Good exposure in Friday AFR and again Saturday

King’s Regal Funds moves in next door to Rinehart

Commodities

Brad Thompson

Neighbours: Phil King and Gina Rinehart. PHOTOS: SASHA WOOLLEY, MATT KRUMINS

Phil King’s Regal Funds Management has grabbed a 10 per cent stake in Atrum Coal, which has a flagship project next door to Gina Rinehart’s $591 million takeover target, Riversdale Resources in Alberta, Canada.

The star stock picker tipped $10 million into a $20 million capital raise completed on Friday to progress development of Atrum’s 100 per cent-owned Elan coking coal project.

The two-tranche placement at 17.5¢ a share was rounded out by other institutional investors and followed a big spike in interest in Atrum after the Rinehart bid for unlisted Riversdale.

Mrs Rinehart’s Hancock Corporation has made an all cash $2.50-a-share offer for full ownership of Riversdale and its Grassy Mountain coal project, a 47 per cent increase on the $1.70 it paid for a 19.8 per cent stake in August and September last year.

The Elan project is north of the Grassy Mountain project and close to Teck’s Elk Valley coking coal operations.

Riversdale founders Michael O’Keefe, Steve Malyon and Anthony Martin have agreed to accept the Hancock offer, but the board has advised shareholders to take no action pending its review of the bidder’s statement lodged with the Australian Investment and Securities Commission on February 27.

Atrum shares rallied 27 per cent in the last 30 minutes of trading on that day on the back of the Hancock bid.

In response to an ASX query, Atrum said the Hancock bid put an aggregate equity value of about $740 million on Riversdale compared with Atrum’s market capitalisation of $52 million at the close of trade on February 26.

It also pointed out that Grassy Mountain had a measured and indicated resource estimate of 195 million tonnes compared with Elan’s 298 milliontonne resource estimate.

Atrum managing director Max Wang said the company was encouraged by the strong demand shown in the equity raising. ‘‘We believe it highlights a rapidly growing appreciation for the underlying value potential of our flagship Elan hard coking coal project,’’ he said.

Mr Wang said Atrum was now well funded to accelerate drilling and evaluation activities across multiple zones within the Elan project with the intention of ‘‘rapidly progressing through key feasibility work and towards formal permitting application for Elan South’’.

Riversdale is further down the path to gaining mining permits in Alberta and expects first coal production in 2021.

Riversdale considered a sharemarket listing last year but abandoned the idea of testing the market after suggestions it was too far out from production.