Trickle down jobs
Tuesday, 27th August, 2019
By Callum Marshall
Mining company Havilah Resources has met local shareholders to discuss a $100m funding investment in the company from GFG Alliance’s subsidiary SIMEC Mining, which could bring jobs to Broken Hill.
The investment, argues Havilah, is a “transformational opportunity” that would provide capital for their iron ore and copper assets with potential access to GFG’s Whyalla Steelworks.
Havilah CEO Walter Richards said the investment was potentially a “once-in-a-lifetime opportunity for the company.
“As a junior miner with a market capital of only $30 million, someone being prepared to invest up to $100 million in the company...is significant,” he said.
“There’s not many of those opportunities coming around every day, especially because it’s not just the funding it’s also the relationship.
“The party investing is GFG Alliance which is Sanjeev Gupta’s group of companies.
“With their owning the Whyalla Steelworks, our iron ore assets all of a sudden look very attractive.
“Instead of trying to mine it and ship it overseas we can actually just, 470ks down the railway line, get it to the Whyalla Steelworks and then all the value that is added stays in South Australia and in Australia.”
He said the potential workforce during the construction and post-construction stages at their Iron Genesis and Copper Aura assets could see similar numbers to Fortescue’s Iron Bridge mine in Western Australia.
“If I look at a typical size mine, Iron Bridge that is now getting developed by Fortescue, they were talking about up to 3000 jobs during the construction period and a workforce of about 600 people after construction,” said Mr Richards.
“That’s a lot of employment opportunity and if you think about the knock-on effect, the last time I looked at it was one for four.
“Which means every one mining job creates four other employment opportunities as well.
“That is significant for a town like Broken Hill.
“And we’re lucky that Broken Hill is the town because if it wasn’t for it, it might’ve been more difficult to develop something that is 80 kilometres away because you’re dependent on Port Augusta or Adelaide.
“If you’re looking to hire a crane, you don’t want to be hiring it from Port Augusta. Broken Hill is a lot closer.”
Mr Richards said that if the project’s economics stack up and financing is guaranteed to develop the mines, there would be a two to three year construction period with potential shipments in five years.
Before all that though, the $100m transaction needs to be approved by shareholders at an EGM on September 12.
In the lead up to that EGM, Havilah have claimed that co-founder of the company Dr Robert Johnson has been spreading “misleading and deceptive” information about the transaction, including the level of control GFG would have over Havilah given GFG is expected to hold a 51 per cent share in the company should they meet all their conditions.
They’ve also claimed Mr Johnson owns 38.51 per cent of the company’s shares through control and influence of other shareholders, and has acquired a further 6.6 per cent through another shareholder.
Last week, Havilah submitted an application to the Takeovers Panel seeking Mr Johnson be barred from voting at the upcoming EGM.
“I would like to encourage shareholders to get the facts and then evaluate the transaction on its merits and then make a decision based on that,” said Mr Richards.
“There’s people that are concerned about the GFG Alliance having control over Havilah’s assets, but the reality is the 51 per cent only gives them an opportunity to vote for resolutions put to shareholders at the AGM or an EGM.
“The strategy of the company is in control of the majority independent directors.
“We stay an ASX listed company (and) management stays in control of the day-today operations and of the projects.
“This transaction allows the company to stay in control of its own destiny which I think is a better deal for the shareholders in the long run because these are early stage projects and we’re trying to move with the committed funding.
“When we signed this deal with GFG at the end of April, I came out of that meeting and said to the guys, ‘there’d be lots of other iron ore companies and projects in South Australia that would love to be on the end of a deal like this with GFG’” added Havilah Chairman Mark Stewart.
“This is an opportunity of a lifetime for Havilah to take its assets and do something special with them.”
In a letter to Havilah yesterday, Sanjeev Gupta said GFG was committed to supporting Havilah’s independent Board and Chairperson.
“It is GFG’s current intention that Havilah’s projects continue to be managed by the existing senior management,” noted Mr Gupta’s letter to Mark Stewart.
“We support Havilah’s commitment to maintaining an independent Board and an independent Chairperson.
“GFG will only increase its Board representation incrementally, in line with its equity position, reflecting its commitment to Havilah.
“We understand how important it is that the interests of all shareholders are protected and they all have a say in the company’s future.”