Article from The Australian: Owen Hegarty remains true to his bullish ‘stronger forever’ mantra

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Australian - 2Feb2018

By: Matt Chambers (Resources Reporter | Melbourne | @mattchambers1

EMR Capital chairman and former Oxiana boss Owen Hegarty has unveiled production and reserve growth plans at his $2.5 billion private equity vehicle and declared EMR would look to sell assets from a substantial global portfolio acquired during the recent downturn.

Mr Hegarty also declared he had not stepped back from a super-bullish view on commodities that he made known through his “stronger forever” mantra during the China boom when he was expanding Oxiana.

Melbourne-based EMR, where Mr Hegarty is executive chairman, has acquired an impressive suite of producing mines and development projects in Australia, Indonesia and Congo, Britain, the US and Chile over the past three years.

In a presentation to the Sydney Mining Club yesterday, Mr Hegarty said the company was looking to double the reserves at the Martabe goldmine in Indonesia and could do the same to production at the Lubambe copper mine in Zambia, where it was also looking at adding an $US8bn ($10bn) cobalt resource.

There have been reports in recent months that EMR is looking to sell out of Martabe and the Capricorn Copper mine — previously known as Mt Gordon — in Queensland.

“At the end of the day, we’re a fund, we have to go (at some stage) and you want to be sure somebody else is going to be in love with it more than you are at any particular time,” Mr Hegarty said.

But he added that sales would not be dictated by the market and that the company was focused on improving the asset.

“We are really driven by getting the work done, getting improvements and expansions, getting costs down and getting it into a saleable position, and we think the market will take care of itself,” he said.

“We still think there is plenty more petrol in the tank for these next few years … in terms of stocks of this, and that it is clear why the market is rising, and when you do the sums of when capacity comes on, there is still quite a while to go.”

Mr Hegarty’s renowned promotional skills were on full display at the lunch presentation, both in terms of plans for the assets and the commodities.

“Martabe is the epitome of our model. It was 200,000 ounces per annum, it’s done 350,000 ounces and it will be north of that this year,” Mr Hegarty said, revealing the mine last year made $US320 million of earnings before interest, tax depreciation and amortisation.

He said a second crusher and reduced power costs had lowered unit costs. Exploration had also been increased.

“There’s 10 million ounces of gold here. We think we can turn it into 20 (million) in a very short space of time,” Mr Hegarty said.

At Lubambe, EMR is ramping up capacity to 50,000 tonnes of copper a year.

But he said there was the potential to build this to more than 100,000 tonnes a year if an extension he described as “one of the largest, highest-grade undeveloped ore bodies on the planet” was developed.

There is also cobalt.

“We believe there is 100 million tonnes of a cobalt ore body here, at about 1000 parts per million, so if you do the sums, that has a street value today of $US8bn from just the cobalt.”

EMR is focused on gold, copper, coking coal and potash.

On commodities, Mr Hegarty said “stronger for longer, forever” was still his mantra.