The OZ Minerals Limited (ASX: OZL) share price hit a post-GFC high today. This came after the ASX copper producer announced the sale of its holdings in two joint ventures (JVs) that could ultimately bring in more than $20 million in cash.
The OZ Minerals share price hit an intraday high of $27.23 in early afternoon trading today. That's 1.22% up on its previous closing price.
It is also the highest price that OZ Minerals has traded for since mid-2008 as the global financial crisis was unfolding.
OZ Minerals told the ASX today that it has struck a $6.6 million deal to sell its 80% stake in the Jericho copper-gold system and its 70% holding in the larger Eloise copper project near Cloncurry in northwest Queensland.
The buyer is Demetallica, which is a subsidiary of OZ Minerals' junior JV partner Minotaur Exploration Ltd (ASX: MEP).
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Proceeds from the asset sales
The $6.6 million consideration is made up of a $475,000 non-refundable deposit and a $6.13 million payment. The second larger payment is due when Minotaur floats Demetallica via an initial public offering (IPO).
But these aren't the only payments OZ Minerals could receive. It is also entitled to up to US$8.82 million (AU$12.3 million) from the copper mined at both projects.
The amount is calculated at the rate of US4 cents a pound on the ore that forms part of the measured and indicated resources or tonnes actually mined, exceeding 200,000 tonnes and capped at 300,000 tonnes.
OZ Minerals gets a further $2.75 million upon the publication or completion of a positive pre-feasibility study for Eloise and/or Jericho, or the commencement of mining within those areas.
OZ Minerals explains divestment rational
The projects weren't of sufficient scale to keep OZ Minerals interested. This deal gives Demetallica options to develop and fund the projects, as well as look for other partners.
OZ Minerals chief executive, Andrew Cole said:
The resource at Jericho did not meet our requirements to continue so we have agreed for our partner's subsidiary, Demetallica, to gain 100% ownership of the project.
Our exploration strategy is to partner with junior explorers who bring new ideas and regional expertise in a way that allows us to test theories and quickly determine the attractiveness of a project.
This is a good example of how our partnering approach allows us to continually turn over our portfolio of exploration projects as we search for our next material discovery. We look forward to continuing to work in partnership with MEP under our various joint ventures.
Demetallica's asset portfolio ahead of IPO
The Jericho copper-gold system reported a maiden mineral resource estimate of 9.1Mt @ 1.4% copper (Cu) and 0.3g/t gold (Au).
Demetallica has also struck a deal with Sandfire Resources Ltd (ASX: SFR) to gain full control of Sandfire's regional tenements and the Altia polymetallic deposit near Cloncurry.
