Alexander Molyneux, a youngish former head of Robert Friedland’s SouthGobi Resources, is Blumont’s new Chairman and potential key shareholder. He has said that withe a strategy designed to make it a major miner. “We are on our way to become Asia’s BHP.”
It’s an ambition worth taking a closer look at, if for nothing else, to understand how very far Blumont has to go to become something like BHP Billiton. In the quarter ending June 30, BHP booked $11 billion profit on $66 billion revenue producing, among other things, 1.2 million tonnes of copper, 170 million tonnes iron ore, 38 million tonnes met coal and 73 million tonnes energy coal, 9 million pounds uranium oxide concentrate, 4.8 million tonnes alumina and 36 million barrels of oil equivalent.
Now, a closer look at Blumont: The Singapore junior started to piece a resource-bent portfolio together last year and has, since then, inked around a dozen deals for stakes in resource companies, most of which are listed on the ASX. The done deals so far – two with links to Molyneux – include smallish stakes in a series of juniors with small to modest-sized assets – one producing copper and the rest in development.
Among the assets: In copper, there is a 13 percent stake in Discovery Metals. This ASX listed junior runs the Boseto Copper mine in Namibia, which last quarter produced about 11 million pounds copper and 213,482 ounces silver with C1 cash costs around $3.45 per pound copper. In coal, Blumont also holds a 12 percent stake in Celsius Coal. This is a junior, led by Molyneux as executive director, which owns, among other things, 255 million tonnes in coal resources in Kyrgyzstan. Again in coal, Blumont also has a roughly 10 percent interest in Cokal, an ASX-listed junior that holds some 77 million tonnes in coal resources in Indonesia, among other assets. And, in uranium, Blumont has bought up all of Powerlite Ventures, a private company, which in turn owns about 18 percent of Azarga Resources, a private company, in which Molyneux is a principal shareholder. It owns, Blumont reports, a modest-sized uranium resource in Kyrgyzstan with about 26 million pounds uranium @ 0.03 percent U3O8 and a stake in Black Range, a Colorado uranium explorer.
There are also some pending deals to consider, though Blumont has had to cancel organising a takeover of Cokal in light of its dramatic trouncing on markets. Other deals are still in the works, however. Among its larger, pending deals, is a takeover of a private Singapore company with rights to iron ore assets in Indonesia, Hudson Minerals, for S$48 million. Blumont reports these assets include some 20 million tonnes in iron ore reserves.
Now, back to Molyneux’s ambition for a BHP Asia in Blumont. It’s clear the distance between the runners is vast. Indeed if Blumont is on its way to becoming BHP Asia, as Molyneux hopes, then it’s barely crossed the starting line. Diverse Blumont’s assets may be, they are miniscule in comparison to BHP’s and are hardly the stuff to power a massive sprint to the finish. For instance, assuming they could be mined, BHP could eat up Celsius Coal’s resources in about a quarter. Or consider Discovery Metals. Its recent quarterly copper production represents about a half a percent of BHP’s. And of course, Blumont owns just a fraction of these juniors, though it is clearly hungry for more
No. To make a power move on the likes of BHP -- to get it to glance over its shoulder a little bit worried -- will take a far more massive asset base than what Blumont has put together so far. Not to say it can’t. Not to say Molyneux doesn’t have ideas on how to get it. But to do it, Blumont will need to ink major acquisitions for large-scale assets, or alternatively, go out and make world-class discoveries. In this respect, Molyneux will be worth watching to see how his ambitious plan for Blumont unfolds.
(Edited from an article by Kip Keen in Mineweb.)