The following articles were published on Tuesday 2nd December 2008

OZ Minerals has taken the extraordinary step of freezing its shares for another four weeks as it scrambles to refinance $US420 million ($A653 million) in debt amid the global financial crisis

OZ Minerals - product of the much-trumpeted Oxiana-Zinifex merger - announced late yesterday that its shares would be suspended until December 29 as it tries to win support from its banking syndicate
The stock, which was placed in a halt on Thursday, was expected to resume trading this morning

OZ Minerals chief executive Andrew Michelmore has been pushing the banks to grant an extension of the deadline for refinancing the facility from November 30 until January 31
But the bank syndicate only agreed to push back the refinancing date to December 29 with an option to extend until January 31, subject to certain undisclosed conditions

Banks on the syndicate include ANZ, BOS International, NAB, Royal Bank of Scotland, Commonwealth Bank and Societe Generale
Sources close to the talks with the syndicate told BusinessDaily last night that BOS International was presenting the biggest obstacle to the refinancing of the facility
BOS International is a subsidiary of the troubled HBOS group, which is now reining in lending exposures around the world under a program to stabilise its balance sheet

"BOS International is behaving like a rogue on the syndicate" the source said "I think the refinancing will happen - it's just a question of when that will occur"

Another source close to the talks said there was no suggestion that the banks would pull the plug on OZ Minerals

In a statement to the Australian Securities Exchange, OZ Minerals said it would try to renew the facility by the end of the month
"The company will use its best endeavours to achieve the refinancing by December 29, but given the continuing volatility in commodity markets and state of global credit markets believes there is a risk it may have to exercise the option to extend until January 31, 2009" OZ Minerals said
"The company requires time to continue negotiations with counter-parties to the refinancing and believes that these negotiations might be jeopardised if they took place during a period of potentially extreme share price volatility"

Ord Minnett resources analyst Peter Arden said OZ Minerals may be forced to raise capital through a share issue or sell assets to ease its financial troubles
But he added it was unlikely to spell the end of the company, which has been dogged by problems since the merger earlier this year
"I don't get the sense it's a terminal disaster for them" he said

OZ Minerals stock last traded at 55c compared with a June high of $3.10

If besieged OZ Minerals boss Andrew Michelmore likes whistling his way to work, then yesterday's tune of the day must surely have been Warren Zevon's classic, Lawyers Guns and Money
"Now I'm hiding in Honduras, I'm a desperate man, Send lawyers, guns and money, The shit has hit the fan"

Michelmore and his increasingly battle-scarred management team were last night reported to be close to a successful conclusion of strangely fractious negotiations over the extension of a pair of facilities worth $US540 million ($840 million)

OZ Minerals put itself into a trading halt on Friday morning after it became clear on Thursday evening it would not be able to meet a close-of-business deadline to extend the terms of facility to January 31

Just one of the seven banks to a $US420 million facility was refusing to move timeframes for repayment, which was necessary only because OZ Minerals is attempting to complete a broader refinancing as part of a strategic redrafting of its banking relationships
Now you could argue that events have proven this to be a pretty dumb time to attempt such a broad-scale refinancing
And you would be right
But OZ Minerals began walking this path within months of the merger that created the business in July

So, at the very least, all the banks involved, including the unnamed refusenik, must have been thoroughly briefed and have delivered some sort of endorsement of the plan for Michelmore & Co to pursue its enactment

The extension of terms requested by OZ Minerals is the necessary milestone along the pathway to this whole-of-business refinancing that reflects management's determination to shift from project financing to centralised funding arrangements
This process requires banking indulgences from two syndicates, the other being a $US120 funding arrangement

The intriguing thing here is that the smaller facility was actually due to be repaid on November 30
But, by Thursday, the bankers to that facility had agreed to extend to next year to enable the broader refinancing to be completed
OZ Minerals was pretty surprised then when one unnamed bank came back on Thursday evening seeking, at the death, to increase its individual level of security

The company refuses to confirm which bank is involved here
But, whichever, it is a bank clearly prepared to play this game just about as hard as the CBA in its conclusive dealings with Allco and continuing negotiations with Centro
For OZ Minerals to have accepted the proposal to increase security would have put it in default of other loan conditions
Which raises the testy issue of motivation
The bank in question would certainly have been aware of all the default conditions of the facility, so why did it come knocking with a condition that put OZ Minerals in breach?
This was a dilemma OZ Minerals did not deserve and one which should make its shareholders very angry indeed

For all OZ Minerals has done it tough since listing back in June, the only fundamental currently standing between it and a relatively prosperous future is this one bank
Fear and loathing in banking has reached a dangerous level when OZ Minerals' viability is placed on the line by one bank so suddenly overwhelmed by self-interest that it becomes seemingly irrational
It is said that at one point over the weekend, the OZ negotiators were told to stop talking about the quality of the assets that secured their facility and start talking about cash

OZ Minerals has its problems, there can be no doubt of that
It owes just under $1 billion at just the wrong time in the cycle of sentiment about debt
It is trying to renegotiate banking arrangements in the middle of an ice age in capital markets
It has become the target of aggressive shorters and former chief executive and soon-to-be-former director Owen Heggarty has the scars on his portfolio to prove it
It has cut costs and capital spending plans on the back of a stunningly rapid decline in the prices of core products such as copper and zinc
But this is also a cashed-up company (it probably has about $260 million in the bank) standing on the front porch of a company-making transition with the start-up of the $1.2 billion Prominent Hills copper mine in South Australia
By the end of 2009, OZ Minerals will be a copper company shifting around 100,000 tonnes of material a year, generating about $2.8 billion in revenue and making EBIT of nearly $590 million
By the close of 2010 it could be debt-free with EBIT circling $1 billion

But to do that, OZ Minerals must first secure its extension and then seal the deal by closing out the refinancing of this $US540 million debt portfolio
To that end, there have been reports that the recalcitrant bank at the heart of the current problem had indicated it did not want to be part of the new syndicate being assembled by OZ Minerals
While that was the case, it is now understood that, during talks over the weekend, the naysayer indicated that it could well reconsider its position
Which Michelmore must find just about as extraordinary as everything else that has happened over the past four or five days

The suspension of trading in OZ Minerals shares, possibly for four weeks or longer, highlights two issues - whether the ASX accedes too readily in denying investors the ability to trade their securities, and the fact that the ASX should now investigate whether the market was misled by the company last month when replying to queries by the stock exchange

OZ Minerals was queried by the ASX on November 18 after the company's share price had fallen from 83c to 73c in the previous two days' trading
The ASX asked whether the company was aware of any information that had not been announced which, if known, could be an explanation for the recent trading

On the following day, OZ Minerals replied that it was not aware of any undisclosed information which, if known, could be an explanation for the movement in the share price

Yet only six days later, on November 25, the company revealed that it was in negotiations on two debt facilities, one for $US420 million and the other for $US140 million, and had sought an extension of time for the facilities
It said the lenders in the smaller facility had agreed to an extension and negotiations for an extension of the larger facility were well advanced

Three days later, on November 28, the company revealed that there was more to the negotiations over the debt
It sought and obtained a trading halt from the ASX

OZ Minerals disclosed that the $US140 million facility was due for repayment on November 30 but the lenders had agreed to extend the repayment date to January 31
The $US420 million was due for repayment in periodic instalments, with the first instalment due on December 31

However, OZ Minerals disclosed that under a separate agreement the company had undertaken to refinance BOTH facilities by November 30
It had requested an extension to January 31 for the larger facility to allow sufficient time to conclude negotiations of a proposed new syndicated facility

Yesterday, OZ Minerals disclosed it had not been able to obtain an extension of the debt facilities to January 31
Instead it had accepted an extension until December 29 with an option, subject to satisfying certain conditions, for a January 31 extension

OZ Minerals said it would try to achieve the refinancing by December 29 but there was a risk it may have to exercise the January 31 option

Of course, there may also be a risk that it will be unable to renegotiate the facilities on acceptable terms, and if that were to happen the threat of administration would loom

An earlier incarnation, Pasminco, was forced into administration because of heavy losses on hedging contracts and was subsequently restructured and refloated

OZ Minerals justified its request for suspension of trading on the grounds that its negotiations with the banks could be jeopardised "if they took place during a period of potentially extreme share price volatility" and that it was unable, because of confidentiality obligations, to disclose the conditions of the December 29 extension - and was therefore concerned that the market would be trading on an uniformed basis if the suspension was not granted

The company expected to seek reinstatement of trading by December 29 "subject to it completing its refinancing negotiations"

OZ Minerals shares last traded at 55 cents

While the company appears to be confident that it will succeed in refinancing its debt by December 29, the shareholders are exposed to risk if it cannot reach agreement with its bankers
Companies appear to obtain trading halts and trading suspension at the drop of a hat nowadays, but denying liquidity to shareholders and investors is a drastic step that should not be lightly agreed to

Transfield Services is another current example where shareholders have been disadvantaged by having trading denied to them for three weeks while the company sought to put together a capital raising and debt renegotiation
When trading was first halted the share price was $3.50 but when trading was resumed yesterday after a capital raising at $1.25 a share, the price promptly plunged to the issue price

Contrast those situations with Allco Finance
On October 24 the troubled company announced that the directors had concluded there was a significant risk surrounding its ability to meet the November and December interest payments on its debt facility and, as a result, had started discussions with its banks seeking an extension of the repayment schedule
Allco had asked the banks to advise by the end of the month whether they would agree to an extension
If they would not agree, the directors would need to consider whether the company could continue as a going concern or need to appoint a voluntary administrator
As it turned out Allco went into administration on November 5, whereupon trading was suspended

But the Allco directors did not request a trading halt on October 24, no doubt on the basis that the market was on notice of the negotiations, and of the risk of failure, and the market was therefore sufficiently informed

Arguably, that's how it should also be with OZ Minerals

The following article was published on Wednesday 3rd December 2008

Investment bank Morgan Stanley has emerged with a key stake in OZ Minerals amid increasing speculation about the future of the struggling miner
As analysts warned OZ would be unlikely to turn a profit next year if commodity prices continued to tumble, Wall Street's Morgan Stanley Investment Management revealed it had increased its stake in the Melbourne-based company to 6.89 per cent
Its 214 million shares, built up by steady buying as OZ Minerals stock was smashed by investors, are worth about $118 million based on the last traded price

Speculation yesterday suggested the bank could be working on behalf of an industry participant interested in a deal with OZ Minerals - with BHP Billiton's name mooted
But analysts said that was unlikely
BHP, the world's bigger miner, last week walked away from its $135billion bid for rival Rio Tinto
BHP operates the massive Olympic Dam mine in northern South Australia, close to OZ Minerals' Prominent Hill copper-gold operation

OZ Minerals said it did not comment on market speculation, but analysts said Morgan Stanley's stock grab was simply opportunistic buying
The bank has been slowly increasing its stake over the past few months
Analysts said that was not surprising, as most watchers valued the stock at about $1.00
Its shares have crashed more than 85 per cent in the past nine months and were fetching just 55c when it went into a trading halt last week

"If you looked at the assets, it was trading really cheap, so it is no surprise investors were interested in the stock and if they get over this hump, the future will look brighter for them" one analyst said

The diversified miner this week took the unusual step of suspending trading in its shares until the end of the year, to continue crucial negotiations with its banks over the refinancing of $US560 million ($878 million) worth of debt

Analysts are now warning that a profit next year looks out of reach, if the global financial market and commodity prices continue to fall

OZ Minerals, formed through the merger of Oxiana and Zinifex, said on Monday its syndicate of seven lenders had granted it an extension until December 29 to refinance the debt, with an option of extending it to January 31 if certain conditions were satisfied
The miner had previously agreed with its lenders that it would refinance two facilities, one of $US420 million and one of $US140 million by November 30, but then sought an extension until January 31 to negotiate a proposed syndicated facility

OZ Minerals has said it will update the market on its financial position and information could be released as early as today (refer to official statement below)

JPMorgan's Brendan James said the falling Australian dollar would normally be positive for OZ Minerals, but it was now hitting the miner twice as hard
"The falling Australian dollar has, on our numbers, increased the payback required on US dollars provisional priced metal sales carried over from the September quarter 2008, while also increasing the company's net debt position in Australian dollar terms" Mr James said

The following articles were published on Tuesday 9th December 2008

OZ Minerals, a big zinc miner scrambling to refinance its debt, has attracted the attention of several Chinese metals companies, three people with direct knowledge of the matter said

The Chinese oil and metals group Citic Resources is among the companies exploring potential investments in the struggling Australian miner, two of the sources said
The sources, who did not want to be named because they were not allowed to speak publicly on the matter, said other Chinese companies interested in OZ Minerals included two Chinese state-owned metals companies: Minmetals and Chinalco

It is not clear which OZ Minerals assets, if any, a Chinese company would want to buy or invest in
OZ Minerals also mines nickel, copper, gold and silver

OZ Minerals declined to comment

Minmetals' public relations official, Gao Peijun, said he was unaware of any offer for OZ Minerals
Chinalco did not return a call seeking comment

"Citic Resources is not involved in the acquisition of OZ Minerals for the time being" a spokeswoman, Mianco Wong, wrote in an e-mail message
Citic will keep reviewing its strategy "according to the best interests of the shareholders" she said

But sources close to both the Chinese companies and OZ Minerals say the Chinese have been poring over the miner's books
In fact, the sources said, Chinese buyers have had their sights set on OZ Minerals for nearly a year, attracted to its metal resources at a time when China was scouring the region for deals to feed its construction boom
Commodity prices have since plunged, giving Chinese buyers the chance to purchase assets far more cheaply

Shenzhen Zhongjin Lingnan Nonfemet, one of the largest zinc producers in China, offered 45.5 million Australian dollars, or $29.8 million, Tuesday for control of the Australian zinc miner Perilya, taking advantage of tumbling market values to secure supply

Shares of Oz Minerals in early March hit nearly 4 dollars and have since dropped to 55 cents

"In terms of its net debt, I don't think the situation is that bad" one source close to the company said
"But it's a timing thing on their repayment schedules I think they can get a refinancing arrangement There are some pretty good assets there"

OZ Minerals, facing sharp falls in prices for its minerals, said this month that it was given one month instead of two by its lenders to come up with a way to refinance $560 million in debt
The extension to restructure its debt until Dec. 29 is a month short of the extension it had been seeking

OZ Minerals has also been granted a monthlong share-trading suspension, fearing the talks would be hindered by volatility in its share price

OZ Minerals said last week that it would cut production at its giant Century zinc mine by 4 percent next year and delay 495 million dollars' worth of copper and gold mining projects

Past and present shareholders of beleaguered OZ Minerals are banding together to sue the troubled miner
They are suing for alleged "misleading and deceptive conduct" and breaches to its continuous disclosure obligations

The class action against the company formed by the merger of Oxiana and Zinifex will claim that OZ Minerals breached its obligation to disclose details of the debt refinancing problems that have forced the company to halt trading of its shares for the rest of this year
OZ Minerals suspended its stock last week after revealing it was struggling to refinance $US560 million ($871 million) worth of debt

The move shocked investors and analysts, prompting downgrades of the stock after a spate of damaging news

Since then there have been claims that warning signs of the difficulties the company would face in refinancing emerged even before the deal to merge gold producer Oxiana and base metals producer Zinifex was sealed

Listed litigation group IMF Australia yesterday announced it would fund the legal action against OZ Minerals (refer to official statement below)
The move has cast doubt over the due diligence and the merits of the deal going ahead

"The claims relate to alleged misleading and deceptive conduct and alleged breaches by OZ Minerals of its continuous disclosure obligations between February 28, 2008 and December 3, 2008" IMF said in a statement
"In particular, the proposed proceedings are for failure to disclose information regarding OZ Minerals' obligations pursuant to a refinance agreement entered into three days before it announced its proposed merger with Zinifex Limited"

Shareholders who purchased securities in the stock between February 28 and December 3 and investors who swapped Zinifex shares for OZ Minerals shares would be eligible to join the claim, IMF said

IMF said it would reveal the claim value in its quarterly case investment reports

Falling commodity prices have weighed heavily on OZ Minerals' share price since earlier this year but the situation took a turn for the worse when director Owen Hegarty was forced to dump 10 million shares for about $6.2 million after receiving a margin call

Last Thursday, the company released updated financial information to the market revealing its cash on hand had dropped to $405 million by November 30 and that its total indebtedness, excluding convertible notes, was $1.08 billion, while net debt was $678.4 million

Shares in OZ Minerals last traded at 55c

The company declined to comment yesterday

The following articles were published on Wednesday 31st December 2008

OZ Minerals CEO Andrew Michelmore

Struggling miner OZ Minerals said today it received a two-month extension to refinance $US560 million ($812 million) of debt and it revealed a French bank would be granted security over key assets until they were sold

The diversified miner had a December 29 deadline to meet its $US560 million debt requirements with its syndicate of seven banks, but had previously indicated it would not meet that and was seeking an extension to January 31
In an announcement to the Australian Securities Exchange today, OZ said it had negotiated an extension to February 27, after agreeing to certain conditions, and that it had also progressed talks on potential asset sales

But the company, formed in June through the merger of Oxiana and Zinifex, cautioned that “there is necessarily some uncertainty as to whether refinancing can be achieved by this date” and therefore it would pursue asset sales

In three-page statement, OZ said part of the extension agreement included Societe Generale being granted “security over assets of the former Zinifex group of companies” in two stages next month ahead of the sale of assets
A further agreement would be reached by January 16 “upon the manner in which the proceeds of asset sales will be distributed amongst the lenders” OZ said
“The remainder of these milestones provisions and conditions are confidential” said OZ, referring to the Societe General facility of the company’s total outstanding debt

Austock Securities analyst Hunter Hillcoat said the extension wasn’t a surprise as it was clear the miner had to get asset sales away to appease the banks
He said it had been difficult for OZ to complete any assets sales before the December 29 deadline but it was clear it was working towards that option and needed the February extension to finalise talks
“There are people looking at the assets but it is all about the timing” he said
“OZ is not conducting these talks from a position of strength
Its goal is to get the best value for its assets, but the buyer is also attempting to get the best deal for itself”

Chief executive Andrew Michelmore said the company was focussed on refinancing its debt facilities by the new deadline and had made “considerable” progress in negotiations with its lenders
“However, we still have a lot of work to do to achieve the refinancing” he said
“The company’s board and management remain entirely focussed in exploring all options in order to deliver tangible results from the perspective of operational improvements and asset sales, as these will be important steps leading to a successful refinancing”

It is understood that if the asset sales are a success and the debt facilities are re-financed by February 27, up to three of the lenders will be discharged from the syndicate

Shares in the Melbourne-based miner will continue to be suspended from trading - frozen at 55c since the end of November - as the company was granted approval from the ASX to continue the suspension

The company also said today that it had received several expressions of interest for selected assets, including for a majority stake in its flagship operation, Prominent Hill
“The company expects material progress in the asset sale initiatives in January 2009” the company said

OZ was forced to meet a series of conditions to have the extension granted, which included provisions relating to the company’s asset sale initiatives, including the sale of up to 100 per cent of Prominent Hill
It has been speculated that BHP Billiton, the world's biggest miner, was interested in the Prominent Hill copper-gold operation, which neighbours BHP's massive Olympic Dam mine in northern South Australia
OZ has not confirmed who it is in talks with, but speculation has also centred on possible interest from Chinese investors

The conditions imposed by the lenders also included OZ agreeing not to pay or declare any dividends or make any other distribution to its shareholders during this period

The miner has also been burning through its cash and earlier this month it said its cash in hand had dropped to $405 million by November 30 and that its total indebtedness, excluding convertible notes, was $1.08 billion, while net debt was $678.4 million
In its statement today, OZ said at the close of business on December 23, its cash balance was $169.2 million

OZ’s future prospects were further dented earlier this month when it said that market conditions and its need to review the profitability of all its operations had forced it to place its Avebury mine on care and maintenance
OZ has 64 employees at Avebury and 125 contractors, with the majority from Barminco
The miner has also cut 135 contractors at its Century zinc mine northwest of Mt Isa

As yesterday’s deadline approached, OZ said it would consider all options to survive, including any approaches from parties wishing to acquire all its shares, a move it said was to prove to the banks it was serious about addressing its debt issue
Observers said a takeover was unlikely, as BHP was one of the few that could afford it and would be more inclined to look at Prominent Hill than bid for the company

Adding to OZ Minerals’ troubles are shareholders who have begun a class action over alleged "misleading and deceptive conduct" and breaches of continuous disclosure obligations relating to its debts
Litigation group IMF Australia, which is backing a legal action against OZ Minerals, believes shareholders who bought the company's securities between February 28 and December 3 and investors who swapped Zinifex shares for OZ Minerals shares are eligible to join the class action
Mr Michelmore has denied claims of inadequate disclosure and says the company will "vigorously defend itself" against the proposed legal claims

There are pluses and minuses in the latest update from OZ Minerals, but we cannot know what the market will make of it because the ASX has gone along with a request from the company to maintain the suspension of trading in the shares for potentially a further two months
Trading has already been suspended for one month, which means shareholders may be deprived of the ability to trade their shares for at least three months
And it could be longer

When the company got a trading suspension on December 1, it said it expected to seek reinstatement of trading by December 29 (the date on which refinancing was due on two debt facilities) "subject to completing its refinancing negotiations"
December 29 has come and gone and OZ has not succeeded in refinancing that debt
But it has managed to obtain an extension of the refinancing to February 27
That's one of the pluses and it's better than expected, as OZ had been seeking an extension only to January 31

The banks have given a bit more breathing space in which to try to resolve the problems
The banks are requiring OZ to use that grace period to try to sell some assets to pay down debt, or at least advance to the stage where the banks are likely to be more accommodating about refinancing

OZ said yesterday it expected "material progress" on the asset sales in January
It had received expressions of interest for selected assets, including a majority stake in the Prominent Hill copper-gold project, and some non-binding indications of price in respect of some assets

Following the latest extension, the ASX has allowed the suspension in trading to continue
OZ now says it is committed to resolving its financial position as soon as possible so that trading in the shares can resume on or before February 27
But the board hasn't committed to seeking reinstatement of trading by that date

It has left unsaid what will happen if the company fails to secure refinancing by its new February 27 deadline, in which case it would either obtain a further extension or be placed in administration and receivership
If it is the former, then presumably the OZ board would seek to continue the suspension for the period of the extension

The extension relates to two facilities totalling $US542 million ($815 million) - one of $US420 million, provided by seven lenders: ANZ, Bank of Scotland International, BNP Paribas, CBA, Bayerische Hypo, NAB and Royal Bank of Scotland - and the other of $US140 million provided by ANZ and Royal Bank of Scotland
OZ has also obtained an extension to February 27 for a $250 million facility from Societe Generale, which is another plus
That facility, which is drawn to $182 million and relates to the former Zinifex operations, was repayable on December 31 and as recently as December 4 the company said it expected to repay by the due date
However, on December 9 OZ received a letter from SocGen alleging the facility was in default
That was potentially critical as the facilities provide that if one facility is in default it may trigger default of the other facilities
Although agreeing to an extension, SocGen has reserved its rights in relation to the claimed breach
Moreover, the extension is on the basis that SocGen be granted security by January 9 over the Australian assets of the former Zinifex group and over the overseas assets by January 16
OZ must also agree by January 16 upon the manner in which the proceeds of asset sales will be distributed among the lenders
But OZ cannot guarantee how the proceeds of asset sales will be distributed, as that will need to be negotiated with the bank lenders to the other two short-term facilities
That's a potential minus

OZ has a fourth facility, fully drawn to $US77 million, which matures in 2011 and relates to the Sepon operation on Laos
OZ says it will make a scheduled repayment on this loan of $US12.6 million by December 31

A big minus is that the company's cash position has deteriorated even further over the past three weeks
At June 30, OZ had $1.2 billion cash in hand
By November 30 it was down to $405 million, then to $279 million by December 8 and the company now says it was down to only $169 million by December 23
A bigger minus is that it's going to get worse

OZ says that, as metals markets have not improved since trading in the shares was suspended, it now expects cash shortfalls in respect of its operations and projects at Golden Grove, Prominent Hill and Martabe between now and February 27, and is negotiating bridging facilities from its current lenders
The lenders of the $US420 million facility have agreed to seek internal approvals to provide the necessary bridging facilities and OZ has asked that they formally respond by January 16 (the deadline imposed by SocGen in relation to its demand for security)
OZ has given no indication as to the amount of bridging facilities that it considers might be necessary, but it would obviously mean that the company's cash resources would drop even further while its debt would continue to grow
It's possible that by February 27, OZ might have exhausted all of its cash funds

OZ obtained the suspension on the grounds that the negotiations with the banks could be jeopardised if they took place during a period of potentially extreme share price volatility and because the company was unable, on confidentiality grounds, to disclose the conditions of the debt extension and the market would be trading on an uninformed basis
The ASX is believed to have satisfied itself that the undisclosed conditions are materially price-sensitive information

It therefore sees OZ as a different situation to Allco Finance where the directors on October 24 warned the market there was a significant risk as to whether the company could meet its November and December interest payments on the debt facilities and if the banks wouldn't agree to an extension of the repayment schedule by the end of the month the directors would have to consider whether Allco could continue as a going concern or would need to appoint a voluntary administrator
The Allco directors did not seek a trading halt and the company went into administration on November 5, whereupon trading was suspended

The ASX differentiates in that instance because Allco confirmed that the market was informed and the company was in compliance with its continuous disclosure obligations, in contrast to the assertions of the OZ directors
But OZ would be exempted from providing the confidential information provided that a reasonable person wouldn't expect it to be disclosed and the information was part of an incomplete proposal or negotiation
OZ seems to be working on the assumption that it doesn't satisfy either of those elements, and the ASX presumably agrees
But would a reasonable person expect that OZ be forced to break confidentiality on conditions, which are part of the negotiations to obtain a refinancing and which are aimed, in the interests of the company and its shareholders, at keeping the company as a going concern, rather than it falling into administration?
This commentator thinks not

The following articles were published on Friday 9th January 2009

OZ Minerals expects to be told today whether its banks will provide a bridge loan to help the miner keep operating until it has solved its refinancing problem

As well as trying to sell assets to help pay off $US560 million ($793.2 million) worth of debt, OZ has been bleeding cash and needs a bridge loan to cover cash shortfalls at its Prominent Hill, Golden Grove and Martabe operations
On December 30 last year, OZ said it had secured an extension until February 27 to sort out its debt and some banks had agreed to seek internal approvals for a bridging facility
OZ has asked the lenders for a response by today
Late yesterday, an OZ spokesman said the company was still awaiting a response
Most of the lenders are overseas banks, so an answer might not come until late tonight

OZ's cash shrank from $279.4 million on December 8 to just $169.2 million two weeks later
At that rate of burn the company would run out of cash next week, but chief executive Andrew Michelmore has said one-off costs from redundancies contributed to the sharp fall and the decline was expected to slow

OZ Minerals has not yet secured a crucial bridging loan to give it enough money to continue operating its mines and complete construction of its Prominent Hill project before a February 27 deadline to refinance $1 billion of debt

The miner last month asked lenders to formally respond to its request for a bridging loan by last night
But due to time-zone differences, it is possible the market will not be updated until early next week

"We are dealing with a number of banks across a number of jurisdictions" said an OZ spokesman, Matthew Foran
He said the company had been negotiating the terms with the banks and expected it would be able to sign off on any proposal relatively quickly

OZ has refused to disclose the amount of bridging finance it is seeking

As of December 30, it had $169.2 million of cash reserves, but has been burning through funds rapidly

UBS analyst Jo Battershill estimated OZ could be seeking $50 million to $100 million to give it enough cash to operate through to the end of February
That would help it complete Prominent Hill and development projects at its Golden Grove mine
"Bridging facilities are horrendously expensive, so you would want to minimise the amount" Mr Battershill said

He said OZ might delay payments to suppliers until it refinanced its debt or sold assets

He said the interest rate on the bridging facility could be higher than the "absolutely exceptional" price Goldman Sachs JBWere is charging rival miner PanAust for a one-year debt rollover
PanAust's package includes a 15 per cent interest rate and 150 million options, which are already in the money

OZ yesterday said it would postpone the release of its quarterly report until January 30, the last day for producing December-quarter reports as opposed to the originally scheduled January 21
Shareholders will remain in the dark about its production and cost performance and the level of completion of its $1.15 billion Prominent Hill copper-gold mine for an extra nine days

Mr Battershill said asset sales, possibly including all or part of Prominent Hill, would be "a given" if OZ could not refinance its debt by the end of next month

OZ Minerals' lenders were due to contact the company today, in response to a request for the bridging finance to cover cash shortfalls at its Golden Grove, Prominent Hill and Martabe mines

The Australian market is expecting to hear news before the open on Monday

The drop in commodity prices have crimped margins at OZ Minerals

The company burnt through around 1 billion dollars cash from the end of June, through to late December

OZ shares remain on hold as it works to refinance US$560 million in debt by the new deadline of February 27th

Talks with lenders on how proceeds from any asset sales would be distributed are also ongoing

The following article was published on Monday 12th January 2009

In an example of how little leverage troubled miner OZ Minerals has with its syndicate of bankers, it did not get any response to its request for a crucial bridging loan by its self-imposed deadline of last Friday

Some of OZ Minerals' banks are overseas and the company had been hopeful of getting a response by Saturday morning
An OZ Minerals spokesman, Matthew Foran, said yesterday the miner had not yet received a response from the banking syndicate
He said it was possible the banks would do so by today or tomorrow

OZ Minerals has not revealed the amount of bridging finance it is seeking to help it remain afloat until it can sell assets or refinance $1 billion of debt by a February 27 deadline
It has admitted there is uncertainty over whether it will be able to refinance its debt

As of December 23, OZ Minerals had $169.2 million in remaining cash and the expectation that this would reduce by $12.6 million because of a debt payment due on December 31 but with no additional credit facilities on which to draw

In response to low commodity prices, OZ Minerals has taken action such as postponing expansions, closing its Avebury nickel mine and reducing the workforce at its Century zinc mine in Queensland

Between December 8 and December 23, OZ Minerals spent $110.2 million, some of which went towards one-off redundancy costs
It is unlikely to have continued to burn through its cash at that rate - about $55 million a week - but if it had, it would run out of cash this week, highlighting the urgency for a bridging loan

If it runs out of cash and credit lines, its suppliers could apply to the courts to wind up the company

OZ Minerals' most promising project, the $1.15 billion Prominent Hill mine in South Australia, is near completion but is not expected to make money until the June quarter
It is not clear how much OZ Minerals had left to spend on Prominent Hill on Friday

A UBS analyst, Jo Battershill, said OZ Minerals was likely to seek as little as possible in bridging finance since the interest rate and other charges involved would be extremely onerous
OZ Minerals has not made public the amount it is seeking but Mr Battershill estimated it could be $50 million to $100 million

OZ Minerals is trying to sell its Martabe gold project and some or all of Prominent Hill

The following articles were published on Thursday 22nd January 2009

Debt laden OZ Minerals Ltd has secured a $140 million bridging finance facility that is repayable when it terminates at the end of next month

The company is seeking to refinance $1 billion of debt by February 27 as its cash on hand dwindles

``OZ Minerals is working to achieve a refinancing of its debt facilities by 27 February 2009 with the agreement of its lenders and, in that context, is actively pursuing both an asset sales program and other initiatives,'' the company said
``Proceeds from the bridging facility are principally available to be used to cover expected short-term cash requirements in respect of the company's operations and projects at Golden Grove (WA), Prominent Hill (SA) and Martabe (Sumatra)''

OZ Minerals said the bridging facility will be provided by all of its `Facility A' lenders
Facility A was drawn to $US420 million at December 10 and matures on February 27

Oz Minerals wants the bridging facility to cover expected cash shortfalls at the Golden Grove base and precious metals mine in Western Australia, Prominent Hill copper and gold mine in South Australia and Martabe gold project in Indonesia

However, the company earlier warned it may not be able to achieve refinancing by February 27 and was pursuing asset sales and other cost cutting measures including, placing its Avebury nickel mine in Tasmania on care and maintenance

Two other debt facilities expire on February 27

``This bridging finance facility provides the company with sure access to the short-term funding it needs whilst we finalise the refinancing of debt facilities'' chief executive Andrew Michelmore said in a statement on Thursday
Mr Michelmore said the company could not yet announce ``any firm outcome in respect of asset sales or other initiatives as these matters are still incomplete and subject to ongoing confidential negotiations''

Separately, OZ Minerals has granted security over some of its Australian assets to Societe Generale, the lender of one of the facilities, as agreed on December 30

The diversified miner said on Thursday that its cash balance was $122.1 million

Its shares remain in a trading halt that was entered into in late November, when its shares last traded at 55 cents

OZ Minerals Ltd, the world’s second-largest zinc miner, secured a bridging loan of as much as A$140 million ($92 million) to maintain operations as it seeks to refinance at least $560 million of debt by next month

“Proceeds from the bridging facility are principally available to be used to cover expected short-term cash requirements in respect of the company’s operations and projects at Golden Grove, Prominent Hill and Martabe” OZ Minerals said today in a statement
The Melbourne-based company “expects” to have access to the funds on Jan. 27, it said

OZ Minerals’s market value plummeted by $6.5 billion in the second half last year amid a slump in zinc prices and over concern about its debt
Commodity prices plummeted 36 percent in 2008, the most in five decades, as the global recession forced producers to slash output and cut workers

Created after Oxiana Ltd. bought Zinifex Ltd. in July, OZ Minerals has been suspended from trading on the exchange since November
The stock plunged 79 percent last half and last traded at 55 cents on Nov. 27

OZ Minerals had a cash balance of A$122.1 million yesterday, according to today’s statement

The company is seeking to borrow from banks that provided a $420 million loan, which it’s also trying to refinance by Feb. 27
The loan was provided by seven lenders including Bank of Scotland Plc, a unit of HBOS Plc, Australia and New Zealand Banking Group Ltd., Commonwealth Bank of Australia, BNP Paribas and Bayerische Hypo- und Vereinsbank AG

It also wants to refinance a second $140 million loan provided by ANZ and RBC Capital Markets

The following article was published on Friday 30th January 2009

Debt laden miner OZ Minerals Ltd says it has made "good progress" on debt refinancing negotiations, and that it has advanced potential asset sales

"Excellent progress has also been made on potential asset sales with a number of expressions of interest received for various assets within the group," OZ said on Friday, as it separately announced the sale of its stake in Brussels-listed smelting company Nyrstar for around $33 million

OZ, which persuaded its bankers to provide it with a bridging finance facility of up to $140 million on January 22, said debt talks with its banks were ongoing
"The refinancing negotiations are continuing and good progress is being made" OZ said

The company needs to refinance $US560 million ($A1.1 billion) of debt by February 27, against the backdrop of plunging metals prices, or possibly face liquidation

OZ Minerals chief executive Andrew Michelmore wouldn't rule out issuing more shares to help bring in cash, a process gaining popularity among mining companies worldwide as economic conditions continue to deteriorate and debt levels swell

Evans and Partners analyst Cathy Moises said it sounds like the miner is getting close to being cash flow positive, but it wasn't too impressive, The Australian Financial Review reports
"I wouldn't go as far as saying I'm impressed, but it does seem like they've made a lot of the hard decisions and they are starting to turn the whole thing around" Ms Moises said

Giant Rio Tinto Ltd is struggling to sell $US10 billion in assets this year ahead of a $US8.9 billion payment due in October and is considering a share issue analysts suggest could raise $US7 billion
Xstrata, the world's fifth-biggest diversified mining group by market value, on Thursday announced a heavily discounted two-for-one rights issue to raise $US5.79 billion

"We’re looking at all of the options on the list" Mr Michelmore told reporters after the announcement
He said the company's future actions would depend on the quantity and price achieved for asset sales, adding that OZ had received interest in all assets and from "just about every country" that has a resources sector

OZ's executive general manager of business support, Bruce Loveday, said the company was only considering "bankable offers" that were fully financed and unconditionally approved by Australia's Foreign Investment Review Board (FIRB)

So far its only sale has been a 7.8 per cent stake in Brussels-listed smelting company Nyrstar
The company said it decided the investment was no longer core to its operations

"Proceeds from the sale are expected to total approximately $33 million resulting in a small loss on carrying value of the stake" OZ said
Last week, Nyrstar said it had booked an impairment charge of E575 million ($A1.14 billion) and scrapped its 2008 dividend

As well as potential asset sales, OZ previously announced it would pursue hefty cost cuts to help meet the debt target
On Friday, the miner said these initiatives had resulted in the total loss of around 1,200 employees and contractors, or a 17 per cent decrease in its total worforce
The cut backs were felt at across all the miners developments in Australia and abroad

The following article was published on Saturday 31st January 2009

OZ Minerals has slashed an extra 441 jobs at its Australian operations as it battles slumping metal prices and frozen credit markets to stay afloat

The zinc, copper and gold miner said yesterday it had now cut its global workforce by 1212, or 17 per cent, since the end of October, with 881 jobs going from Tasmania, Queensland, South Australia, Western Australia and Victoria The rest of the cuts were in Laos
Of the job losses, 440 - from Tasmania, Queensland and WA - had already been announced

The extra contractor and employee cuts included 55 employees from the Prominent Hill site in SA, 187 more cuts at the Golden Grove operations in WA, 121 more at Rosebery in Tasmania and 29 at the Melbourne head office

"It's been a defining quarter for the company, with one of the most dramatic and sudden declines in commodity prices in recent memory combining with a devastating contraction in global financial markets" chief executive Andrew Michelmore said

OZ's shares have been suspended from trading since the start of December, as the company tries to renegotiate $1billion of finance and sell assets to pay off some banks unwilling to roll over loans

Mr Michelmore said yesterday that, along with asset sales and rejigged bank debt, the company was also looking at other options to stay afloat, including going to the market
"You could do a convertible (note issue) or chase various forms of equity, we're looking at all forms on the list" he said

OZ also drew a timeline under its asset sales, saying they would have to be wrapped up with binding agreements by February 27, the date its lenders have extended their loans to
Mr Michelmore said that to give time to explore any other necessary options, such as a capital raising, the sales would really need to be wrapped up in the next couple of weeks

As part of conditions of the loan renegotiations, OZ has had to investigate the sale of its Prominent Hill mine
BHP Billiton has been touted as a potential buyer of the operation and OZ revealed yesterday that the miner would truck its first concentrate, in March, to BHP's nearby Olympic Dam mine
"Prominent Hill material would help with any blending on high sulfur, low copper feeds and give BHP more flexibility in their operation and getting more tonnes through their smelter - they're an obvious customer and the one that's closest" Mr Michelmore said

The following articles were published on Monday 16th February 2009

The directors of diversified miner OZ Minerals Ltd said Monday they are recommending shareholders accept a A$2.6 billion takeover offer from China Minmetals Nonferrous Metals Company Ltd., or Minmetals

The miner, which has been struggling to refinance US$560 million worth of debt, said the offer is pitched at 82.5 Australian cents a share representing a 50% premium to its last traded price

The deal will see Minmetals repay all of OZ Mineral's outstanding debt and redeem OZ's outstanding convertible bonds

"The board has determined that Minmetals' cash proposal is in the best interests of OZ Minerals' shareholders and believes this is the best outcome for shareholders compared with any of the other options available to us" OZ Chairman Barry Cusack said in a statement

The miner said the completion of the transaction is subject to regulatory approvals and other conditions

Chinese trading group Minmetals is offering A$2.6 billion ($1.7 billion), or 82.5 cents per share, to acquire debt-laden Australia miner Oz Minerals Ltd, the Australian firm said on Monday
OZ said the offer is unanimously recommended by its board in the absence of a superior one

Debt-laden copper and gold producer OZ Minerals has recommended a $2.6 billion takeover offer from China Minmetals Non-ferrous Metals Company, in what would be the second major investment by a Chinese company in Australia within a week

The Chinese trading company is offering 82.5 cents for each share in OZ Minerals, which is seeking to refinance $1 billion of debt by February 27, with the proposed acquisition to be completed via a scheme of arrangement

OZ Minerals said the offer is unanimously recommended by its board in the absence of a superior one

"The board has determined that Minmetals' cash proposal is in the best interests of OZ Minerals' shareholders and believes this is the best outcome for shareholders compared with any of the other options available to us'' chairman Barry Cusack said in a statement

Shares in OZ Minerals - which was formed through the merger of Oxiana and Zinifex last year - last traded at 55 cents before the company entered a voluntary suspension in December

OZ Minerals has been pursuing asset sales and other cost-reduction measures including, job and production cuts and placing its Avebury nickel mine in Tasmania on care and maintenance
The company said it would continue to pursue the sale of the Martabe gold and silver project in Indonesia and the Golden Grove polymetallic mine in Western Australia

OZ Minerals said its outstanding debt facilities would be repaid by Minmetals upon completion of the transaction, which would solve its "present financial issues''

"Minmetals has confirmed that it intends to continue to operate current OZ Minerals operations, which, in turn, will benefit employees and relevant local communities and also provide certainty to businesses beyond those operated by OZ Minerals'' managing director Andrew Michelmore said in a statement on Monday

The transaction is subject to regulatory approvals, completion of due diligence by Minmetals, OZ Minerals banking syndicate agreeing to extend the term of their debt arrangements and shareholder approval

OZ Minerals said the company would continue to be domiciled in Australia with its staff retained

"Minmetals will provide a robust platform for OZ Minerals to realise its growth potential when market conditions permit'' Minmetals chairman Zhou Zhongshu said in a statement

The proposal follows Rio Tinto's $US19.5 million ($30 million) deal with major shareholder and China's state-backed company Chinalco

------------------------------

The following article was published on Monday 16th February 2009

OZ Minerals wishes to advise that suspension of trading in the Company’s shares will be lifted by the ASX tomorrow, Tuesday 17 February, 2009

The Company confirms that it is in compliance with its continuous disclosure obligations

For further information, please contact:
Matthew Foran
Group Manager - External Affairs
T 61 3 9288 0456
M 61 (0)409 313 637
Richard Hedstrom
Group Manager - Investor Relations
T 61 3 9288 0376

Kind regards

Richard Hedstrom
Group Manager - Investor Relations
OZ Minerals Limited
61 3 9288 0376
61 3 9288 0406
richard.hedstrom@ozminerals.com

The following articles were published on Thursday 26th February 2009

The debt-laden Australian miner Oz Minerals sought to allay concerns Wednesday that it was days away from default, but wider fears persisted about the future of a $1.7 billion rescue bid for the company from China

OZ Minerals, the world's second-largest zinc mining company, was due to repay loans by Friday, but concerns that its banks would not roll over the debt sent its shares plunging as much as 31 percent, prompting it to declare that talks with the banks were positive

"We're in very good, productive talks with the banks, with a view to getting the extension we need by Friday" Bruce Loveday, the executive general manager of OZ Minerals, said in an interview
"The discussions are very positive" he added
He insisted that it was untrue that "those discussions have broken down or have produced a negative result"

He said OZ Minerals expected to make an announcement before Monday on the refinancing

The firm, which is the subject of a takeover bid by the Chinese state-owned metals trader Minmetals, has a deadline at the end of Friday for repaying at least 140 million Australian dollars, or $90.7 million, in loans

OZ Minerals shares sank to a low of 40 cents but recovered after Loveday's comments to 49.5 cents, still down 15 percent

The stock remained well below the Minmetals offer of 82.5 cents, reflecting lingering concerns that the government might oppose the takeover and withhold foreign-investment approval
Some Australian politicians are wary of handing control of local mining companies, which make up the nation's biggest export industry, to China, which is its biggest export customer
They argue that it is in China's interest to keep Australian export prices low

"The biggest concern is whether the government approves the Minmetals bid" said Rob Patterson, the managing director of Argo Investments, which owns OZ Minerals shares

The office of the Australian treasurer, who has a veto over foreign investment in local firms, said that no determination had been made on the deal

OZ Minerals expected regulatory approval from Australia and China by April

Other Chinese investments in local mining companies awaiting government approval include a $19.5 billion investment in Rio Tinto by the state-owned Aluminum Corp of China, or Chinalco
This deal would represent the biggest single offshore investment by China

OZ Minerals shares tanked yesterday, falling to a 39 per cent discount to China Minmetals' $2.6 billion takeover bid, on fears the debt-laden miner's banks will crush the deal

The Melbourne-based miner has 24 hours left to convince its banks of the need to extend its debt facilities beyond tomorrow's deadline, to allow China's Minmetals' rescue bid to proceed
Without the extension, OZ Minerals will be forced to call in the administrators, industry insiders have warned

Speculation that the banks may not extend the diversified miner's deadline spooked the market, but the company was quick to confirm that its talks with the banks had been positive
In early trading yesterday, the stock dropped 21 per cent to 46.5c but rose slightly to close down 15.4 per cent at 49.5c

The OZ Minerals board has recommended Minmetals' 82.5c per share offer, which it said was at a 50 per cent premium to its last traded price of 55c when it entered a trading halt on November 27

The $2.6 billion deal must meet a list of conditions, including its syndicate of banks agreeing by tomorrow to extend its debt facilities

One analyst said there was also concern among hedge funds yesterday about comments made by DJ Carmichael analyst James Wilson, who told AAP he had advised his clients to be aware that OZ Minerals now offered "100 per cent downside risk"

Anthony Anderson, senior client adviser at MF Global Australia, said OZ's shares took a hit on a mix of negative sentiment
"There were a bunch of negative rumours that led to the stock being sold down - day traders obviously thought it was worth looking at"

The offer by Chinese state-owned Minmetals needs approval from the Foreign Investment Review Board, but industry observers say this hurdle is easier to overcome than convincing banks
The number of Chinese state-owned enterprises taking advantage of the downturn to acquire stakes in struggling Australian miners is causing concern for Treasurer Wayne Swan
He will ultimately decide if Minmetals can take control of the Australian-based company, which owns the prospective Prominent Hill copper-gold operation in South Australia
Analysts have generally agreed it was likely Mr Swan would approve the deal, as the alternative was putting the miner into administration and risking thousands of jobs

OZ is also believed close to announcing the sale of its Martabe gold mine in Indonesia, with former OZ Minerals director Owen Hegarty involved
If it sells Martabe and its Golden Grove polymetallic mine in Western Australia, Minmetals' 82.5c a share offer may change
Minmetals' offer will increase if the aggregate net sale proceeds from those two assets exceed $425 million

The following articles were published on Tuesday 24th March 2009

The future of OZ Minerals rests with the Foreign Investment Review Board after it added Minmetals' $2.6 billion bid for the struggling miner to its pile of delayed decisions last night

The debt-laden miner was praying for a quick decision by FIRB as it teeters close to voluntary administration
But FIRB chose to delay any recommendations on China's increasing interest in Australian resources by putting off a decision by 90 days from today

OZ's request was urgent
Unlike the other applicants, its future existence depends on a government decision

State-owned China Minmetals threw the diversified miner a lifeline in February, less than a week after another Chinese state-owned company, Chinalco, swooped on Rio Tinto with a $US19.5 billion asset and share deal to help resolve Rio's debt problems
FIRB has extended its decision on Rio by 90 days and also recently delayed rulings on Chinese deals with Fortescue Metals Group and Gindalbie Metals by 30 days

In a statement to the Australian Securities Exchange last night, OZ said it was in the interests of the company, its shareholders, employees and all its stakeholders that the Minmetals' application be determined as soon as possible
The company said it had been advised that the Australian Competition and Consumer Commission had indicated it would not intervene in the deal

Industry insiders mostly expected FIRB to grant a 30-day delay on its OZ decision, despite the deal being a full takeover and all the assets being in Australia

In a report upgrading OZ's stock to a "buy" recommendation yesterday, Citi said it expected FIRB to delay its decision by 30 days but to approve the deal eventually

OZ has been fighting for survival since late last year as it struggled to refinance $US560 million worth of debt by February 27
The OZ Minerals board has recommended Minmetals' 82.5c per share offer, saying it was the only full bid for the miner and gave it the best chance of surviving
But the $2.6 billion rescue package is well down on the $10billion OZ was valued at when it formed from the merger of Oxiana and Zinifex in June last year

Its shares were in a trading halt at 59c yesterday

Southern Cross Equities director Charlie Aitken said that without the Chinese deal, OZ's only alternative was administration, the likely loss of 6000 jobs, and operating mines being placed on care and maintenance as the administrators conducted a fire sale
"The alternative outcome is clearly a shocking outcome for OZ shareholders, employees and the nation" he said

FIRB is not the only stumbling block for the Melbourne-based miner
OZ is also waiting for its banks to decide whether to extend debt arrangements to September 15, two weeks after a scheme implementation agreement between OZ and Minmetals terminates
The providers of OZ Minerals' credit facilities had already agreed to extend the refinancing deadline to 31 March, to give them time to get approval from their internal credit committees to push the extension to mid-September

The miner said yesterday it would continue negotiations with its lenders to achieve the extension required, which is enough to see the deal through should FIRB make a decision in the 90-day period and not extend further

The Foreign Investment Review Board (FIRB) has extended by 90 days its ruling on Minmetals' $2.6 billion takeover offer for OZ Minerals Ltd, a blow to the troubled miner as it negotiates with lenders over debt extensions
OZ has asked its lenders to extend the March 31 debt deadline to September 15 to give it more time to complete the deal

If the takeover falls through and OZ is unable to refinance $1.3 billion of debt by the end of March, it has warned it might go under
"OZ Minerals will continue negotiations with its lenders to achieve the extension required" it said

The regulator must now make a decision on whether to approve a takeover offer from state-owned Minmetals by June
In a statement to the Australian Securities Exchange, OZ Minerals said while it understood the requirement of proper process, it was "in the interests of OZ Minerals, its shareholders, employees and all its stakeholders that the Minmetals' application is determined as soon as possible"

FIRB, which has extended reviews into Chinalco's $US19.5 billion ($A29.6 billion) deal with Rio Tinto Ltd and Hunan Valin Iron and Steel's plan to buy up to a 17.5 per cent stake Fortescue Metals Group Ltd, was expected to hand down a ruling on the OZ Minerals-Minmetals takeover on Friday
The Fortescue review was extended by 30 days; the Chinalco transaction by 90 days

OZ, Australia's third-largest diversified miner and world's second biggest zinc supplier, entered a trading halt on Monday
Trading will resume on Tuesday

Minmetals has offered 82.5 cents a share for OZ, which was formed by the merger of Oxiana Ltd and Zinifex Ltd last year
OZ Minerals shares have fallen by about 15 per cent in the last fortnight - 34 per cent below the Minmetals offer of 82.5 cents a share, reflecting uncertainty the deal will go ahead
OZ shares last traded 1.66 per cent lower at 59 cents, after surging more than 12 per cent on Friday

Minmetals has said it plans to use its proposed takeover target as a platform to consolidate other overseas assets, and the company's management would be retained

Last month, OZ Minerals said it was expecting to complete the sale of the Martabe gold project in Indonesia, and the Golden Grove polymetallic wine in Western Australia, but no sale has followed, making banks and investors nervous

Citi analyst Clarke Wilkins said FIRB approval for the transaction was expected, with the key risk being the timetable extension testing the patience of the banks
"Lack of asset sales and increasing political focus on FIRB and Chinese investment in Australia has undoubtedly put additional pressure on banks, but we still expect the (debt refinancing) extension to be granted" Mr Wilkins said in a note to clients

Once the board completes its review it will hand a recommendation to Treasurer Wayne Swan, who has the final say, based on national interest

"Consideration of this matter is at the Government's discretion
We respect the government's process and will not comment further" said Minmetals' spokesman in Australia, Ian Smith

The following articles were published on Saturday 28th March 2009

Chinese owned Minmetals has been blocked from acquiring the key asset in its $2.6 billion bid for OZ Minerals because the South Australian gold and copper mine was too close to a sensitive Australian defence facility

The hardline decision by the Rudd Government comes ahead of a string of diplomatically and commercially difficult foreign investment applications, including the proposed $28 billion investment in Rio Tinto and some of its key mining projects by Chinese-owned Chinalco

The decision came on the same day the Opposition used allegations about Defence Minister Joel Fitzgibbon's links with Chinese-born businesswoman Helen Liu to raise broader questions about the Government's - and specifically Kevin Rudd's - links with China as it assesses several sensitive and high-profile Chinese investment applications

In an announcement that surprised the company and the market, Wayne Swan said late yesterday he would not give foreign investment approval to the 100 per cent Minmetals takeover if it included OZ Minerals' key asset, the Prominent Hill mine, because the mine was within the protected area around the Woomera weapons testing range

A spokesman for Minmetals said the company was still talking to the Foreign Investment Review Board about its bid for the rest of the debt-laden OZ Minerals' businesses and assets

As well as Minmetals' bid for OZ Minerals, the Government is considering Chinalco's application for a $28 billion stake in Rio Tinto and a proposal from Hunan Valin to inject $644.8 million into Fortescue Metals Group in return for 17.4per cent of the company

Malcolm Turnbull linked the investment decisions with the Prime Minister's attempts to avoid publicity for his meeting with the Chinese Communist Party's propaganda chief Li Changchun last weekend and the broader links between the Mandarin-speaking Mr Rudd and China
"China wants to buy as much of our natural resources as they can at the lowest possible price, and China's ambitions are not always in Australia's best national interest" the Opposition Leader said
"So it is a friendly relationship but it is a competitive relationship, and that is why it is very important for dealings, whether it is the Prime Minister and this senior minister from China or whether it is Joel Fitzgibbon and Ms Liu and her relationships with the Chinese Government - all of these things have to be fully disclosed and above board and be transparent, and when they are not they raise legitimate concerns about what is really going on"

Mr Turnbull also questioned Mr Rudd's international advocacy of a bigger role for China in the International Monetary Fund, saying "he seems to be more like a travelling advocate for China as opposed to Australia"
Singling out an interview Mr Rudd did on a US television show, Mr Turnbull said the Prime Minister had been "given the opportunity in that interview to speak up strongly on behalf of Australia's economy and Australia's successful system of financial regulation and compare it favourably with the failures elsewhere in the world
He didn't do that
He seemed to spend most of his time talking about China
Now, he's not a roving ambassador for the People's Republic of China - he's the Prime Minister of Australia and he has to put our national interest first"

His Treasury spokesman Joe Hockey went further, suggesting a link between the Government's foreign investment deliberations and trips by Mr Rudd, the Treasurer and other frontbenchers paid for by Chinese business interests during Labor's years in Opposition

In Washington, Mr Rudd, who had put Mr Fitzgibbon on notice to improve his performance, was handed a book called China's Rise after addressing the Peterson Institute for International Economics
The book, by C.Fred Bergsten, Charles Freeman, Nicholas Lardy and Derek Mitchell, examines China's economic rise and suggests ways to maximise opportunities for its integration into the international community

The Government says it judges all foreign investment applications against a set of "national interest" principles set out by Mr Swan last year

This week, the Australian Competition and Consumer Commission said it would not oppose the Chinalco bid but suggested that all state-owned Chinese enterprises be controlled by a single parent entity, a view that could hamper the success of its FIRB application

Foreign Minister Stephen Smith, who is on an official visit to China, said that in his discussions with the Chinese leadership he had "laid out the rules and principles that apply ... and they are very transparent ... Australia does not have a discretionary policy here"

The Minmetals knock-back comes as Rio Tinto appears to be gaining confidence that it would get foreign investment approval for the Chinalco investment
Rio Tinto chief executive Tom Albanese told the China Daily in London that he was sure shareholders and Australian regulators would approve the deal
"I am quite confident that all of the pieces will progressively work through over the coming months
We will of course have regulator approval, and we will have shareholder approval as well" he said

Mr Smith said he had not raised the specifics of any applications by Chinese companies to buy into Australian companies at a meeting in Bejing yesterday with his Chinese counterpart Yang Jichei
He also signalled that he was not planning to raise any specific deals at two other meetings held late yesterday with Vice-Premier Xi Jin Ping and domestic security chief Zhou Yongkang, both members of the country's nine-man ruling Politburo Standing Committee

In his statement on the proposed Minmetals deal, Mr Swan said it was "not unusual for governments to restrict access to sensitive areas on national security grounds"
"OZ Minerals' Prominent Hill mining operations are situated in the Woomera Prohibited Area in South Australia
The Woomera Prohibited Area weapons testing range makes a unique and sensitive contribution to Australia's national defence" Mr Swan said

Federal Treasurer Wayne Swan went to extraordinary lengths not to make a ruling on Chinese investment in Australia's resources industry by partially knocking back the OZ Minerals deal

His excuse was as lame as they get ... the Chinese rescue could not include the Prominent Hill copper and gold mine because it was too close to the defence facility at Woomera in South Australia
The mine is 162km from the facility and to define it as being of strategic importance is a stretch of extraordinary proportions
If China or anyone wanted to spy on Woomera, and few would, all you would need to do would be to log on to Google Earth rather than pay more than $4 billion to buy a gold and copper mine

Swan's timing could not be worse for OZ, coming just days after FIRB said it would need another 90 days to make its decision, and just three days before the company needs to appeal to its bankers for an extension of their debt facilities

For a Government that boasts about its good work in helping the country through the recession, this decision says the exact opposite

The folks at Rio Tinto will now be busily firming out options B, C and D because, based on the nonsense trotted out by Swan yesterday, they can have no confidence in getting approval for their Chinalco deal

Prominent Hill is the prized OZ Minerals asset and the main reason anyone would be interested in spending $4 billion to keep OZ out of the liquidator's hands
By excluding the mine for strategic defence reasons, Swan effectively killed the deal without actually having to make a decision himself
Instead, Swan has found a way to sidestep a difficult policy issue
He had options ... after all, Minmetals wanted 100 per cent of the company and he has previously shied away from approving such deals
Rio is a bigger company, but Chinalco is only seeking increased minority control
This meant Swan could distinguish between the two
He could have laid down firm policy that everyone could understand, but such transparency is every politician's worst nightmare
This shows that Chinese companies like Chinalco face a tough time
Swan can play by whatever rules he likes

Minmetals says it is continuing to discuss options, but with Prominent Hill off the agenda, OZ Minerals' survival chances have slumped

BHP is said to have not even done due diligence on the deal, but may look now
Others, like Barrack, have already taken a look
It's a Canadian company, and BHP is foreign-controlled, so that would leave Swan in a difficult position: knocking back the Chinese for defence reasons and letting another foreigner through the door

Swan's non-decision has made an already murky part of Government even murkier

The following article was published on Tuesday 31st March 2009

Stricken OZ Minerals remained locked in life-or-death talks to extend the deadline on its $1.3 billion loans yesterday, as Chinese white knight Minmetals hammered out a revised bid to satisfy foreign investment officials

OZ Minerals' future hangs in the balance as the miner scrambles to push out the repayment date on its debts from close-of-business tomorrow until mid-September

The mission is even more urgent since the Foreign Investment Review Board's decision on Friday to knock back Beijing-backed Minmetals' $2.6 billion friendly offer for OZ Minerals on national security grounds
Minmetals is drawing up a new offer excluding the Prominent Hill mine in South Australia after the Federal Government regulator struck down the proposed takeover because of the copper-gold operation's proximity to the Woomera weapons testing range

The FIRB ruling to quash the Minmetals bid for OZ Minerals has fuelled the heated national debate over the growing presence of Chinese government-owned companies in Australia's vital resources sector

It has also cast doubts over other mooted Chinese partnerships with local miners, such as Chinalco's $27 billion cash injection into Rio Tinto and Hunan Valin Iron & Steel's $645 million investment in Fortescue Metals

Minmetals' proposed takeover of OZ Minerals had been considered the Chinese deal most likely to win the green light from the FIRB because of OZ Minerals' desperate financial situation

OZ Minerals general manager business development, Bruce Loveday, said the miner was still working with Minmetals on a revised proposal
"We're really trying to focus on an alternative structure that works and delivers some value to the shareholders and we're not quite there yet" he told BusinessDaily

If OZ Minerals fails to negotiate the 5-1/2 month reprieve with its banking syndicate there is a real risk the miner will fall into the hands of receivers
The banks, which have already deferred the loan repayments three times since the original November deadline, may be unwilling to grant OZ Minerals a further extension since FIRB stopped Minmetals' initial bid because they are now less likely to see a return on their capital

Minmetals' spokesman in Australia, Ian Smith, was tight-lipped when questioned about the details of a potential revised offer
"We're not going to comment about the status of any proposal, except to say that in any proposal we do put forward we will seek to meet the interests of all shareholders" Mr Smith told BusinessDaily

If and when Minmetals tables a new bid that sets aside Prominent Hill - considered the jewel in OZ Minerals' crown - it will leave the way open for another party to snap up the asset
In light of FIRB's ruling, the most likely buyer is a local player with a strong balance sheet - such as BHP Billiton or Newcrest, although Canadian gold giant Barrick is also rumoured to be interested
The sale of Prominent Hill - estimated to be worth as much as $1.3 billion - could be enough to wipe out OZ Minerals' debts

There is a possibility that Minmetals will turn its attention away from OZ Minerals to more attractive targets now that Prominent Hill is off limits
With OZ Minerals already negotiating the sale of the Golden Grove polymetallic mine in Western Australia and the Martabe gold deposit in Indonesia, Minmetals runs the risk of walking away with a hotch-potch of the miner's second-class assets if it pushes ahead with the deal
Chief among these are the ageing Century zinc mine in Queensland and the Rosebery zinc mine in Tasmania - currently under care and maintenance because it is uneconomical to run at current base metals prices

OZ Minerals shares, which were suspended on Friday while the miner tries to find a solution the crisis, last traded at 55.5c

The following articles were published on Thursday 2nd April 2009

China Minmetals Group, the nation’s biggest metals trader, agreed to buy most of debt-laden OZ Minerals Ltd’s mines for $1.2 billion after Australia last week blocked a takeover on national-security grounds

Minmetals will get the world’s second-biggest zinc mine, as well as assets in Australia, Laos and Canada, OZ Minerals said today in a statement

Melbourne-based OZ Minerals also gained a one-month extension on about A$1.2 billion ($830 million) of debt, it said

The sale allows OZ Minerals to retain its major Prominent Hill copper and gold mine and pay most of its debt, which ballooned last year as the credit crunch and global recession slashed asset values

Treasurer Wayne Swan last week rejected Minmetals’ A$2.6 billion offer for the whole company as he mulls more than $20 billion in investments by Chinese companies

Minmetals has “left, undoubtedly, the jewel in the crown behind and are willing to accept the other assets so it just shows you their appetite to enter into transactions” Anthony Anderson, a trader at MF Global Ltd. in Sydney, said today by phone
“All the debt is paid off, they are a company with A$600 million in cash ... this is a pretty good result”

OZ Minerals fell 0.9 percent to 55 cents at 12:17pm Sydney time following a three-day halt

The Minmetals takeover offer was worth 82.5 cents a share and the new proposal means no cash will flow directly to shareholders
“There’s a number of investors who’d been in the stock with the expectation that the original 82.5 cents cash deal would get up and are now exiting their positions” said Matt Riordan, who works at Paradice Investment Management in Sydney

Mine Retained
OZ Minerals will retain the Prominent Hill copper and gold mine in Australia as well as a project in Indonesia
“Prominent Hill has significant upside potential and OZ Minerals will have the financial capacity to continue its development” Chief Executive Officer Andrew Michelmore said in the statement
The mine has started output and will be “cash flow positive during the second half of 2009” he said

OZ Minerals, created less than a year ago by the merger of Oxiana Ltd. and Zinifex Ltd., reported a A$2.5 billion loss in February

UBS AG values Prominent Hill, located near BHP Billiton Ltd.’s Olympic Dam operation in South Australia, at A$1.6 billion

“The OZ Minerals skeleton appears very vulnerable to a takeover” Greg Canavan, head of Australian research at Fat Prophets Funds Management in Sydney, said today in an e-mailed note
“BHP is an obvious contender, given Prominent Hill’s proximity to Olympic Dam” Canavan said

The offer needs approvals from China and Australia as well as OZ Minerals shareholders

RBC Capital Markets had yesterday estimated Minmetals would buy the assets for between A$1.5 billion and A$1.6 billion

OZ Minerals' battle-scarred shareholders have lost the financial upside that China Minmetals' original takeover bid would have delivered, as the revised $1.7 billion rescue package offers less immediate value

Treasurer Wayne Swan forced the Chinese state-owned entity to review its original $2.6 billion bid for the debt-laden miner, which would have delivered shareholders 82.5c a share
The $1.7 billion deal, in which Minmetals will buy a range of assets leaving OZ with its flagship Prominent Hill operation, is valued at about 56c a share

When news of the deal was released yesterday, OZ Minerals shares fell 3.6 per cent to 54c, after a three-day trading halt

The deal, described by one analyst as a "get-out-of-jail card", is widely hailed as a positive for the Melbourne miner
It will continue as a listed entity, retaining Prominent Hill, Martabe gold mine (still for sale), exploration assets in Cambodia and Thailand, investments in listed entities, and will have about $600 million in cash

According to Credit Suisse, on its valuation the smaller OZ would have a value of about $2.3 billion, or 75c a share

"It is a good deal in the circumstances" one analyst said
"But the full bid had greater certainty for shareholders, which was why there was a stock sell-off yesterday as those that wanted out certainty got out"

OZ has been fighting for survival since late last year, as it struggled to refinance about $1.2 billion worth of debt
The new offer from the Chinese means it can continue trading debt-free and with a significant asset

But Minmetals' revised bid to take on a suite of assets that include Sepon, Golden Grove, Century, Rosebery, Avebury, Dugald River and other exploration and development assets still needs Foreign Investment Review Board approval
Both parties are confident of a quick decision by Mr Swan on the revised deal, as he flagged he would be open to alternative proposals when he knocked back the original rescue package late last week ruling that Minmetals' bid for OZ could not proceed if it included the flagship Prominent Hill project
The decision was made on national security grounds because Prominent Hill is in South Australia's Woomera Prohibited Area, a weapons testing range

Chinalco's $US19.5 billion investment in Rio Tinto is the most high-profile case before the FIRB, which has delayed its decision by 90 days
Mr Swan did give one deal the go-ahead this week, approving Hunan Valin Iron & Steel Group's $645 million investment in Fortescue Metals Group

Analysts suggest also it would be a huge "slap in the face" to China if Mr Swan left the door open for an alternative bid and then rejected a second attempt to establish a footprint in Australia's resources
According to Minmetals, the FIRB process had begun because the new offer was an amended version of its initial approach
"We believe the Australian Government can deal with this expeditiously, as much of the material has already been considered" a spokesman said

If the proposal succeeds, the staff and management at OZ will be split but both companies said it was too early to decide where the divide would be and how the new structures would look
"It is premature to comment on what management requirements we will need, but we do bring greater certainty to the many existing OZ employees at the sites" Minmetals said
Credit Suisse analyst Michael Slifirski said it was likely OZ would have a smaller management team and board

The Melbourne company also won a one-month extension on about $1.2billion of debt from its lenders and will continue to seek an extension to see the new deal through to completion, expected in June