consmin gilbertsons got baxter in his palm

CONSOLIDATED MINING

From outpost to outback



By Brendan Ryan

Expect the present management to be working to a new strategy






Having made piles of money for SA, Australian, British, Indian and Russian investors - not to mention himself - Brian Gilbertson has now picked an obscure Australian nickel producer as his next growth vehicle.


The company is Consolidated Minerals (Consmin), listed on the Australian stock exchange and London's AIM bourse.


Gilbertson is bidding for control through a private investment company - Pallinghurst Resources - which he runs with Arne Frandsen, the former CEO of Incwala Resources.




WHAT IT MEANS
Consmin should fill an investment void left by takeovers
Big plans to build up a small operator






Consmin MD Rod Baxter is ex-Anglo American, though he has just taken out Aussie citizenship, and two executives, Garth Higgo and Alistair Croll, are former Anglo Platinum executives who recently emigrated to Australia.


If the deal goes through, Gilbertson will join the Consmin board as a non executive director. Frandsen will move to Perth to become executive director responsible for strategy. The existing Consmin management team will stay.


Gilbertson and Frandsen go way back, through involvement in deals in Frandsen's investment banking days at JP Morgan. Gilbertson helped create Incwala.


Consmin documentation indicates Gilbertson began negotiating the deal in October last year. At that time he had just finalised the merger of Russian aluminum producers Sual and Rusal, and he told the FM (Features October 13 2006) that he would be staying on to oversee the listing of the merged group on the London Stock Exchange.


After that it seemed retirement would beckon, as he was pushing 65. "I must say, retirement at Plettenberg Bay looks very appealing," he said at the time. Not any more - he's now committed to involvement with Consmin for three years. Gilbertson acknowledges he would like to get more of a balance between his business and personal lives, but concedes it's something he has not been good at. So why carry on? Is it the challenge? The money? "Both. I get a kick out doing this," replies Gilbertson, who has already cleaned up on share option payouts after his stints at BHP Billiton, Vedanta and Sual.


His departure from all three groups has been controversial. The conspiracy theorists are now speculating about a fallout between Gilbertson and his former Russian backer, Victor Vekselberg, who was the major shareholder in Sual. But there is also speculation that Vekselberg is one of the investors in Pallinghurst. "He may be," replies Gilbertson, who declines to name all the investors in Pallinghurst.


Consmin operates small manganese, chrome and nickel mines and plants in Western Australia, with an active iron ore exploration and development programme. It also has interests in copper, zinc and tungsten.


Consmin believes it could consolidate a number of small iron ore players in the midwest region of Western Australia.


Higgo says the intention is to transform Consmin into a "midtier" mining group over three to five years, filling an investment void created by takeovers of groups like North, MIM, Normandy and WMC.


The obvious question is whether Consmin will go the same way. Not easily, Higgo replies, given the size of the controlling block held by Pallinghurst, even though this may be diluted over time.


Pallinghurst is a joint venture investment vehicle based in London, backed by privately owned resource group AMCI, which has a co-investment arrangement with Pallinghurst.


AMCI holds investments world wide, including large coal interests in Australia. It has just sold some of these coal assets to CVRD and it seems likely the remaining coal assets could go to Consmin. AMCI cofounder Hans Mende will also be joining the Consmin board.


Gilbertson says Consmin is the second of "between five and 10 " investment opportunities Pallinghurst is looking for. Pallinghurst's first deal was to buy the rights to the Fabergé brand name.


Asked where he will be based, Gilbertson says: "London, SA, Australia - wherever it makes sense to be." One place it will not be is Moscow; Gilbertson sounds relieved to be out of the bitter Russian winter and back at his house in Plett.