The new proposal excludes the Prominent Hill copper and gold mine in Australia, the Martabe operation in Indonesia and stakes in some publicly traded companies, Melbourne-based OZ said today in a statement. No value was given. Minmetals last month made a A$2.6 billion, or 82.5 cents a share, cash bid.

OZ Minerals, the world’s second-largest zinc mining company, may sell the assets for as much as A$1.6 billion, enough to repay debt owed to 11 banks, RBC Capital Markets said today. Australian Treasurer Wayne Swan said last week he would consider alternative proposals from Minmetals, one of more than $20 billion of proposed investments by China awaiting approval.

“What appears clear is that a satisfactory deal and price has been struck, which should satisfy OZ Minerals’ banks,” Credit Suisse Group AG Melbourne-based analysts Michael Slifirski and Nathan Littlewood said today in a note to clients. “OZ Minerals could emerge as a debt-free entity.”

OZ Minerals, suspended for a third day on the Australian stock exchange, last traded at 55.5 cents on March 26, valuing it at A$1.7 billion. Trading is expected to resume tomorrow after the company makes a statement on the refinancing, OZ Minerals said. It said it also aims to make an announcement tomorrow on the new proposal.

Missile Testing

“China Minmetals has made an incomplete proposal,” Ian Smith, an Adelaide-based outside spokesman for the Beijing-based company, said in an e-mailed statement. “Minmetals will be making no further comments” until talks are concluded because of confidentiality provisions, he said.

Swan rejected the initial transaction because the A$1.2 billion Prominent Hill mine in central Australia is located near Woomera, the world’s largest land-locked missile-testing range, which previously included testing for nuclear weapons, according to a Web site designed with the help of the Department of Defence.

“While shareholders are unlikely to immediately realize the original 82.5 cents Minmetals offer price, they will hold a stake in a company with a more certain future, a strong asset base and considerable leverage to the copper price,” RBC analyst Geoff Breen wrote today in a note to clients.

Production at Prominent Hill started last month and is expected to produce as much as 100,000 metric tons of copper and 70,000 ounces of gold this year, according to a March 10 company presentation. The open-pit mine is estimated to operate for 10 years and there is potential for expansion to underground production, OZ Minerals has said.

Revised Offer

Under the revised offer, Minmetals will get control of the Sepon copper and gold mine in Laos, the Century, Rosebery and Avebury zinc mines in Australia, and smaller projects in the country and Canada. OZ Minerals would retain Prominent Hill in South Australia, the Martabe gold and silver mine in Indonesia and stakes in some explorers, including Toro Energy Ltd.

“There are still uncertainties on the Australian government side whether to let the deal go ahead,” Wang Zhe, an analyst at China Securities Co., said today from Beijing. “The acquisition is less valuable as the best assets are excluded.”

The refusal to allow the initial deal underlines the sensitivity of Chinese acquisitions in Australia. Swan is due to rule on a proposed $19.5 billion investment by Aluminum Corp. of China in Rio Tinto Group by mid-June.

The Australian government today approved a A$1.3 billion investment in Perth-based Fortescue Metals Group Ltd. by Hunan Valin Iron & Steel Group. The Chinese company will hold a 17.6 percent stake in Australia’s third-biggest iron ore exporter.

Loans Extension

OZ Minerals is seeking an extension on its debt to Sept. 15. Its lenders include Royal Bank of Scotland Plc, a unit of HBOS Plc, Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, Macquarie Group Ltd. and Bayerische Hypo-und Vereinsbank AG.

“The proposal will also provide a complete solution to OZ Minerals’ refinancing issues,” the company said in the statement. Talks with banks are expected to be “completed satisfactorily,” the statement said.

Chinese regulators blocked Coca-Cola Co.’s planned $2.3 billion takeover of the country’s biggest domestic juicemaker, China Huiyuan Juice Group Ltd. on March 18, citing competition concerns.

Some 78 percent of Australians oppose investment in the nation by Chinese government-controlled businesses, according to a poll of 1,001 people by the Sydney-based Lowy Institute in September. Opposition to Chinese investment globally helped block Cnooc Ltd.’s $18.5 billion bid for U.S.-based Unocal Corp. and Haier Group Corp.’s offer for U.S. appliance maker Maytag Corp. in 2005.

“It is probably going to get through if it excludes Prominent Hill,” Lyndon Fagan, a Sydney-based analyst at RBS, said today by phone. “Prominent Hill is the best asset so if you had to hold on to something, it’s the one to hold.”