west australian newspaper report

Stokes reveals an iron grip

21st July 2007, 7:30 WST



Seven Network’s billionaire chairman, Kerry Stokes, has taken a $12 million punt on WA’s emerging iron ore sector with a deal to take control of Pilbara explorer Iron Ore Holdings.

In a surprise move yesterday, Mr Stokes’ investment company, Australian Capital Equity, revealed it had agreed to buy a 40 per cent stake in IOH from founder Derek Ammon.

ACE, which also houses Mr Stokes’ lucrative Westrac Caterpillar heavy equipment dealership, will pay $5.9 million upfront for 14.8 million IOH shares at 40¢ each for an initial 19.9 per cent stake.

Subject to approval from IOH shareholders, Mr Ammon will then sell his remaining 15.18 million shares at the same price to give Mr Stokes a controlling 40 per cent interest.

Mr Stokes’ cash deal is believed to have gazumped a higher-priced, allscrip offer for Mr Ammon’s stake from emerging Pilbara iron ore player Atlas Iron.

ACE director Robin Waters yesterday described the move as a “portfolio investment” that would give ACE exposure to the emerging junior iron ore sector.

“It was an opportunity that was presented to us where a major shareholder was exiting … and it looks a very interesting company from an exploration potential point of view,” he said. “It is a portfolio investment, and not a corporate play.”

IOH director Mal Randall “welcomed” Mr Stokes on to the company’s register.

“We look forward to it,” he said.

The IOH deal is part of a $100 million spending spree by Mr Stokes’ interests in recent months.

Since May, the Stokes-controlled Seven Network has splashed out over $57 million on a 12 per cent stake in engineering group GRD and this month spent a further $38 million boosting its stake in West Australian Newspapers Holdings to more than 16 per cent.

Mr Stokes now heads a high-profile
list of investors on the IOH register, which includes Perth shopping centre billionaire Stan Perron as well as John and Craig Bond, the sons of fallen tyco Alan Bond. Japanese metals giant Sumitomo also holds a cornerstone 9 per cent interest.

IOH shares yesterday closed 0.5¢ firmer at 52¢, but have been on a rollercoaster ride since the company’s spectacular float in 2005.

After raising $6 million at 20¢ a share, the stock made its debut at 40¢ and rocketed as high as $3.15 in December that year amid a frenzy for exposure to the iron ore boom.

But it quickly slumped on the back of disappointing first-up drilling results from its Lamb Creek leases, near the big Yandi and Yandicoogina mines operated by BHP Billiton and Rio Tinto.

Since then, however, it has expanded its footprint in the area and has confirmed an initial Yandi-style resource of more than eight million tonnes grading 58.1 per cent iron at its Phil’s Creek lease. A scoping study into a 1.5 million-tonnes-a-year “starter” mine is due for completion in September.