BEIJING - RMG Services Ltd and Teck Australia, a unit of Canada's Teck Resources, are seeking buyers for a potential sale of the Carrapateena deposit, one of Australia's largest undeveloped copper and gold projects.
Carrapateena is part of the same geological structure -- the Gawler Craton -- as BHP Billiton Ltd's huge Olympic Dam mine and OZ Minerals Ltd's Prominent Hill copper-gold mine.
"This is a world class asset and we expect there'll be interest from miners around the world," RMG's vice president of Business Development Phil Gomez told Reuters by phone.
Mr Gomez declined to put a value on the deposit.
"We've been taking the approach that we don't want to put any number out there," he said.
Carrapateena is estimated to hold 4.4 million tonnes of copper, six million ounces of gold and 225 million pounds of uranium, as well as haematite iron ore and rare earths, according to a teaser seen by Reuters -- a document given to potential buyers to elicit interest early in a sales process.
RMG and Teck, with 58 per cent and 34 per cent of Carrapateena respectively, said a month ago that they had hired Rothschild to look at strategic options for the project.
A source involved in the bidding earlier said the sellers were courting Chinese buyers and were expecting non-binding expressions of interest to be submitted by late May.
The source, who asked not to be identified because of the confidentiality of the deal, said acquisitive state-owned firms such as Minmetals Corp, Chinalco, CITIC and China Nonferrous Metal Mining Group could be potential bidders.
Mr Gomez said there was still no final decision to sell.
"We haven't made a decision to sell. We are running a sale process and we'll see how the process pans out," he said.
"We haven't set any ultimate deadline."
A question for the FIRB
Chinese companies have been hunting Australian resource assets for several years, encouraged by the government in Beijing, which wants to secure supplies of raw materials to sustain China's economic boom for decades to come.
But they have had mixed success, largely limited to buying stakes in Australian firms rather than gaining outright control.
China's most ambitious move was a $US19.5 billion ($A21.1 billion) bid by state-owned metals firm Chinalco to double its nine per cent holding in Anglo-Australian miner Rio Tinto Ltd.
But Rio opted for a tie-up with BHP instead.
Teck has spent about $30 million on exploring the site since 2005, when it formed a joint venture with RMG, a privately-held company owned by Australian prospector Rudy Gomez.
"Teck Resources was one of the majors hardest hit by the late 2008 recession and may be looking to another major to develop the project," analysts at IM Mining International said in a note on March 10.
Carrapateena is situated in a 1,070 square km site in South Australia.
The deposit, lying at a depth of about 470 metres, would be suitable for block-cave mining, according to the teaser.
The document said that there are no known native title or environmental obstacles to a sale of Carrapateena, which lies outside the Woomera Prohibited Area, a huge weapons testing site.
But a sale to a Chinese state-backed bidder or consortium would need to be notified to Australia's Foreign Investment Review Board and approved by Treasurer Wayne Swan.
Australia last year blocked a takeover of OZ Minerals by China's Minmetals because of the proximity of its Prominent Hill mine to Woomera.
The companies later agreed a dela that excluded Prominent Hill.
"This could be a test case for FIRB, but given the fact Carrapateena represents a large scale development asset, the chances of a positive outcome are encouraging," said the source involved in the bidding.
Mr Gomez said the company had not yet approached FIRB.
He also said he did not expect the presence of uranium in the mine to be an obstacle to a sale.
"I can't speak for the regulators but uranium's not the only metal that's in the body.
I don't think that would prevent parties from Canada or India or elsewhere from acquiring this asset," he said, adding that the government had taken a more relaxed attitude on uranium policies in recent years.
Obviously would cost a bucket load to mine this deposit as it starts from 470m depth. Realistically would this be the logical choice for OZL management and shareholders interests OR would SFR better suit OZL's budget given that its deposit is much closer to the surface and wouldn't cost as much to extract.
OZL Price at posting:
$13.85 Sentiment: LT Buy Disclosure: Held
