OZ minerals announced yesterday it would sell its Cambodian gold assets to fellow Australian miner Renaissance Minerals for US$19.2 million.
The deal comes in the wake of a tumultuous 2011 for OZ, in which exploration yields proved disappointing and corruption allegations weighed heavily on the company’s Cambodian operations.
OZ will sell 100 per cent ownership of its exploration licences for its Okvau and O’Chhung concessions in Mondulkiri province, along with another unnamed licence and three joint-venture licences, for US$19.16 million in cash, shares and options in Renaissance, according to statements posted on the Australian Securities Exchange website.
The Okvau gold deposit held an established 729,000 ounces of gold, the statement said, as well as noting that the deal would make OZ the largest shareholder in Renaissance.
In addition, Renaissance will pay OZ another $24.2 million if gold is mined at the site.
“OZ Minerals sought to develop and operate a mid-tier gold mine in Cambodia and to this end took Cambodian interests from a grassroots project to an identified gold resource,” OZ chief executive and managing director Terry Burgess said in the statement.
The project did not fit with OZ’s strategy in regard to the amount of gold at the concessions and the company’s “overall preference for mid-tier copper projects”, he said.
OZ began exploration in Cambodia in 2006.
The company’s shares fell 1.45 per cent on the ASX yesterday, finishing at $11.74. Renaissance shares closed up 16.67 per cent at $0.30.
Renaissance plans to fund the acquisition with the issue of 60 million shares at $0.22 each, aiming to raise $12.9 million in equity.
OZ’s Cambodian project failed to meet expectations.
The company planned to identify at least two million ounces of gold in Cambodia in 2010 alone, the Post reported in December, 2009, with an eventual three million ounces of established gold deposits in total.
In the first quarter of 2011, OZ announced an inferred resource of 605,000 ounces of gold at the Okvau concession, the Post reported last year.
In April, 2011, OZ's Mesam concession produced results inferior to the adjoining Okvau concession in Mondulkiri, the Post reported.
Renaissance claimed an established gold deposit of 729,000 ounces at Okvau in its statement yesterday.
In June, allegations of corruption were brought against OZ Minerals. According to media reports, the company entered into a joint venture with family members of Ministry of Industry, Mines and Energy officials.
Those family members later received as much as $1.15 million when OZ bought their stakes in the joint venture.
Cambodian officials and OZ representatives denied any claims of wrongdoing.
Representatives at OZ Minerals declined to elaborate on the company’s future strategy, and Renaissance Minerals could not be reached for comment yesterday.