OZ Minerals has signed a conditional binding terms sheet with Havilah Resources, setting out the basis of a new strategic relationship in the prospective Curnamona Province in South Australia.
It includes the option to acquire the Kalkaroo Project, which consists of a Mineral Resource estimate of 245 million tonnes at 0.45 per cent copper and 0.39 grams per tonne gold.
The terms sheet provides OZ Minerals with a study period of up to 18 months (option and alliance period) to evaluate the potential of Kalkaroo at a purchase price of $205 million.
Under the strategic alliance, OZ Minerals will pay Havilah $1 million per month during the option and alliance period, with 50 per cent of the payments directed towards Havilah identifying and advancing nearby exploration opportunities within Curnamona.
Including the monthly payment, OZ Minerals expects to spend up to $76 million during the period to undertake studies, and for exploration activities at Kalkaroo and on alliance activities.
OZ Minerals managing director and chief executive officer Andrew Cole said the agreement allowed the company to apply its 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 per cent of the project for a fixed acquisition price together with any deferred contingent consideration,” he said.
“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.