Explorer surges on OZ deal

OZ Minerals has struck an option agreement with Havilah Resources to acquire its Kalkaroo copper project in South Australia’s east for as much as $405m, sending shares in the junior explorer soaring.

OZ, which operates the Prominent Hill and Carrapateena cooper and gold operations in central SA, will have 18 months to assess the Kalkaroo project, at which time it can elect to pay $205m to buy it.

There is also a potential deferred payment of $65m contingent on a 30 per cent increase in the measured and indicated resource at Kalkaroo, and a copper price-linked payment in each year of production up to $135m.

Shares in Havilah Resources, whose shareholders will have to approve the deal, traded as high as 45c closing at 30.5c, up 85 per cent for the day. OZ Minerals shares rose 2.7 per cent to $22.03.

The Havilah board has recommended shareholders vote in favour of the deal.

Havilah has been exploring at Kalkaroo for more than 15 years, and in mid-2019 released a prefeasibility study into the project that envisaged a 13-year mine life producing 30,000 tonnes of copper and 72,000 ounces of gold per year.