Late today the board of OZ Minerals Ltd (ASX: OZL) announced it would recommend a takeover offer from the Chinese trading company China Minmetals Corporation which some observers see as a solution to the growing grim news from what was Australia's third biggest mining house.

OZ Minerals has the problem of having to refinance $A1 billion ($US650 million) of its debt by February 27 and has other bank loans either under pressure or with some mine assets under bond. OZ Minerals' plight was not helped by the announcement last week of write-downs on assets .

Directors said today that the offer of A$0.825 ($US0.54) a share - accepted subject to a better offer emerging - would value the company at $A2.6 B ($US1.69 B).

Under the deal Minmetals has a break fee of $A25.751 M ($US16.73 M) exclusive of Australia's General Service Tax with one of the provisos being that the deal be completed within 12 months. The Chinese company would settle all of OZ Minerals' bank debts.

The offer represents a 50% premium on the last traded price of OZ Minerals on October 27. Share trading on the Australian Securities Exchange will resume tomorrow - and it will be interesting to see the course of the share price.

Meanwhile in Canberra, while the Chinalco deal was speculated as gaining a relatively smooth course through the foreign takeovers provisions, this added takeover will add to the rumblings over a further loss of Australia's mineral estate. Adding to this is the increasing role of Chinese partners in planned and established junior iron ore mining projects in Western Australia because of the market meltdown.

The solution for most Australian mine developments is that outside of established Chinese partners and ore contract clients, where do they go for funds? The answer is that the Western bankers still have cold hearts, unless you have a gold project.

The other possibility for both Rio Tinto and OZ Minerals being touted in the market is BHP Billiton and over the weekend one large investment fund was saying BHPB should now look at a cheaper Rio Tinto.

OZ Minerals said today that the regulatory hurdles for this takeover would not only include the Australian Government but also the Laotian Government over the Sepon copper and gold mines.

OZ Minerals said it was proceeding with its previously announced asset sale programme for the Martabe gold project in Indonesia and the Golden Grove copper-lead-zinc-silver operations in Western Australia. (No mention was made this time of the Prominent Hill copper-gold mine in South Australia which is moving into commissioning mode).

OZ Minerals' chairman Barry Cusack, commented: The Board has determined that Minmetals' cash proposal is in the best interests of OZ Minerals' shareholders and believes this is the best outcome for shareholders compared with any of the other options available to us.

He said Minmetals is one of China's leading metals and mining companies and it has substantial international operations.

As well as being Australia's third biggest diversified miner, OZ Minerals is the world's second largest producer of zinc as well as a substantial producer of copper, lead, gold and silver.