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Australian Heritage retains dual focus

YOU become acutely aware you are perceived as doing something different from the rest when the doorbell won’t stop ringing and the requests are all the same: “Can we join in?”

This is the experience of local listed investment firm Australian Heritage Group, not yet two-and-a-half, but successfully selling its strengths and dealing aggressively with an increase in pace and complexity.

Despite reporting a consolidated net loss of $195,002 in the half year to December 31 2001, the group has declared the market value of its total assets at $20.4 million.

Differences in the market and book values of the group’s investments reflect mixed fortunes in an investment climate that could best be described as uncertain.

More concisely, led by executive chairman Anthony Barton and managing director Sally Capp, Australian Heritage achieved a $5.9 million boost to the value of its investments, with a consolidated net assets book value of $9.7 million, built on a figure of $7.6 million six months earlier.

Expansive plans for both its financial services and venture capital pursuits mean the group is not dismissive of the approaches it receives from those offering either projects or themselves.

It has now entered a labour-intensive growth and development period, after identifying financial services of a quality or type not currently offered in Western Australia, Ms Capp said, and those hearing of its plans are keen to be a part of something unique.

The group has recognised its understanding of the WA market and financial-legal-industry management mix and gives it the right edge to develop as a supplier of a comprehensive range of premium investment advice, reporting and administration services, in addition to well-reputed investments.

To include self-managed funds, retirement planning, wealth creation and investor-directed portfolio services, the expanded offerings will further grow and add value to Australian Heritage’s core holdings in: retail stockbroker DJ Carmichael Pty Limited (50 per cent); licensed fund manager MMC Asset Management Limited (22.94 per cent); managed superannuation funds administrator Australian & Superannuation Compliance Limited (50 per cent); and in a mooted complementary venture.

Australian Heritage has internally seeded two managed investment funds, one of which has invested in a project under the care of former wholly owned subsidiary, Mineral Securities.

The group is retaining the dual focus of investment into the resources sector as well as the financial services industry. But, after determining it needed an industry manager for its resources arm, sold half of its interest in Mineral Securities in the second half of last year in exchange for a greater stake in common assets Sally Malay Mining and West Musgrave Mining.

Investments in Compass Resources and Platinum Australia were moved out of Mineral Securities as part of this deal. But, described by Australian Heritage as a resource venture capital investment company, Mineral Securities is continuing with its original intent – to acquire and develop unique opportune investments.

The move to give Mineral Securities a life of its own appears to be paying off, with the market value of Mineral Securities’ investments improving 57 per cent in the first 70 days of this year.

With increased intensity and a life and board of its own under the leadership of executive chairman and 50 per cent holder, Keith Liddell, the Mineral Securities vision is of a resource investment bank, offering a range of industry investments of reputable quality and with new projects continually passing through.

The board, which includes Mr Barton and Ms Capp, plans to list Mineral Securities, but for the first part of the year is focused on expanding its portfolio.

It has recently re-listed Avon Resources, which will take on some new projects still under assessment, in addition to some prospective interests it already holds.

Last week’s deal by Mineral Securities to acquire an interest in Sylvania Resources through Sylvania’s proposed acquisition of Australian Ferroalloys exemplifies both Australian Heritage’s way of doing business and growing investments, and Mr Liddell’s vision of adding value to local resources.

Mineral Securities currently holds 50 per cent of Australian Ferroalloys and, under the in-principle agreement with Sylvania, will raise $500,000 through placing Sylvania shares following Sylvania’s payment for Australian Ferroalloys by way of a share and option issue.

Mineral Securities seeded Australian Ferroalloys for a pre-feasibility study, which subsequently labelled as viable plans to use North West Shelf gas for a ferrochrome smelter facility in Port Hedland.

Australia had less political risk than the current three suppliers in this market and the venture would be well placed to supply end-users in Japan, South Korea and throughout South-East Asia.

Prized Mineral Securities investments Sally Malay Mining and West Musgrave Mining illustrate the group’s ability to identify opportunities with the right project, management and risk profile and its capacity to inject further technical, corporate and financial value, Mr Liddell said.

A West Musgrave director before taking on Mineral Securities, and now also chairman of Sally Malay, Mr Liddell said the group was not an in-and-out speculative promoter.

“We can add value, and in a relatively short time, for shareholders,” he said.

The company’s proposed float of Whicher Range Gasfields will still happen, but the equity to be taken in the Whicher Range gas field 200, kilometres south of Perth, and Amity Oil’s drilling of Whicher Range-5, planned for later this year, is yet to be determined.

Though this stake will be less than the originally planned 31.55 per cent, Mineral Securities remained keen on being part of a project which had the potential to substantially change WA’s energy profile, Mr Liddell said.

“This project has the ability to drive growth in the State’s resources industry for the next decade,” he said.

With gas production much closer to the Perth market and the South West, aluminium and titanium smelters were just some of the possibilities.

By taking such large positions in companies, Ms Capp said Australian Heritage and its interests demonstrated they were taking on as much or greater risk than shareholders and were consequently serious about nurturing and growing the investments.

Further, it highlighted the difference between Australian Heritage and the general venture capital market, she said.

Another example of the group’s strategic approach – to ensure the quality and growth of its investments – the in-house accommodation not only allows Australian Heritage to offer support and resources cost effectively, but also ensures instilling of the group’s practice standards and procedures.

“Our biggest investment right now will be more people,” Ms Capp confirmed. “And because we’re very proactive in what we do, there are plenty of people approaching Australian Heritage.”

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