OZ Minerals has signed a conditional binding terms sheet with Havilah Resources Ltd. setting out the basis of a new strategic relationship in the prospective Curnamona Province in South Australia, including the option to acquire the Kalkaroo project.

The Kalkaroo project consists of a mineral resource estimate of 245 million metric tons (mt) announced by Havilah in 2018 with Havilah having a large exploration tenement holding in the Curnamona Province.

The terms sheet provides OZ Minerals with a study period of up to 18 months to evaluate the potential of the Kalkaroo project and the option to acquire 100% of it for a purchase price of $205 million. In addition, the agreement provides a deferred contingent consideration of $65 million, upon a 30% uplift in Kalkaroo’s Measured and Indicated Resource estimate as well as a copper price linked contingent payment in each year of production up to a maximum cumulative amount of $135 million.

Under the strategic alliance, OZ Minerals will pay Havilah $1 million per month during the option and alliance period, with 50% of the payments directed toward Havilah identifying and advancing nearby exploration opportunities within the Curnamona Province. Including the monthly payment, OZ Minerals expects to spend up to $76 million during the option and alliance period to undertake studies and for exploration activities at the Kalkaroo project and on alliance activities.

“The agreement allows OZ Minerals to apply our experience of looking at projects in a different way to unlock value during the study phase, while providing Havilah the opportunity to continue to apply its extensive exploration experience across the province to identify new deposits,” OZ Minerals Managing Director and CEO Andrew Cole said.