OXR oxiana limited

oxr and mount woods

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    Extract fro Courier Mail

    Oxiana dusts off
    By Robin Bromby

    IF ever there was any question about the need for smaller mining companies, then Oxiana's move into the high-profile Mt Woods project has dispelled that doubt.

    BHP Billiton decided to bow out of the South Australian copper-gold project when it came to the conclusion, contrary to earlier expectations, that Mt Woods was not another Olympic Dam.
    Without its money, Minotaur faced a challenge to find enough to keep drilling going.

    But now Oxiana has stepped up to the plate with a commitment to spend $34 million proving the complex geology of this part of the Gawler Craton does host a substantial resource, although the first stage requires only a $3.5 million investment.

    "It just shows the vigour of the smaller end of the market when there is a job to be done," a director of several gold hopefuls said.

    Drilling at Mt Woods created a sensation in late 2001 when Minotaur reported high-grade copper-gold intercepts at Prominent Hill, within the joint venture, and its struggling shares soared.

    One analyst who inspected the project believes it may be like Olympic Dam, just 120km away, and consist of a star-shaped mineralised zone that would explain why some drill holes hit high grades and others did not.

    He believes it could be as long as two or three years before Minotaur gets to know exactly what is there.

    Now Minotaur will move to full ownership of the Mt Woods joint venture, which includes the Prominent Hill project, buying BHP's 51 per cent for $8 million.

    It will also issue shares to minority stakeholders Newmont Mining, Sons of Gwalia and Sabatica's to buy out their interests.

    Oxiana will earn up to 65 per cent farming in to spend $34 million taking Mt Woods to a final feasibility study.

    Analysts see this as a good move for Oxiana because it dilutes the political risk attaching to a company that has focused on the Sepon copper-gold project in Laos. They believe the diversification will help provide a stronger justification for Oxiana's $670 million market capitalisation.

    Oxiana managing director Owen Hegarty said Prominent Hill involved only modest exploration spending.

    Although BHP and the other partners concluded that Mt Woods was not going to be big enough for their commitment, it could be a significant size for a company like Oxiana.

    He said it was similar to Rio Tinto selling out 80 per cent of Sepon, a move that gave Oxiana a company-making mine.

    "The initial outlay is only $3.5 million. If the project is viable after the initial exploration program, then we'll be happy to keep going," Mr Hegarty said.

    © Queensland Newspapers


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