Oxiana drilling finds more copper * Font Size: Decrease Increase...

Oxiana drilling finds more copper

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Matt Chambers | July 04, 2008

OZ Minerals, formed last month in the merger of Oxiana and Zinifex, could be sitting on another big copper find near its $1.1billion Prominent Hill project in South Australia, judging from recent drilling.

The company, still known as Oxiana until a shareholder vote later this month, yesterday released what it called "outstanding" drill results less than a kilometre from Prominent Hill.

Drilling "has highlighted potential for the discovery of an additional deposit close to existing infrastructure", OZ said.

The results, from 900 metres west of the mining pit, include 26 metres of ore at 2.1 per cent copper and 86 metres of ore at 2.9 per cent copper (61 of those metres at 3.9 per cent copper). More drilling is planned.

OZ said construction of Prominent Hill remained on track, with first production due in the fourth quarter.

Meanwhile, Oxiana chief executive Andrew Michelmore said yesterday the miner could begin to chase larger acquisitions now it had completed its merger with Zinifex, but it was also a target as mergers and acquisitions continued in the resources sector.

Michelmore told Dow Jones Newswires the company had a "number of things under review" concerning mergers and acquisitions, and could now look at bigger deals. He declined to elaborate.

"Our business development section will be running the ruler over the two groups' projects, and also identify the things we would have liked to have been able to do and couldn't before, but can now," he said.

Mining shares were sold off heavily in Australia yesterday and Mr Michelmore said any ongoing weakness could create opportunities.

"With the heat coming out of the market, some people's views of what they think their companies have been worth may be adjusted," he said.

Analysts say the combined Oxiana-Zinifex is likely to be more of a target for mining majors than the individual companies were.

Mr Michelmore said the miner was a target but there had been no approaches.

"The combination, for all the reasons we put it together, is a more attractive entity," he said.

Oxiana also yesterday announced an agreement with PT Aneka Tambang for the pair to co-operate in the hunt for mining projects in Indonesia, with Antam to buy an initial 10 per cent stake in the Martabe mine for $US66.5 million ($69.2 million).

Mr Michelmore said the partnership with Antam gave Oxiana a reputable local partner and a chance to chase nickel and copper projects in Indonesia.

"Our geologists believe Indonesia is probably the most prospective area for nickel and copper deposits, both of which we are extremely interested in," Mr Michelmore said.

Oxiana was unlikely to take a stake in existing Antam operations, with the focus on new projects.

The Melbourne-based miner would be looking for local partners in other countries as well to spread the risk and win access to local expertise and land holdings, he said.

Additional reporting: Agencies