OZ may pull out of Cambodia gold search

By Berry Fitzgerald

OZ Minerals is reviewing its Cambodian gold exploration program, which has failed to find the 2 million-ounce resource base that could have become a starter project there.

The latest drilling at the Mesam prospect has failed to excite.

Mesam is adjacent to the Okvau deposit, which OZ last year ranked as a 605,000-ounce gold find.

Advertisement: Story continues below It was hoped Mesam would get OZ closer to the 2 million-ounce threshold. But managing director Terry Burgess said yesterday that results to date had ''not been particularly spectacular.

''We have three or four holes to go but I guess like all these exploration endeavours, you're always waiting for the successful hole,'' he said. He confirmed that the gold assets could be sold after the review was completed.

Apart from the lack of a major discovery in Cambodia, gold assets in the country have fallen dramatically in overall importance to OZ.

After the group's drastic restructuring in 2008, its mining portfolio was reduced to ownership of the Prominent Hill copper/gold mine in South Australia and the Cambodian gold play.

Analysts have previously valued the Cambodian assets at between $40 million and $120 million, with the higher amount dependent on the so-far-elusive additional exploration success. Prominent Hill is now well established as a 100,000 to 110,000-tonne-a-year copper producer.

Cambodia also became less important for OZ after the miner's recent acquisition of the undeveloped Carrapateena copper/gold/uranium deposit in South Australia.

Carrapateena has the potential to be a similar sized copper producer to Prominent Hill. But its development is some way off. A pre-feasibility study could start in 2012 and would take at least a year.

This would lead to full feasibility studies, which take another 18-24 months. After allowing for mine construction time, first production would be in 2017 at the earliest.

Mr Burgess dismissed the suggestion the Carrapateena acquisition meant the group's acquisition hunt to replenish its mining portfolio would be reined in. OZ is holding $750 million cash.