PERTH (miningweekly.com) – Australian copper producer Oz Minerals would likely be facing a tougher challenge if it wished to make a takeover offer for fellow-listed Sandfire Resources, analysts said on Monday.

This comes after Sandfire inked a A$93,3-million deal with LS-Nikko, which would see the Korean metals trader take up a 12,5% stake in the ASX-listed company.

However, by signing the 18,7-million share deal with LS-Nikko, Sandfire diluted the shareholding of Oz Minerals from its recently acquired 19,9% to around 17%.

Stock Resources’ Grant Craighead said in an interview with Mining Weekly Online that there was still a possibility for Oz Minerals to increase its stake to the initial 19,9% interest in Sandfire, if it purchased shares on market.

“I think what they were doing with their initial stake, was trying to put a foothold on Sandfire while they consider their broader opportunities,” Craighead said.

However, he added that a complete takeover offer for Sandfire would now be more complex with the addition of yet another major shareholder.

Sandfire shares were now divided between Oz Minerals, LS-Nikko and Posco.

“It just makes it more challenging if the register is open, you obviously have a bit more of a freer run at the company, whereas if there are multiple partners involved, you have to satisfy all of their needs and it's just a challenge.”

Stock Analysis’ Peter Strachan agreed, saying that a takeover of Sandfire by Oz Minerals was unlikely now, considering the blocking stakes held by the other shareholders.

“Oz Minerals would have to cut the Koreans and Posco in for some type of special treatment for that to happen,” Strachan said.

He added that although the LS-Nikko deal would prove fruitful for Sandfire, exposing it to a Korean copper group with a broad range of international copper interests, the agreement would not prove as fruitful for Oz Minerals.

“The thing that Oz Minerals might have been hoping to potentially do was some type of joint venture to develop the Doolgunna project, with Sandfire and Oz Minerals being partners. But now, it looks like that is less likely.”

Oz Minerals had indeed reported that it hoped to work constructively with Sandfire to maximise the full value of the Doolgunna asset.

Earlier this month, Oz Minerals MD Terry Burgess said that the company was “particularly excited” by the exploration potential of the project.

“Doolgunna appears to represent the discovery of a new high grade copper deposit with considerable upside yet to be realised.”

As part of its A$100-million deal with Sandfire in July, Oz had also formally requested a seat on the Sandfire board of directors.

CARRAPATEENA FOR GROWTH?

While a takeover of Sandfire might prove challenging, Oz Minerals still had the opportunity to grow its output through the possible acquisition of Carrapateena copper project, in South Australia, from Canadian mining firm Teck Resources.

There has been some market speculation that Oz Minerals has been placed on the short-list for the Carrapateena project disposal.

“There is no guarantee that Oz Minerals will be bidding for Sandfire, but if they are successful in buying Carrapateena, that would satisfy a large chunk of their growth aspirations in the foreseeable future,” Craighead stated.

Oz Minerals was unavailable for comment on Monday.

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