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Oz Minerals gets bank lifeline as assets go on block
SYDNEY (Reuters) - Oz Minerals, which mines industrial and precious metals in Australia and Laos, was given another two months to persuade lenders to refinance $560 million in debt as it tries to raise cash by selling assets to combat sharp falls in metals prices.
The company, whose shares were suspended November 28 after dropping 85 percent from their January price, was due by the end of Monday to refinance a $140 million loan and a syndicated credit line of which $420 million has been drawn.
Oz Minerals is meeting with potential buyers for some of its prized mines but is keeping the names secret while negotiations progress, according to Chief Executive Andrew Michelmore.
With the majority of the world's mining houses strapped for cash since metals markets collapsed a few months ago, the list is a short one, analysts and bankers said.
"Who could afford to buy Oz Minerals' assets now?" said Australia & New Zealand Bank chief commodities strategist Mark Pervan. "The Chinese, maybe, and BHP, that's who."
BHP Billiton, the world biggest miner, which withdrew a $66 billion share offer for fellow industry titan Rio Tinto in November, has said it's still looking for smaller acquisitions that may surface from the sector's malaise.
Rio itself is trying to sell more than $15 billion worth of assets to pay off debt.
Oz Minerals was assembled from the merger of two medium-sized mining houses only last June when commodity markets still appeared immune from the world's mounting credit crunch. Since then, zinc has tumbled 40 percent, copper 66 percent and lead 48 percent.
Besides selling assets, Oz Minerals has already shut a small nickel mine and threatened to close its unprofitable Century zinc mine -- the world's second largest -- if conditions worsen.
It's also shelved expansion at its Sepon copper and gold mine, one of only two in Laos.
Oz Minerals said on Tuesday its banks had agreed to roll over its debt until February 27. Its shares will remain suspended until then.
MORE WORK AHEAD
"We remain very focused on achieving a refinancing of our facilities by early 2009 and have made considerable progress in negotiations with the company's lenders," Michelmore said in a statement. "However, we still have a lot of work to do to achieve the refinancing."
Topping the list of assets Oz Minerals has on the block is a majority stake in the rich Prominent Hill copper and gold mine in the south Australian outback, which analyst estimate is worth around A$700 million ($475 million) and could interest BHP, which already mines and smelts copper and gold nearby.
"Who's got the cash to pay for that stake?" said DJ Carmichael & Co analyst James Wilson. "I reckon there's only one company in town and they have their own big mine down the road -- BHP."
A BHP spokeswoman declined to comment on the matter.
The Martabe gold prospect in Indonesia, which was acquired to help move Oz Minerals away from a miner solely of industrial metals, meets the large size and long operating life of Australia-listed pure gold plays Lihir Gold< and Newcrest Mining.
UBS this month valued Martabe at A$111 million ($76 million).
"The company has received a number of expressions of interest for selected assets, including for a majority stake in Prominent Hill and expects to make further progress on asset sales in January," Michelmore said.
Basis Point, a Thomson Reuters news service, has reported Australia & New Zealand Banking Group, Commonwealth Bank of Australia, BNP Paribas, nabCapital, Royal Bank of Scotland and Westpac Banking Corp have agreed to refinance the debt.
HBOS has been reluctant to give OZ Minerals more time, according to Australian media reports.
(Editing by Jean Yoon)
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