Straight-talking Newcrest Boss Adds Spice To Sedimentary Takeover Mix

The Age

Monday August 14, 2006

BARRY FITZGERALD

NEWCREST'S new boss, Ian Smith, got full points at the Diggers & Dealers bash in Kalgoorlie for being a straight talker.

And that was extended to what the former Rio Tinto gun had to say about Newcrest's interest in AuSelect's $80 million takeover bid for Sedimentary Holdings.

Most CEOs would simply have dodged questions on whether Newcrest was about to make a counter-bid for Sedimentary, Newcrest's 30 per cent partner in the 130,000 ounce-a-year Queensland Cracow gold mine.

Not so the new big fella at Newcrest. Smith volunteered straight up that Newcrest had no interest in moving to 100 per cent of Cracow and that, if anything, Cracow did not fit the "profile" Newcrest would be pursuing in the longer term. In short, Newcrest was not a counter-bidder and could be a seller.

Smith's comments at a media briefing created a bit of buzz in the Sedimentary takeover battle because, until then, all players and would-be players in the takeover were left to second guess Newcrest's attitude.

Now they can rule out Newcrest as a counter-bidder. More importantly, they can frame their responses on the basis that the potential to secure 100 per cent ownership of Cracow is a distinct possibility - one that necessarily increases the range of potential counter-bidders.

But at this stage, only Lion Selection offshoot AuSelect has an offer on the table. It is two AuSelect shares (trading at $1.27 each) for every nine Sedimentary shares (trading at 27? each), valuing Sedimentary at 28.2? a share. What's more, AuSelect also has close to 20 per cent of its target under its belt, most of which came from a pre-bid agreement with Lion Selection. AuSelect also stepped up the pressure last week by declaring its offer unconditional.

Sedimentary is putting up a fight and has said that discussions with "other parties" about the potential for an alternative offer are "progressing positively". Given the AuSelect bid is now unconditional, Sedimentary will have to progress them to a conclusion ASAP.

There are plenty of cashed-up junior miners out there looking to spend their cash before someone else does it for them. Owning 30 per cent of Cracow was not all that appealing, but 100 per cent is another matter.

IT'S a feature of what is becoming a prolonged commodities boom that the size of new floats is getter bigger. And because of the competition for decent exploration ground and projects in Australia, they are also getting more exotic.

The soon-to-launch $20 mil-lion float of Perth-based Mundo Minerals is a case in point. Apart from the scale of the float, Mundo's focus on gold in Brazil and Peru makes it a leading example of the new breed.

It was the subject of much talk at Diggers & Dealers - no surprise given its high-profile board and management team, many of whom were spotted doing the rounds at D & D.

The board is a bit of a who's who of the West Australian min-ing sector. Non-executive chair-man George Jones is joined by Brazilian-based executive direc-tor Michael Schmulian, seasoned WA mining men Brian Hurley (chairman of D & D) and Barry Eldridge, and Perth lawyer Rob McKenzie.

John Langford is CEO. He headed the corporate finance division for Deloitte in Western Australia for 10 years and is a director of Palace Securities, the company that owns D & D.

Mundo's most advanced project is Engenho in Brazil. It could be in production within 18 months. Previously worked by AngloGold, it comes with a contained resource of 1.13 million tonnes grading a handy 5.82 grams of gold a tonne.

THE busiest company promotio-nal booth at Diggers & Dealers was Gryphon Minerals.

The Perth-based explorer has picked up some well-located uranium exploration properties in the Mount Isa district of north Queensland and has continued to generate interesting gold results in Burkina Faso, West Africa, of all places.

But in a fine example of a cross-promotional effort that worked a treat, it was the avail-ability of the dark and pale ales of Margaret River's Colonial Brewing Co that ensured there was a steady procession to the Gryphon booth.

As it turns out, Colonial is preparing for a $10 million float under the name Empire Beer Group, with the business acquired from founder Ross Smith ahead of an expansion of the craft brew-pub concept nationwide.

A prospectus is a couple of weeks away. They like doing this sort of thing in the West, remem-bering that they have also given us Matilda Bay, Little Creatures, Gage Roads Brewing and Mash Brewing.

And the connection between Gryphon and Empire? It is for-mer insolvency practitioner Mel Ashton, chairman of Gryphon and Empire director. He is best known here as vice-president of the Fremantle Dockers.

© 2006 The Age

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