22 March 2016 – EMR strikes gold with mine

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Melbourne’s EMR Capital has emerged as one of the region’s biggest gold producers after a consortium it leads secured a 95 per cent stake in the Martabe gold and silver mine in Indonesia for $US775 million ($1 billion).

But before the deal could be concluded, the seller of the interest in the 300,000 ounce-a-year equivalent low cost producer, Hong Kong-listed G-Resources, had to first see off a challenge from the world’s biggest resources investor, BlackRock.

BlackRock lobbied against the sale by G-Resources on the basis that it would rather see funds from the sale returned to shareholders than pumped into financial services and property as planned by the company.

But a shareholder vote requiring a simple majority for the sale to the EMR consortium to proceed was carried at a G-Resources shareholder meeting with a supporting vote of 58.8 per cent.

EMR is partnered in the acquisition by some of Indonesia’s richest families, as well as US investment firm Farallon.

The deal propels EMR — founded by Jason Chang, former partner in charge of KPMG’s Asia practice in Australia, and Owen Hegarty, founder of Oxiana, which later became OZ Minerals — into being one of the biggest resources private equity groups in the region.

Mr Hegarty is a director of iron ore producer Fortescue and a super-bull on Asia’s growth story. He is also a 0.92 per cent shareholder in G-Resources and is its vice-chairman.

He was excluded from voting on the transaction and did not receive any money from G-Resources or EMR related to the deal.

EMR — initially a $US450m fund that took on another $US195m for the deal — owns 61.4 per cent of the buyer’s group for Martabe.

The other investors are Farallon (20.6 per cent), and the Chinese-Indonesian billionaires Martua Sitorus (11 per cent) and the Hartono family (7 per cent).

Mr Chang, EMR’s chief executive, told The Australian from Hong Kong that the fund was “very excited’’ the deal had been concluded. “You don’t get a world-class goldmine like this every day. We did a global search for mines that we might like and Martabe was very much in the top category,’’ he said.

He said last year Martabe produced its gold at a cost of $US497 an ounce on an all-in sustaining cost basis. The Australian industry averages about $US850 an ounce.

“From EMR’s perspective it is very much consistent with our strategy to acquire tier one assets globally,’’ he said.

He said that in the current mining downturn, EMR was “seeing similar opportunities and we are looking for more of these sorts of things’’.

Mr Chang said EMR’s “favourite four’’ remained copper, gold, potash and coking coal.

 

by Barry Fitzgerald

The article can be accessed by click here.