iluka in trouble again, page-4

+++ only 10% of ilu's price ++++ http://www.miningnews.net/storyview.asp?storyid=46854§ionsource=/premiumarea.asp


Sands shifting BeMaX's way



Tuesday, September 27, 2005
IT'S been a hard slog for BeMaX Resources to convince a dubious stock market it has become more than an explorer with its foot on a big chunk of the titanium-and-zircon-rich Murray Basin of eastern Australia. But sometime in May a switch was flicked, sending BeMaX on a merry ride which has delivered a 50% increase in its share price and added $60 million to its market capitalisation.

In truth, the market has been as sloppy as the company has been slow in telling a story of successful corporate metamorphosis. BeMaX today is anything but an explorer.

It is Australia's third biggest ilmenite producer, with a successful division operating on the west coast and the first of a series of major new mines close to start-up in the Murray Basin.

Production is on track to rise from 350,000 tonnes of concentrate a year to 900,000t – at a time when the titanium minerals market is firming and the zircon market is positively booming.

A look at the market leader, Iluka Resources, is all that is required to make the point about recovery, both in an operational sense and in the way fat cat investors such as Kerry Packer and Rob de Crespigny have been attracted to the Iluka share register, pushing the share price of that company from a 12-month low of $4.45 to a recent high of $9.05.

BeMaX is a poor relation to Iluka. Its market capitalisation is just 10% of the leader ($2 billion v $240 million). But there seems little doubt that BeMaX is finally on a growth path after years of uncertainty.

Last year it completed a complex three-way merger with Sojitz Corporation (formerly Nissho Iwai) and parts of the since-failed Sons of Gwalia group. This brought together the long-established Cable Sands business in Western Australia with the Murray Basin assets of Sons of Gwalia, and BeMaX's big Pooncarrie project in south-east New South Wales.

The Western Australian operations have been the major source of revenue in the early stages of the new-look BeMaX, and largely responsible for a $12.7 million profit in the year to December 31 2004. The future, however, lies in the Murray Basin, with the $176 million Pooncarrie project said to be "on schedule and within budget".

Mining is by a conventional dredge, which has been shipped across from WA, re-conditioned and fitted with the latest spirals for heavy mineral separation. The wet concentrate will then be trucked to Broken Hill for dry processing, before exporting through Port Adelaide for shipping to BeMaX's upgrading facilities at Bunbury in the south-west of WA.

Issues remain before BeMaX can win more widespread recognition by investors. The major shareholder, with a 32.7% stake, is a Saudi Arabian business known as Cristal, which had been the strongest backer of the old BeMaX when it was just a Murray Basin explorer.

The Japanese partner in the three-way merger, Sojitz, has a stake of 8.84%, and the administrator of Sons of Gwalia has been quitting its holding, with the last reported position being 3.31% -- though it can be safely assumed this residual investment will be sold.

Firing up Pooncarrie is key to the market developing a more enthusiastic approach to BeMaX. The big new mine will be coming on-line at a perfect time in the titanium/zircon cycle. If BeMaX can demonstrate that its long lines of communications between NSW and WA (via SA) can deliver strong profits, then the BeMaX share price should respond better than it already has. -AUSTRALIA'S MINING MONTHLY