MINERALS CORPORATION TO EMERGE AS ONE OF THE WORLD’S LEADING CHINA CLAY COMPANIES.
Seven years after buying it’s initial China Clays investment, Minerals Corporation Limited is emerging as Australia’s leading industrial minerals company – with assets spread across Australia’s major China Clay - or Kaolin – deposits at Skardon River, QLD and Swan River, WA.
With plans to float its successful china clay business in London in November, the company is now focussing on a number of highly promising projects with the potential to take the company into another major growth phase.
Managing director and CEO Mr Vic Alexander told The Australian Investor its china clay inestment has grown from an initial A$6m investment to around A$60m at cost, with an independent valuation of about A$180m.
“We recently restructured the business to consolidate all the clay assets into one entity. Registered as Australian China Clays plc, Minerals Corporation will be the dominant shareholder and operator when the new company floats on the LSE AIM Market in November, and this will be an important step in returning value to our loyal shareholders.” The float will help fund a full-scale processing plant in WA as well as port infrastructure to meet expected annual throughput of over 150,000 tpa at Skardon River.
Demand for premium grade kaolin is on the increase – it’s a major manufacturing ingredient in products ranging from coated papers, paints and polymers, rubber, ceramics, pharmaceuticals and cosmetics. The fastest growth area is Asia.
“It has taken 7 years to develop Skardon River into a world-class kaolin producer, and marketer of fine-grain premium quality Kaolin. The mine life is expected to be in excess of 100 years, and is well positioned to service the growing demand from Asia”. Over two thirds of the tenements have yet to be drilled.
“Because of delays and the long lead times - typical in building a customer base for industrial minerals - it has taken us longer than expected, and a considerable amount of fund rasing – through equity and debt. With over 1.5b shares on issue, today the share price is severely devalued , but early next month we will redeeming about half of our A$15m debentures, and some equity buy-back activity may be considered early 2008.”
In addition, the company has recently sponsored the float of private equity investment company China Century Capital Limited, (CCY), on the ASX raising A$6.6m, Mr Alexander explained, “The Chinese economy is continuing it’s strong growth, and China Century Capital is able to tap-into the huge demand for investment in China.” China Century Capital’s portfolio holds investments in renewable energy, telecommunications and construction minerals. Minerals Corporation holds a 22% stake in CCY and Mr Alexander is an executive director.
“The outcome of all this is that we expect a “new” Minerals Corporation to emerge towards the end of the year, and we have set our sights high for some major developments. For example, our 50% JV copper and uranium play in Belfield, QLD has the reasonable potential to be another Mt Isa – it is showing all the right early stage signatures. We are still at pre-drill, but the ground chemistry and recent aeromagnetic survey offer encouragement for a big potential resource,” Mr Alexander said.
“ We are watching closely our 25% share in the zircon rich Eucla Basin, as recent multi-billion dollar finds nearby discovered by Iluka and our own latest drilling results indicating a A$1b in-ground resource are very exciting. The area could well become the leading world province for heavy minerals and zircon, and we have options to increase our share with operator Diatreme Resources Limited to 35% in 2009, by which time we expect to have completed full feasibility”.
“Of course, developments continue in our WA and China premium grade kaolin projects. So, I think it’s reasonable to say that as there is strong expectation for the share price to more realistically reflect the true value of the company as these projects are better defined and become recognised by the market. The total asset value is many times the current market capitalisation.” Mr Alexander concluded.
MSC Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
