OZ sells N. Sumatra gold project for $211m

Australian mining firm OZ Minerals Limited announced on Friday that it had agreed to sell its Martabe gold and silver project in North Sumatra, Indonesia, to China Sci-Tech Holdings Limited (CST) for US$211 million in cash following a competitive sale process over recent months

CST has agreed to pay a deposit of US$10 million upon signing and the balance of US$201 million upon completion of the transaction, which is expected by early June 2009, subject to several conditions outlined below being satisfied, it said. OZ Minerals will also be reimbursed by CST for an estimated expenditure of US$7.5 million on the project since 1 April through to the completion date.

CST, which is listed on The Stock Exchange of Hong Kong, was founded as an investment holding company and its subsidiaries are principally engaged in investments in financial instruments and property investment. CST has been pursuing interests in the mining sector for some time. Its mining and investment business will now be centered on the Martabe project. To assist this transformation, CST has appointed an experienced mining team and has formed a strategic relationship with an Indonesian partner through an immediate member of the Soeryadjaya family (Judith Soeryadjaya) emphasising the family's commitment to the Martabe Project.

The sale is not conditional on financing, and CST will fund the acquisition from cash on hand. However, it is conditional on the consent of certain of OZ Minerals? lenders, CST?s shareholders and Australia?s Foreign Investment Review Board.

OZ in November 2008 suspended development activities at Martabe until after 2009 in the face of worsening global economic slow down.

OZ?s initial plan is to start Martabe production late 2009 with annual output of 200,000 oz of gold and 2 million oz of silver. Estimated capital cost to develop the project is US$310 million.

The Martabe project is currently 100% owned by OZ Minerals, with 5% held in trust for local Indonesian stakeholders. (denny)