OZ Minerals Says Bank Talks Continue to Secure Loan

By Rebecca Keenan

Jan. 12 (Bloomberg) -- OZ Minerals Ltd., trying to renegotiate at least $560 million of debt, said it’s made progress to arrange a bridging loan to cover cash requirements.

“The lenders have not formally responded to the company’s request to obtain approvals for bridging finance by the requested date of Jan. 9 but have indicated they will do so as soon as possible,” Melbourne-based OZ Minerals said today in a statement.

The world’s second-largest zinc mining company needs the bridging loan to cover cash shortfalls at its Golden Grove, Prominent Hill and Martabe projects. OZ Minerals’ market value slumped by $6.5 billion, or 79 percent, in the second half as metal prices plunged almost 60 percent, squeezing cash flows.

The company has slowed its cash consumption rate and had cash of A$132 million ($92 million) at Jan. 8, it said today. The slower “cash burn” rate reflects better commodity prices and benefits from a cost-cutting program, it said.

OZ Minerals is seeking the bridging loan from banks that provided a $420 million loan, which the company is trying to refinance by Feb. 27. The loan is provided by seven lenders including Bank of Scotland Plc, a unit of HBOS Plc, Australia & New Zealand Bank 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.

A third loan with Societe Generale has a limit of A$250 million and OZ Minerals also is trying to extend the refinancing deadline to Feb. 27, the mining company said. Societe Generale agreed to extend the deadline to provide security over some assets to Jan. 14, it said.

OZ Minerals, created when Oxiana Ltd. bought Zinifex Ltd. in July, last traded at 55 cents on Nov. 27, giving it a market value of A$1.7 billion. Its shares, which have been suspended since Nov. 27, may remain halted until Feb. 27 as it seeks to complete the refinancing. Goldman Sachs JBWere Pty is advising OZ Minerals.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net