Shares in Oz Minerals rallied today, after the company claimed the option to acquire one of the world’s largest undeveloped open pit copper-gold deposits, ending the day over 2.5% higher at $22.03.
Management announced it had signed a binding term sheet with explorer Havilah Resources Ltd
This gives OZ Minerals the option to acquire 100% of the Kalkaroo project. It also sets the basis for a strategic partnership between the miners in the prospective Curnamona Province in South Australia.
Not surprisingly, being the much smaller company, it was the Havilah share price that benefited the most from the deal. The share price leapt over 150% at the beginning of trading to 45 cents a share. By the end of the day, it closed at 31 cents a share, 81% higher. The term sheet is material to the mining junior as OZ Minerals will pay $1 million a month to Havilah for the period of the term sheet.
OZ Minerals is committed to spending another $76 million on exploration at the Kalkaroo project and on partnership activities. In return, the Oz Minerals has up to 18 months to decide if it wants to buy the Kalkaroo project for $205 million.
Kalkaroo’s Mineral Resource estimate of 245Mt @ 0.45% Cu and 0.39g/t Au was announced by Havilah in 2018.
OZ Minerals chief executive Andrew Cole said:
“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.
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.”