OZ Minerals has signed a conditional binding terms sheet with Havilah Resources Ltd setting out the basis of a new strategic relationship in the prospective Curnamona Province in South Australia, including the option to acquire the Kalkaroo project.
The Kalkaroo project consists of a Mineral Resource estimate of 245 million t @ 0.45% Cu and 0.39g/t Au announced by Havilah in 2018, with Havilah having a large exploration tenement holding in the Curnamona Province.
The terms sheet provides OZ Minerals with a study period of up to 18 months (option and alliance period) to evaluate the potential of the Kalkaroo project and the option to acquire 100% of it for a purchase price of $205 million. OZ Minerals may elect to not exercise the Kalkaroo Option at any time during the option and alliance period, provided 5000 m have been drilled or a shortfall payment (metres not drilled multiplied by $400) is paid to Havilah. In addition, the agreement provides a deferred contingent consideration of $65 million, upon a 30% uplift in Kalkaroo’s Measured and Indicated Resource estimate, as well as a copper price linked contingent payment in each year of production up to a maximum cumulative amount of $135 million.
Under the strategic alliance, OZ Minerals will pay Havilah $1 million per month during the option and alliance period, with 50% of the payments directed towards Havilah identifying and advancing nearby exploration opportunities within the Curnamona Province. Including the monthly payment, OZ Minerals expects to spend up to $76 million during the option and alliance period to undertake studies and for exploration activities at the Kalkaroo project and on alliance activities.
OZ Minerals will have certain rights to accelerate exploration in discoveries of copper dominant mineralisation in the alliance area and to participate in developing any related projects.
Funding options for any potential acquisition of the Kalkaroo project will be evaluated by OZ Minerals during the option and alliance period.
Andrew Cole, OZ Minerals Managing Director and Chief Executive Officer, said:
“We are pleased to be working with Havilah and to have the opportunity to add an exciting project to our growth pipeline. The agreement allows OZ Minerals to apply our experience of looking at projects in a different way to unlock value during the study phase, while providing Havilah the opportunity to continue to apply its extensive exploration experience across the province to identify new deposits.
“The agreement provides a low-cost option and flexibility to study the Kalkaroo project, while retaining the optionality to acquire 100% of the project for a fixed acquisition price together with any deferred contingent consideration. If the study can demonstrate value creation for our stakeholders, the fixed component of the acquisition price ensures that OZ Minerals captures additional value identified through the study and provides Havilah shareholders with price certainty, while the deferred contingent consideration rewards Havilah for future value enhancing milestones.
“During the study period the team will focus on opportunities to identify additional value by assessing a range of modern mining opportunities, innovation, processing improvements, and local infrastructure that reduce project costs and improve productivity. The aim of the study is to improve our understanding and confidence in the project, and will include an infill drilling program to confirm the current mineral resource estimate, prior to making a decision to exercise the option to acquire 100% of the Kalkaroo project.
“We believe our approach of taking projects from an early study phase through development and into operation can unlock significant value for our stakeholders, something we have demonstrated with Carrapateena, now in its third year of operation, and continue to show with West Musgrave as we approach a final investment decision on the project later this year.
“We remain focused on adding multiple options, like Kalkaroo, to our growth pipeline. We have strong study and project construction experience enabling rapid deployment to new projects beyond West Musgrave (should the project be approved) and our current brownfields expansions at Prominent Hill and Carrapateena.
“We look forward to working in partnership with Havilah on the Kalkaroo project and Strategic Alliance.”
Read the article online at: https://www.globalminingreview.com/mining/20052022/oz-minerals-announces-option-to-acquire-kalkaroo-project/