Gilbertson takes another shot

Former BHP Billiton chief Brian Gilbertson is clearly a believer in the old maxim: if at first you don’t succeed, then try and try again.

The veteran South African deal maker this week unveiled a complicated $245 million play for control of emerging iron ore and manganese developer Jupiter Mines.

Under the deal, a consortium led by Mr Gilbertson’s Johannesburg-listed Pallinghurst Resources will acquire an 85 per cent stake in Jupiter in return for a 49.9 per cent share of the big Tshipi manganese project in South Africa’s Kalahari Basin due to start production in 2013.

The Pallinghurst consortium includes private miner AMCI Holdings, Korean steel giant Posco, merchant bank Investec, and US private equity fund Midstream & Resources.

The deal prices Jupiter at just 21 cents per share, below its pre-announcement close of 22.5 cents, but was received well enough to push the stock above 25 cents by mid week.

If the story sounds familiar, it’s because Mr Gilbertson has twice before failed to pull off a similar plan.

In 2007, his target was Pilbara manganese miner Consolidated Minerals, in which Pallinghurst sought a 60 per cent stake for just $1.38 per share – well below ConsMin’s then price of $1.71.

The offer was pitched as providing the backing needed to build on ConsMin’s strategic share of the manganese market. Pallinghurst also floated the possibility of vending in unnamed Kalahari Basin manganese assets.

But the plan was derailed when a bidding war erupted and Ukrainian billionaire Gennadiy Bogolyubov ultimately paid $5 a share for ConsMin.

Though Pallinghurst subsequently acquired an initial 11 per cent stake in Jupiter early last year, its next big move in Australia came last September when it struck a familiar agreement to sell half of Tshipi to Perth-based manganese miner OM Holdings.

But that deal fell over in November when the two groups could not agree on the price or size of Pallinghurst’s resulting stake in OM.

Fast-forward to this week and Mr Gilbertson’s third attempt to create an African-Australian manganese and iron ore producer.

While Jupiter shareholders may baulk at the absence of a control premium, Mr Gilbertson is offering a simple pitch he believes is compelling.

Jupiter gets access to a world-class asset on the verge of development, a much bigger balance sheet and the backing of serious industry players with the capacity to fund its exploration and development plans in Australia and Africa.

While that kind of blue-sky potential was central to Pallinghurst’s ConsMin pitch, this time it is not just relying on a rerating to boost Jupiter’s market worth. If the deal proceeds, the 85 per cent increase in Jupiter’s capital base will be backed by $245 million in tangible assets actually injected by Pallinghurst. Theoretically, Jupiter should then be worth $350 million compared to $80 million pre-deal.

Jupiter will also remain under the eye of chairman and former Portman Mining chief Geoff Wedlock, who has been assembling strategic assets close to existing transport infrastructure, such as its Yilgarn iron ore assets near Leonora and Oakover manganese discovery in the Pilbara.

That marries nicely with Pallinghurst’s focus on creating a specialist supplier of iron ore, manganese and coking coal to the steel industry.

Mr Gilbertson and Mr Wedlock talked up Jupiter’s resulting clout to spearhead “co-operative” consolidation of stranded Yilgarn iron ore assets, which Mr Wedlock conceded would struggle to be developed on a standalone basis.

“I’d like to think our investors are seen as the kind of people who can bring it together,” Mr Gilbertson said.

Jupiter shareholders have much to think about before they vote on the plan in May.