Australian mining company OZ Minerals has signed an agreement with Havilah Resources to option the latter’s Kalkaroo copper project in South Australia for $143.8 million (A$205 million).
Over a period of 18 months, OZ Minerals will assess the project potential and option to purchase the Kalkaroo Project, which is potentially one of the largest undeveloped open pit copper-gold deposits in Australia.
The study will focus on exploring new resources while optimizing project, scale and value.
Managing Director and CEO of OZ Minerals, Andrew Cole, said: “The agreement provides a low cost option and flexibility to study the Kalkaroo project whilst retaining the option to acquire 100% of the project for a price of fixed vesting and any deferred contingent consideration.
“The purpose of the study is to improve our understanding and confidence in the project, and will include an infill drilling program to confirm the current mineral resource estimate, before a decision is made to exercise the option to acquire 100% of the Kalkaroo project.”
According to the conditional binding term sheet, OZ Minerals is required to complete 5,000m of exploration drilling on the project or make a deficiency payment to Havilah if it chooses not to exercise the option.
OZ Minerals said in a statement: “In addition, the agreement provides for deferred contingent consideration of A$65 million, following a 30% increase in Kalkaroo’s measured and indicated resource estimate, as well as a payment conditional linked to the price of copper for each year of production, up to a maximum cumulative amount of A$135 million.
The two companies have also agreed to a strategic alliance for the exploration of copper in the potential property of Havilah in the province of Curnamona in South Australia.
As part of the alliance, OZ Minerals will pay $12.6 million (A$18 million) to Havilah during the option and alliance period. Of this payment, 50% will be used by Havilah for the exploration of new prospects in the province of Curnamona.