Oz Still Waiting For Word On Crucial Loan

Sydney Morning Herald

Saturday January 10, 2009

Jamie Freed

OZ MINERALS last night had yet to secure a bridging loan to give it enough money to continue operating its mines and building its Prominent Hill project before February 27, its deadline for refinancing $1 billion debt.

Last month the miner asked lenders to formally respond to its request for a bridging loan by last night. But because of time zone differences the market may 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.

The company had been negotiating the terms with the banks and expected to sign a proposal relatively quickly, he said.

OZ has not disclosed the amount of bridging finance it is seeking. As of December 30 it had $169.2 million of cash reserves, but it has been burning through funds rapidly.

A UBS analyst, Jo Battershill, estimated OZ could be seeking $50 million to $100 million of bridging finance to give it enough cash to operate until the end of next month. That would help the miner 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.

OZ might attempt to delay payments to suppliers until it refinanced its debt or sold assets, he said.

He said the interest rate on the bridging facility could be higher than the "absolutely exceptional" price Goldman Sachs JBWere was charging a rival miner, PanAust, for a one-year debt rollover.

PanAust's agreement included a 15 per cent interest rate and 150 million options, which were 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. The date originally scheduled was January 21.

That means that for an extra nine days shareholders will remain in the dark about its production and cost performance and about how close its $1.15 billion Prominent Hill copper and gold mine is to completion.

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.

Potential buyers for Prominent Hill included BHP Billiton, Chinese companies, and Vale, Anglo American and Xstrata, he said.

© 2009 Sydney Morning Herald

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