MELBOURNE OZ Minerals Ltd (OZL.AX) said on Monday it had not been approached by Glencore Xstrata (GLEN.L) with any offer, dismissing a British newspaper report that said Glencore was weighing a 750 million pound ($1.2 billion) bid for the Australian copper miner.
The Mail on Sunday reported that Glencore had acquired up to a 10 percent stake in OZ Minerals, citing City sources, and said OZ Minerals had appointed UBS UBSN.VX as a defense adviser.
"In response to a query from ASX with respect to recent media speculation on Glencore acquiring OZ Minerals' shares, the Company advises it has not received a substantial shareholder notice from Glencore nor has OZ Minerals been approached by Glencore in regard to any proposal," OZ Minerals said in a statement to the Australian Stock Exchange.
Under Australian rules, any investor directly holding at least 5 percent of a stock must disclose their ownership.
Glencore and UBS declined to comment to Reuters on the Mail on Sunday report.
A banker who knows Glencore well poured cold water on the British media report, saying Glencore was unlikely to pounce on OZ Minerals as the Swiss-based firm is looking to conserve cash.
He said even if OZ Minerals was a bargain its assets would not be a good fit for Glencore.
"There's no obvious synergy," the banker said, declining to be identified because he was not authorized to speak on behalf of Glencore.
OZ Minerals owns the Prominent Hill copper mine in South Australia, whose costs are rising as its mine life runs out. The mine's copper is exported to China, so would not provide any feed for Glencore's Mt Isa operation.
OZ Minerals' other key asset is the undeveloped Carrapateena deposit in South Australia, which Glencore would not want as it is selling off some undeveloped copper assets and has made clear it has no interest in spending on new mines.
OZ Minerals is sitting on A$433 million ($403.36 million) in cash, hunting for producing mines that could boost its output as Prominent Hill output declines, while it weighs whether to develop Carrapateena.
"There's been pressure on them to buy another operating project," said Mark Hinsley on equity research sales at Foster Stockbroking.
Shares in OZ Minerals Ltd (OZL.AX) rose more than 6 percent to a near five-month high of A$4.71 in early trade after the British report. They then eased to close up just 0.5 percent at A$4.43, valuing the company at A$1.34 billion.
The broader market fell 1.7 percent.
UBS has been an adviser to OZ Minerals for some time, another banker, who declined to be named, told Reuters.
($1 = 0.6203 British pounds)
($1 = 1.0735 Australian dollars)
(Reporting by Sonali Paul in Melbourne and Jackie Range in Sydney; Editing by Richard Pullin, Stephen Coates and Jeremy Laurence)