Territory Resources Has Big Plans To Supply Global Steel Industry

Sydney Morning Herald

Friday July 13, 2007

Michael Weir

TERRITORY Resources chairman Michael Kiernan is planning to offload Consolidated Minerals' Kambalda nickel business and its lucrative stake in emerging copper producer Jabiru Metals, raising several hundred million dollars, if he succeeds with a planned $780 million takeover.

Mr Kiernan said the move would leave a newly-merged Territory and ConsMin with a cash war chest of $150-$200 million to pursue its goal of creating a diversified supplier to the global steel industry. His comments came as advisers for Territory were in the final stages of due diligence on ConsMin before the virtual data room closes today.

Mr Kiernan said the due diligence had found "no bombs at this stage and that would tend to indicate that we will make a bid at this point in time". One of Territory's financial partners, investment bank Lehman Brothers, was due to lodge its final funding proposal to its New York head office last night and had also indicated it planned to take an equity stake in Territory.

It is also understood another of Territory's partners, Hong Kong-based Noble Group, is close to signing off on a major iron ore deal in South America.

Territory plans to consider the results of the due diligence on the weekend and lodge a formal bid for ConsMin on Monday.

Territory has flagged an offer of $2 cash and one share for each share in ConsMin, a deal that trumps a $660 million bid by Brian Gilbertson's Pallinghurst Resources which has already been endorsed by the ConsMin board.

Mr Kiernan said the due diligence had shown ConsMin had underperformed under its current management. "It is in worse shape than we thought," he said.

He said he had seen profit figures to the end of May and the company should have been making double what it had.

ConsMin is due to release its unaudited profit figures for 2006-07 today.

As part of his shake-up of ConsMin if he wins control, Mr Kiernan said he would appoint Monarch Gold managing director Allan Quadrio as deputy managing director of the bigger group to pull the operations into shape.

He also planned to offload ConsMin's 28 per cent stake in Jabiru, worth more than $170 million, with the stake likely to be broken up and sold to a range of institutional investors.

The Kambalda nickel operations of ConsMin would also be sold and are likely to fetch around $250 million. ConsMin bought the nickel through the $76 million takeover of Reliance Mining in 2005 while ConsMin was still under the control of Mr Kiernan.

Mr Kiernan wrote to ConsMin shareholders yesterday urging them to pressure the ConsMin board to delay the shareholder meeting which has been planned for next Thursday to vote on the Pallinghurst offer. He said a delay would allow shareholder to assess which offer was superior.

© 2007 Sydney Morning Herald

Back to News Index | Back to Home