* OZ Minerals lenders seen likely to extend debt deadline
* Patience of bidder Minmetals, copper price outlook seen
* Shares drop as much as 15 percent on fresh uncertainty
(Adds lender, OZ spokesman, Australian trade minister
By Sonali Paul
MELBOURNE, March 24 Lenders to OZ Minerals Ltd
(OZL.AX) are likely to extend a March 31 debt deadline, a
lender said on Tuesday, after the Australia government decided
it needed more time to assess a $1.8 billion rescue bid for the
group from Chinese state-owned Minmetals.
The world's second-biggest zinc miner was left at the mercy
of its lenders this week when Australia's Foreign Investment
Review Board extended its probe into Minmetals' takeover to
June 22, well past the deadline for OZ to repay $1.3 billion.
That knocked its shares down as much as 15 percent on
Tuesday as investors worried about the fate of the deal and the
patience of the lenders.
"OZ Minerals lenders will extend the deadline. Most of the
banks are currently in the midst of getting their internal
approvals," said a lender to OZ who asked not to be named due
to the sensitive stage of the talks.
The company said its banks have another week to make their
"Talks with lenders are progressing," said OZ Minerals
spokesman Matthew Foran.
OZ shares fell 10 percent to A$0.53 on Tuesday, about 36
percent below the A$0.825 a share offered by Minmetals,
reflecting the uncertainty.
Two key factors would make the banks more willing to extend
OZ's lifeline: Minmetals' commitment to wait for a final
decision from the Australian government and improving commodity
prices, said the lender.
"It really depends on how certain the lenders are of
Minmetals' position in 90 days, which is a long time," the
Minmetals said on Monday it respected the government's
review process, but declined to comment further.
Copper prices touched a 4-½ month high this week on signs
of improved demand from China and hopes for an economic
recovery in the United States.
"With copper prices going up, OZ is making money, and this
is a positive thing for the company," the lender added.
Observers, including investment analysts, lobbyists and
academics, expect the deal to be approved by Australia's
treasurer eventually, possibly with conditions as it involves a
full takeover by a state-owned Chinese company.
The Minmetals deal is considered less controversial than
Chinese state-owned Chinalco's $19.5 billion tie-up with global
miner Rio Tinto (RIO.AX)(RIO.L), also being reviewed by the
Australian government, as OZ's assets are not as strategic as
Rio Tinto's iron ore.
Australian Trade Minister Simon Crean said the extension of
the probe by the Foreign Investment Review Board showed it
needed more time to weigh the full impact of the proposal.
"All proposals, whether they come from China or any other
part of the world, have to be considered against national
interest guidelines," Crean told reporters in Canberra.
"It is just a demonstration that more time is needed to
consider those facts."
The government has said it welcomes Chinese investment, but
wants to ensure that any state-owned companies investing
operate at arm's length from the government and on commercial
(Additional reporting by Sharon Klyne and Rob Taylor in
Canberra; Editing by James Thornhill)