Among the very first international mining companies to arrive in Cambodia four years ago, Oz Minerals said Tuesday it was considering a sale offer for the sale of some of its Cambodian assets as part of a bid to stave off bankruptcy.
Facing a lawsuit from angry shareholders who say the company failed to disclose over $700 million in debt, the company, Australia’s third-largest diversified miner, last month posted a 2008 after-tax loss of $1.7 billion and is now negotiating both its takeover by a Chinese company and the sale of assets in Indonesia and Australia.
Company spokeswoman Natalie Worley said Tuesday that the company is now also considering an offer for an unspecified number of the company’s four exploration projects in Mondolkiri, Kratie and Kompong Thom provinces.
“It is being considered. Nothing is finalized,” she said by telephone from Melbourne, adding that discussions over Cambodia have not reached advanced stages.
Oz Minerals was formed from last year’s merger between Zinifex Ltd and Oxiana Ltd, a mid-tier company which in 2006 announced drilling test results of 9.9 grams of gold per ton over a 33-meter interval in Mondolkiri. The company’s arrival, ahead of giant BHP Billiton and junior explorer Southern Gold, helped boost Cambodia’s reputation as prospective and under-explored.
Due to the terms of confidential negotiations, Worley said she could not disclose the size of the offer or which Cambodian projects were under discussion. However, she said the offer was made by one of the companies currently seeking to buy Oz Mineral’s Martabe gold and silver exploration project in northern Sumatra, Indonesia.
Australian press reports have identified Tigers Gold, a new Australian company formed by former Oxiana executives, as the frontrunner in negotiations for Martabe.
The company’s founder, David Forsyth, did not respond to requests for comment Tuesday.
Stephen Bartrop, managing director of the Australian mining investment fund LimeStreet Capital, said Tuesday that Oz Minerals’ potential divestment from Cambodia was due to the company’s individual circumstances and was unlikely to mark a decline in foreign mineral exploration in Cambodia.
By October, the global economic crisis and the collapse in commodities prices had caused mining companies to put off $50 billion in exploration projects worldwide. The Minerals Council of Australia reported last week that the industry had shed 11,000 jobs since June.
Bartrop said that smaller mineral exploration companies, known as juniors, rely heavily on investment to finance their operations and are therefore suffering the most from the decline in equities markets. Larger companies may be more likely to wait, if possible, to develop their assets rather than sell them.
“It takes a lot of money to close up shop and close down operations,” said Bartrop by telephone from Sydney. “We’ve absolutely got to wait for a global recovery.”
Oz Minerals shares closed down 0.81 percent Tuesday at $0.40. The company’s share price has suffered in recent days due to speculation that Australian authorities may not approve its $1.7 billion acquisition by Chinese minerals trader Minmetals.