UPDATE 1-Oz Minerals gets less time to refinance debt

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SYDNEY Dec 1 (Reuters) - Australian miner Oz Minerals Ltd (OZL.AX), facing sharp falls in selling prices for its minerals, was given one month instead of two by its lenders to come up with a way to refinance $560 million in debt, it said on Monday.

Oz Minerals, the world second-biggest zinc supplier and also a miner of nickel, copper, gold and silver, has also been granted a month-long share trading suspension by regulators, fearing the negotiations would be hindered by volatility in its share price.

The extension to restructure its debt until Dec. 29 is a month short of the Jan. 31, 2009 extension it was seeking.

Oz Minerals said there was option from the group's lenders to extend the deadline to the end of January but warned that was subject to certain conditions, declining to say what the conditions were.

There was a risk it may have to seek the conditional extension given market volatility and tight credit, the company said.

The delays are the result of conditions requested by one of seven syndicated lenders, according to Credit Suisse.

"We have been advised that were Oz Minerals to accept these conditions it would be in breach of conditions placed by other debt providers," Credit Suisse, which has downgraded the stock to neutral from outperform. said in a report.

"The reputational damage of the situation, and implications on management credibility, are of concern to us," Credit Suisse said.

Oz Minerals last week said it will cut production at its giant Century zinc mine by 4 percent in 2009 and delay A$495 million ($323.5 million) in copper and gold mining projects, joining a growing number of miners forced to trim output as slowing global economies knock demand and prices.

Costs at the Century mine were running at around $0.69 a pound, compared with current selling prices of around $0.55 a pound on the London Metal Exchange MZN3 ($1=A$1.53) (Reporting by James Regan; Editing by James Thornhill)