Atlantics Minosora Retraces Forrests Path, Seeks $2...

Atlantics Minosora Retraces Forrests Path, Seeks $2 Billion
2010-04-14 16:01:00.1 GMT


By Jason Scott
April 15 (Bloomberg) -- Atlantic Ltd., run by a former
Fortescue Metals Group Ltd. executive, said its in initial
talks to raise as much as $2 billion for a planned bauxite
project in Vietnam to supply forecast rising demand.
Weve talked to a number of funding providers in the
North American debt markets and Asia as well as potential
sales partners, Managing Director Michael Minosora, a former
chief financial officer at Fortescue, Australias third-largest iron ore exporter, said in an interview. Bauxite is refined into alumina, which is then turned into aluminum metal.
Aluminum prices have gained 59 percent in the past year,
driven by demand from automakers and builders in China. Minosora is attempting to follow the footsteps of Fortescues Andrew Forrest, who became Australias richest man after selling debt in the U.S. and equity in China to fund his iron ore mines.
Minosoras relationship with Fortescue has opened many
doors globally in the debt markets, said Brad Shallard, a fund manager at Katana Capital Ltd. He looks like hes trying to take a leaf out of Andrew Forrests book by trying to find a large project with long mine-life and build the dream.
Fortescue started shipping from its A$2.8 billion ($2.6
billion) Pilbara project to Chinese steel mills in May 2008,
about five years after Forrest took over the company and spokeabout his plans to become an iron ore producer.
Shares in Perth-based Atlantic, which aims to restart a
vanadium mine in Western Australia this year, have gained 23
percent this year on the Australian stock exchange, giving the company a market value of A$54 million.

Big Ask

Raising that amount of money sounds like a big ask,
said Peter Arden, a Melbourne-based senior mining analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co. You need a lot of well-heeled partners or customers to back you up. The debt markets probably may not support that at this stage.
Atlantic signed an initial agreement in December with
state-owned Vietnam Natural Resources & Environment Corp. to
develop a mine, rail and port project in the country, holder of the worlds third-largest bauxite reserves.
Given its a high-quality bauxite operation, it would
seem after the detailed discussions weve had with a variety of potential funders, funding will be straightforward, Minosora, 52, said April 12.

Atlantic is looking to complete a joint venture arrangement
with Vietnam Natural Resources by mid-year, he said. The
project, scheduled for production in 2013, aims to produce 25 million tons of bauxite a year. The company has the option to build an alumina refinery in Vietnam, Minosora said.
Minosora, the biggest shareholder of Atlantic, was also
formerly the managing director at Perth-based boutique corporate advisory firm Azure Capital.

Mining Opposition

Vietnam National Coal-Mineral Industries Group, a state-
owned mining company, is developing a bauxite mine at Nhan Co Dak Nong province with Aluminum Corp. of China Ltd., and another in Tan Rai in neighboring Lam Dong province.
Vietnam, where bauxite mining has sparked opposition and
anti-China sentiment, has reserves of 5.4 billion tons, the
worlds largest after Guinea and Australia, according to a U.S.
Geological Survey report published in July.
Atlantic last week completed an agreement with Mineral
Resources Ltd. to buy and complete the Windimurra vanadium
project in Western Australia, once owned by Xstrata Plc. In
February 2009, outside managers were appointed for the previous owner, Windimurra Vanadium Ltd., and the site was placed on care
and maintenance.
Atlantic will have a 63 percent stake in the venture, which
is forecast to produce about 7 percent of the worlds supply of the steel-strengthening material. The venture is seeking to raise between A$90 million and A$100 million for the project, which was 85 percent completed when it was sold.
We anticipate well be able to confirm financing well in
advance of our June 30 deadline, Minosora said. We continue to renegotiate key supply contracts.