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Territory joins props under Monarch
Email Print Normal font Large font AdvertisementJamie Freed
February 29, 2008

IRON ORE and gold aren't exactly similar commodities.

So the market is questioning why Territory Resources, the successful iron ore vehicle of the West Australian mining identity Michael Kiernan, has become the second company in his empire to help prop up his cash-strapped gold miner, Monarch Gold.

Earlier this month Mr Kiernan told the Sydney Mining Club that he intended to fold all of his mining interests - except Monarch - into Territory within two years to achieve "a gold-focused West Australian producer [Monarch] and a broad-based commodities supplier, Territory Resources".

But less than a week after the Herald revealed that the copper miner India Resources had lent $7 million to Monarch in the December quarter, Territory has emerged with a 5.2 per cent stake in Monarch.

Some of the shares were bought on-market as early as February 1, but the majority of the stake was amassed when Territory took up more than a quarter of the shares in Monarch's recent $10 million placement. Monarch had originally hoped to raise up to $25 million but emerged with only $10 million after a nine-day trading halt this month.

Territory last week raised $9 million, which it said was to take up entitlements in sister company Windimurra Vanadium. But Territory last night sold 13 million Windimurra shares worth $26 million and it is understood Mr Kiernan plans to step down as chairman following long-standing disagreements with some major shareholders.

Ord Minnett analyst Peter Arden said he was "a bit disappointed" Territory had spent nearly $5 million on Monarch shares during the past month. "[Territory's] strategy has been to focus on carbon steel materials, so that is a bit of a departure," he said. "It looks like they have been asked to step up there [to help Monarch]."

Some of the Monarch shares were bought this week, when the goldminer's share price was diving after revelations it had a loan from India Resources.

Monarch is preparing for a large capital raising in Canada to help fund its $65 million purchase of gold assets from Harmony Resources. Mr Kiernan will be in Toronto next week.