Already a major shareholder, Asset Backed Holdings could leap from holding less than 20 per cent of Phosphate Resources in June, due to the combined effects of a $4.2 million rights issue announced two weeks ago and a $4.2 million buy back in June and July.
Asset Backed has underwritten the rights issue to the tune of $2.7 million and could emerge with as much as 35 per cent of the miner if the rights issue went fully unsubscribed.
Phosphate Resources company secretary Niels Kroyer said the miner hoped the Federal Government’s compensation offer for mining leases on land where it wanted to build a detention centre would be worth “tens of millions of dollars”.
The mining company already has been provided with 80 hectares in lieu of land it is losing for the proposed spaceport. It could also give up land for an extension of the island’s airport.
Mr Kroyer said the $2.7 million in partial underwriting of the rights issue by Asset Backed would be the “bare minimum” to cover the expedited mining that Phosphate Resources was being forced to conduct because of these developments.
“We had to push forward the mining due to the Federal Government bringing forward the expansion of the airport and its detention centre,” said Mr Kroyer, who was also company secretary for Asset Backed.
“We need working capital to bring that mining forward. The company ran into an industrial dispute which cost a lot of money.”
Mr Kroyer confirmed Asset Backed, which counts Menzies Court director Michael Perrott, stock broker Tony Rigoll and Norwest Chemicals managing director David Argyle among its directors, did not participate in the buy-back resulting in its stake rising to nearly 25 per cent from 19.9 per cent.
Mr Perrot is also Phosphate Resources’ chairman while Mr Rigoll and Mr Argyle are directors of the phosphate miner.
Mr Kroyer said the buy-back move was intended to clear up the capital structure of Phosphate Resources and occurred before the more recent developments on the island became apparent.
He also confirmed the rights issue could result in Asset Backed ending up with up to 35 per cent of the mining company, but said that would not result in a controlling stake in the miner.
Phosphate Resources is currently negotiating with the Federal Government over about 30 hectares of its mining lease that could be surrendered for the Government’s detention centre. There has been speculation that hundreds of millions of dollars were involved but the company denied that, revealing only that it would be less than $100 million and more than $20 million.
Union of Christmas Island Workers secretary Gordon Thomson, who is also a Phosphate Resources shareholder and did not participate in the buy-back, said there was concern on the island that the corporate activities would impact on the community.
“They want to bring contract workers to do the mining,” Mr Thomson said.
Mr Kroyer denied that the company would be bringing in external contractors to replace the existing workers.
“We are trying to put some of the workers onto Australian Workplace Agreements,” he said.
Mr Thomson confirmed there had been six weeks of industrial action, which he claimed had been provoked by Phosphate Resources’ removal of a redundancy agreement that had not been registered.
He said there had been peace since the redundancy agreement had been reinstated and registered.
Phosphate Resources was formed in 1991 by the Union of Christmas Island Workers to ensure that the workers on the island still had work after the mine was threatened with closure.
Former union president Lia Ah Hong is still a director of Phosphate Resources.
Phosphate Resources has also informally approached the Federal Government over gaining access to phosphate resources still located in the 60 per cent of Christmas Island that has been declared national park.
Mr Kroyer said the company’s approaches had been informal and did not involve further mining.
“I understand the company is only looking for stockpiles of phosphate left over from previous mining,” he said.
An adviser to Federal Regional Services, Territories and Local Government Minister Wilson Tuckey said the minister had only received informal approaches.
He said even if the Government decided to allow the company to access those stockpiles it would require major legislative changes before that could happen.
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