ARH (ASX) smh article

Firm's loss is bosses' gain
Email Print Normal font Large font Jamie Freed
October 5, 2006

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AdvertisementIT'S fairly routine for minerals explorers to report an annual loss. But for iron ore hopeful Australasian Resources, the majority of its latest loss wasn't attributed to drilling expenses or even overheads but to a $7.5 million options package for chairman Domenic Martino and managing director Darren Hedley.

The package is planned as a reward for Messrs Martino and Hedley's role in securing a massive iron ore project from controversial Queensland entre-preneur Clive Palmer next month. Nevertheless, the options deal has been expensed in Australasian's annual report released this week.

Both the options deal and the project purchase are subject to shareholder approval.

Australasian - formerly Sherlock Bay Nickel - plans to hand over 76 per cent of the company to Mr Palmer in return for the Balmoral magnetite project in WA, which would cost $US2 billion ($2.7 billion) to develop.

"It's created a lot of value for the remaining shareholders," Mr Martino said. "I would expect they would feel good about that."

Mr Palmer was the man behind Austeel's failed $2.5 billion Newcastle steel project, which failed to get up after receiving $20 million from the NSW Government. He recently did a deal with Hong Kong's CITIC Pacific whereby he pocketed $US415 million plus royalties in return for rights to an iron ore project he picked up cheaply in the 1980s.

Mr Martino was the chairman of Sydney Gas until last year when he left the company amid controversy over his remuneration, which at one time was more than that of BHP Billiton chairman Don Argus. Prior to that, he served as the head of Deloittes' Australian arm until resigning amid criticism of his role as a director of failed dotcom New Tel.

Mr Martino told the Herald yesterday he thought the Australasian options package - worth an estimated $3 million to him and $4.5 million to Mr Hedley - was fair because the pair had been instrumental in securing the Balmoral project from Mr Palmer.

He added the options would be based on the weighted average of Australasian's share price since the deal was announced and therefore would not be exercisable at a very deep discount to the share price.

"The value in these options is when we get into production," he said, adding the company was talking to Chinese and Indian parties over offtake agreements.

Australasian shares closed 0.5c lower at 11.5c yesterday.