from theage Kalahari deal 'to transform' Jupiter BARRY...

from theage
Kalahari deal 'to transform' Jupiter BARRY FITZGERALD
March 2, 2010
IT'S not the biggest deal that former BHP Billiton chief executive Brian Gilbertson has orchestrated, but he considers it ''transformational'' for Perth-based manganese and iron ore hopeful Jupiter Mines.

Mr Gilbertson's privately held resources investment specialist Pallinghurst and its co-investors - AMCI, Investec, Midstream & Resources and Korean steel giant Posco - yesterday unveiled a deal for Jupiter to acquire a 49.9 per cent stake in the Tshipi manganese project in South Africa's Kalahari Basin.

The all-scrip deal values the stake at $245 million and is part of Mr Gilbertson's ambition to use Jupiter as the vehicle to create a steel feed company - one that supplies iron ore, manganese and coking coal.

''We think steel is going to be a growth industry for decades ahead,'' Mr Gilbertson said.

Pallinghurst and its co-investors will emerge with a combined, and associated, 85 per cent stake in Jupiter.

Mr Gilbertson said the important feature of the Jupiter deal was that ''Jupiter will have a group of international investors who are enthusiasts of the steel feed concept''. As a result, finance would be available for any reasonable future transactions in the steel feed area.

Pallinghurst and its co-investors had originally planned that Northern Territory manganese producer OM Holdings would acquire the Tshipi stake now to be bounced to Jupiter. OM Holdings acquired an indirect 13 per cent interest in the project for $64 million last year.

But OMH's Asian shareholder base baulked at the ownership dilution that would have come from issuing a big swag of shares to the Pallinghurst syndicate to increase its Tshipi stake.

The implied value of Tshipi in Jupiter's scrip deal is the same as that in OMH's cash deal, a total of $490 million. Jupiter will issue 1.15 billion shares at a nominated 21 a share to Pallinghurst and its co-investors. On completion of the deal, Jupiter would have a market capitalisation of $353 million at its 23 share price before the announcement.

Tshipi is an advanced world-class manganese project. Jupiter's iron ore interest is its Yilgarn iron ore project in Western Australia, which it hopes can be aggregated with other projects in the region to underpin the development of Esperance as a third major port for the export of iron ore from WA.

Jupiter's missing ingredient to become the steel feed company Mr Gilbertson wants is coking coal, but the intent to get it is there