Minmetals gets Chinese OK for OZ

The acquisition of various assets and businesses of OZ Minerals by China Minmetals Non-ferrous Metals Company has taken a step forward, with China's development and reform commission today giving the transaction the green light.

The approval follows the approval given to the transaction by Federal Treasurer Wayne Swan on 23 April and represents the satisfaction of an important condition for the completion of the transaction.

Minmetals has also advised OZ Minerals that it has received binding financing commitments from its financiers to enable the transaction to be completed.

Further necessary Chinese regulatory approvals, including from the Ministry of Commerce, the State Administration of Foreign Exchange and the State-owned Assets Supervision an Administration Commission, are expected to be received before 11 June 11.

Debt-laden miner OZ Minerals was thrown a lifeline earlier this month by its bankers, ahead of a deal to sell most of its assets to the Chinese company.

OZ Minerals had said at the time that its bankers had agreed to extend a refinancing deadline on its $1.2 billion debt by two months to June 30.

OZ Minerals chief financial officer David Lamont said at the time that the agreement would enable the deal with the Chinese state-owned China Minmetals to go ahead.

The Prominent Hill copper and gold mine in South Australia will become OZ Minerals' sole asset following the sale of its other projects to Minmetals and China Sci-Tech Holdings Ltd.

The deals offer debt-laden OZ Minerals a financial lifeline, given its debt of about A$1 billion (US$750.1 million) was threatening to send it into administration.

OZ Minerals chairman Barry Cusack said on Monday that while several further Chinese regulatory approvals were still required, the company was aware of the significance of the NDRC approval.

"We recently announced that a resolution authorising the sale to Minmetals will be put to shareholders at our annual general meeting on 11 June and we have previously stated, this sale represents the best available outcome for OZ Minerals and provides a complete solution to its refinancing issues.

"Accordingly, the board of OZ Minerals unanimously recommends, in
the absence of a superior transaction, that shareholders vote in favour of the resolution, Mr Cusack said in a statement.

If the resolution authorising the sale to Minmetals is approved, the transaction with Minmetals will be completed and settled on or before 18 June 2009.

Mr Swan rejected Minmetals' earlier takeover proposal for OZ Minerals on national security grounds because OZ Minerals' most prized asset - the Prominent Hill mine - was within the Woomera Prohibited Area weapons testing range.

State-owned Minmetals will instead buy the Golden Grove mine in Western Australia, the Rosebery and Avebury mines in Tasmania, and the Century and Dugald River operations in Queensland.

Mr Swans later approval was conditional on Minmetals operating the mines as a separate business, using companies incorporated, headquartered and managed in Australia under a predominantly Australian management team.