June 7, 2018 / 9:38 AM / 4 months ago

UPDATE 1-Australian copper miner Oz Minerals says door open to suitors

* Expects deal for Brazilian miner Avanco to close next week

* Sees significant exploration potential through Avanco

* Expects Carrapateena mine to start producing from late 2019 (Recasts, adds comments, detail)

By Melanie Burton

MELBOURNE, June 7 (Reuters) - Australian copper miner Oz Minerals Ltd, which is on the cusp of closing its first overseas copper deal, has a response team in place for bids, and a door that is open for potential suitors, Chief Executive Andrew Cole said on Thursday.

Cole expects its buyout of Brazilian explorer Avanco Resources Ltd to close next week. The deal, which has been in the works for three years, offers chunky exploration potential because Avanco owns the greatest landholding in the copper-rich Carajas region, second only to mining major Vale , Cole said.

Avanco gives Oz Mineral a healthy-looking new project pipeline just as those of the majors look patchy, and as the renewable energy boom burnishes global appetite for copper. Oz Minerals is capitalised at A$3.17 billion ($2.43 billion).

“We are building up a company where we have plans to do lots of great things. If somebody thinks they can use these assets more effectively than we can, that’s fine. I would see it as a compliment in fact, if someone came along and wanted to buy our portfolio of assets,” Cole said, speaking to reporters after a Melbourne Mining Club event.

In the years since the 2012-2013 commodity price crash, mining majors have focused on repairing their balance sheets and paying back investors. But Rio Tinto’s coal divestments that were snapped up in March suggest the tide may be turning and that investors are becoming more open to spending on replenishment.

Oz Mineral’s A$444 million ($340 million) cash-and-scrip offer is expected to close on June 14. Avanco produces around 14,000 tonnes of copper but targets around 50,000 tonnes.

“Today, they are a very small producer ... We are interested for the copper they could produce with the resources they have got and the exploration upside in that district,” Cole said.

Oz Mineral’s crown jewel is copper-gold mine Prominent Hill in South Australia, but much of its future payoff will come from its Carrapateena copper-gold project, which it decided to build when copper prices were $2.15 a pound.

“We decided to build Carrapateena when ... the market was very pessimistic,” said Cole.

Comex copper was trading at $3.27 a pound on Thursday, the highest this year.

Carrapateena is expected to produce 65,000 tonnes of copper and 67,000 ounces of gold a year for 20 years from late 2019.

Oz Minerals produced some 112,000 tonnes of copper and 127,000 ounces of gold last year.

$1 = 1.3070 Australian dollars Reporting by Melanie Burton; Editing by Sherry Jacob-Phillips and Tom Hogue

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