MELBOURNE (Bloomberg) -- OZ Minerals Ltd., the Australian metals producer with more than $790 million in cash after selling mines to clear debt this month, may be an acquisition target, according to JPMorgan Chase & Co. and Pengana Capital.

“Someone could seek to buy them,” said Ian Henderson, who manages $7 billion in natural-resource assets shares at JPMorgan Chase & Co.’s asset-management unit in London. “Someone that needs money for a project could look at that cash pile, and it wouldn’t necessarily have to be a copper company either.”
Xstrata Plc’s proposed 22.4 billion-pound ($37 billion) merger with Anglo American Plc this week may spur consolidation among mining companies as they compete for access to resources as demand rebounds. BHP Billiton Ltd., the world’s largest mining company, and Rio Tinto Group may seek to buy OZ Minerals, Pengana fund manager Ric Ronge said.
“I’m sure that people are looking at it, obviously there is a truckload of cash and an asset there that is OK,” said Ronge, who helps manage the equivalent of $1 billion at Pengana in Melbourne, including OZ Minerals stock. OZ Minerals should consider a capital return to shareholders with the proceeds of the assets sales, he said.
OZ Minerals rose as much as 1.6 percent to 94.5 cents and traded at 93 cents 10:21 a.m. Sydney time on the Australian stock exchange. The stock has jumped 67 percent this year and has a market value of A$2.8 billion ($2.3 billion).
JPMorgan Asset Management is OZ Minerals 11th-largest shareholder with 6.4 million shares, or a 0.2 percent stake, according to Bloomberg data.
------Cash pile
“Having resolved our financial problems we are now actually in a strong position,” acting chief executive officer Bruce Loveday said on Saturday in e-mailed comments sent to Bloomberg. “We have a very well regarded copper-gold operation in Prominent Hill, some exciting exploration potential around Prominent Hill and in Asia, and we have the financial capacity to be able to maximize value from these.”
OZ Minerals, formerly the world’s second-largest zinc mining company, sold $1.4 billion in mines to China Minmetals Corp. to slash debt after a rout in commodity prices last year curbed profits. It also expects to complete next week the sale of the Martabe mine in Indonesia for $211 million.
The sales will leave OZ Minerals with more than $790 million in cash, the company said on Friday. It owns the A$1.2 billion Prominent Hill mine in South Australia state and mineral exploration projects in Cambodia and Thailand. State-owned China Minmetals was blocked from buying Prominent Hill by Australian Treasurer Wayne Swan in March on national security concern because of its proximity to the Woomera weapons testing range.
------Tier-one
The likely restrictions on foreign owners may limit the number of possible acquirers for OZ Minerals, said Pengana’s Ronge. BHP may be prepared to pay A$2.75 billion to buy Prominent Hill, located 650 kilometers (404 miles) from state capital Adelaide, to secure copper and uranium for its adjacent Olympic Dam operation, JPMorgan said in an April 28 report.
While Prominent Hill isn’t a so-called “tier-one” mining asset, it could be a strategic purchase for BHP, Ronge said. BHP indicated it may not be interested in Prominent Hill as it doesn’t view the project as a top-tier mining asset, the Australian newspaper reported last month, citing BHP’s uranium head, Dean Dalla Valle.