THE troubled miner OZ Minerals has entered exclusive negotiations for at least one of the mines in its asset sale program.
The Herald understands that efforts to sell its Prominent Hill copper-gold mine in South Australia and its Martabe gold project in Indonesia are the most advanced, and that OZ has whittled down the field of possible buyers and entered exclusive negotiations with another party for at least one of those assets.
OZ has set up data rooms and allowed some of the potential buyers to visit the sites. It has been forced to examine asset sales because of its inability to refinance $1 billion of debt.
It is understood to be fielding offers for all of its assets and has yet to decide on the final combination of sales it expects to make or whether to sell a minority or majority stake in its Prominent Hill mine.
There is some competitive tension in the asset sales process, with several groups - believed to include big diversified miners, goldminers and Chinese companies - said to have expressed interest in various assets.
That will help OZ achieve better prices, despite the fire-sale nature of the process. The company does not expect to fetch the same prices it would have six months or a year ago when metals prices were stronger.
OZ hopes to complete significant asset sales - or at least of signing sales agreements - within the next six weeks in order to remain afloat. But it is also examining other financing options, such as a rights issue or convertible note raising.
The company is seeking an unknown amount of bridging finance to allow it to continue operating and completing projects before the February 27 refinancing deadline.
The precarious state of the company's finances means that some suppliers are believed to be less willing to extend credit to OZ and have demanded immediate repayment.
OZ said yesterday that its creditors accounts were "in line with agreed terms" except for a small number of disputes about delivery, quality and other similar considerations.
It added that its banks were expected to obtain internal approvals to provide a bridging loan "as soon as possible" - after missing its self-imposed deadline of Friday.
OZ revealed it had $132 million of cash on hand, compared with $169.2 million on December 23. But it noted its cash had fallen to $109.3 million by December 30 and had since risen due to higher metals prices and the early results of cost-cutting programs.
It said it was "working constructively" with one of its lenders, Societe Generale, to give the bank security over some of its zinc assets in return for a loan extension to February 27.
It was supposed to have finalised the security agreement on Friday, but now expects to do so by tomorrow.
An OZ spokesman said the timeline had been extended because of the amount of legal work and paperwork involved.
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