiana side of OZ had for the project at the time of the merger almost a year ago.
The shares rose 5.5%, or 4 cents to 76 cents yesterday.
That was hardly earth shattering, but on a day when the wider market was weak, it was a small ray of sunlight for the company’s suffering shareholders.
OZ Minerals said resources at its Western Copper deposit had increased 32 per cent to 245,000 tonnes of contained copper.
"At the first available opportunity, drilling of the deposit will be reactivated to further expand the deposit," OZ Minerals said.
"Resources at Prominent Hill continue to expand with the most recent drilling campaign increasing the ‘Western Copper’ deposit by 32% to 245Kt of contained copper. Inferred Resources at the Western Copper deposit now stand at 14.5Mt grading 1.7% copper, 0.28g/t gold and 3.7g/t Ag silver.
The deposit is situated about 800 metres west of the Prominent Hill open pit, which is currently being mined, and requires further drilling to enable the calculation of an initial ore reserve.
Studies are under way examining the viability of developing an underground mine immediately beneath and to the east of the open pit, the company said.
The deposit was first identified in 2008 and this resource estimate includes drilling completed up until November 2008 when drilling was suspended as part of company wide cost reduction measures.
"The Western Copper deposit is the most promising near mine deposit identified to date, however, the remainder of the Prominent Hill region is highly prospective with multiple iron-oxide-copper-gold targets within trucking distance of the Prominent Hill plant still to be tested, OZ told the ASX..
"However, the remainder of the Prominent Hill region is highly prospective with multiple iron-oxide-copper-gold targets within trucking distance of the Prominent Hill plant still to be tested," it said.
Prominent Hill is OZ Minerals’ sole asset following the sale of its other projects to China Minmetals Non-ferrous Metals and China Sci-Tech Holdings.
The deals give OZ Minerals a solid chance of surviving with its best asset in its hand, thanks to intervention by the Federal Government.
The Minmetals sale is expected to be complete by mid- to late-June while the sale of the Martabe gold and silver project in Indonesia to China Sci-Tech Holdings Ltd is expected to be complete by early June.
OZ later said China’s National Development and Reform Commission had approved the purchase of its assets by China Minmetals.
Meanwhile NSW coal miner Whitehaven Coal yesterday abandoned a planned merger with fellow miner Gloucester Coal after Gloucester recommended an improved rival bid by commodity trader Noble Group of Hong Kong.
Noble raised its offer for Gloucester Coal on Friday to $7 a share, or $572 million.
Gloucester’s board has declared the new Noble bid superior and recommended its shareholders accept it, forcing he withdrawal by Whitehaven from what had been an increasingly acrimonious and confusing takeover battle.
Gloucester Coal shares leapt more than 17% to $6.94, a rose of more than $1. Whitehaven Coal shares fell in early trading to a low of $2.09, before recovering to end down 4 cents at $2.26.
And small Victorian based food group, Patties Foods said yesterday its search for a chairman had struck "unforeseen delays", but it expects to be able to announce an appointment by July.
The manufacturer of pies and sweet pastry products said in a statement to the ASX that its search consultants had compiled a list of eight potential candidates, none of whom are associated with the company.
Patties said currently the lead search consultant is meeting each candidate face to face to outline the history, performance and plans of the company and to determine the interest and suitability of the candidates in the position.
Patties said it was disappointing there have been unforeseen delays, but to ensure a robust and independent recruitment, the board was committed to maintaining due process.
The company said it was confident that it would be able to announce an appointment in June – July 2009.
Ernest Barr has been acting chairman since the company’s former chairman, Peter Kempen, resigned in November 2008.
