The value of shares held by some of the biggest names in mining have slumped along with the companies they lead, but there are pockets of good news in what has been a tough year on the markets.
The value of shares held by some of the biggest names in mining have slumped along with the companies they lead, but there are pockets of good news in what has been a tough year on the markets.
PAPER fortunes come and go, and nothing illustrates this better than our 2012 list of wealth creators, which tracks the value of listed shares held by Western Australian company directors and compares with our previous review around this time last year.
Many have seen the value of their shareholdings shredded by the volatile markets, which have downgraded the market capitalisations of many listed companies.
But there have been plenty of winners, too.
Those in the iron ore space, having made the biggest gains in recent years, have been among those hardest hit by investor concerns about the ability of China to sustain its economy. A sharp drop in iron ore prices this year has forced a revaluation of companies focused on that sector.
Fortescue Metals Group founder Andrew Forrest has seen the value of his holdings in the company fall by about one quarter during the past year, to $4.3 billion, even though he has been a major buyer of FMG shares.
Mr Forrest bought about $130 million worth of stock as recently as July, just weeks before the most dramatic plunge in commodity prices forced the company to halt expansion plans, cut staff, and renegotiate its debt.
FMG has recovered substantially from those short-term losses, but it is still well below the market’s valuation of just one year ago.
Media magnate Kerry Stokes has done better than most in his field, adding a respectable $200 million to reach $1.95 billion, up from $1.74 billion the previous year.
Of course, he is oddly diversified into resources, having sold his Westrac Caterpillar franchisee into his main listed vehicle, Seven Group Floldings. Then there is Iron Ore Floldings, in which Mr Stokes holds a 52.7 per cent stake via his private interests.
For the purposes of this review, Mr Stokes’ major listed investments (SGF1, Seven West Media and IOFT) are included under his name, even though he is not a director of Iron Ore Holdings and his son, Ryan, sits on the board of all three.
While most of Gina Rinehart’s wealth is privately tied-up in iron ore resources, her forays into the listed sphere have had mixed results. The biggest, into Fairfax Media, has yet to win her a board seat and has been a poor performer in terms of share price but, overall, the value of her listed equity holdings has been steady this year.
Mrs Rinehart has been active on the register at Fairfax but has also worn big losses as the share price of Fairfax, along with other major media players, has struggled as the market awaits a coherent strategy in the face of digital disruption to its print business.
Tony Poli, head of Aquila Resources, has felt the impact as well, despite being diversified across iron ore and coal. His stake in Aquila was worth more than $500 million a little over a year ago; these days it is valued at $327 million, despite a buying spree during which he increased his shareholding by about a third.
It’s a similar story for Charles Bass, also a director of Aquila, with the value of his holdings slumping by more than $100 million, to $130 million.
Aquila has had a bumpy ride during the past year. Progress on its $7.4 billion West Pilbara Iron Ore project, especially the port infrastructure, has been slow, in part due to disagreements with other players on the scale of the development.
In a similar position in terms of valuation changes are the directors and management of Mineral Resources, which is also part of Mrs Rinehart’s portfolio, although it is clear share sales by company officers contributed significantly to their slide down the wealth ladder.
Chris Ellison, who sold about 10 per cent of his stake in Mineral Resources to realise more than $41 million in March, has seen the value of his stake in the company fall significantly. In March his remaining shares were worth $325 million, but last week WA Business News calculated they were worth $236 million (also see Locals lag main contributors).
Others to lose out were: Centamin’s Josef El-Raghy, down 3 per cent to $110 million; Ausdrill’s Ron Sayers, off 8 per cent to $105 million; and Terry Streeter, best known for his exploration play, Western Areas, down 12 per cent to $124 million.
Both Mr Sayers and Mr Streeter have been bogged down with legal issues in recent years, while Centamin delisted from the ASX and is now listed in Toronto.
One of the few foreign-listed company directors to appear on this list is Nik Zuks who became a household name in WA in the 1990s when, as head of Kingstream Resources, he tried to develop a steel manufacturer at Geraldton; a move that included plans for a port at Oakajee.
Mr Zuks, until recently, headed AIM-listed Bellzone Mining. It has a WA base and an Africa-focused portfolio, including the Forecariah iron ore development, which recently commenced production, and the 6 billion tonne Kalia iron ore project in Guinea.
Like many in iron ore, Bellzone has been hit by the price volatility. In June, the company appointed Consolidated Minerals chief executive Glenn Baldwin as its new CEO. Mr Zuks remains a director.
Big winners
Of course, it was not all bad news at the top of the charts.
Global education player Navtias has proved a resilient company despite the difficulties in its market due to the GFC and changing immigration policies in several key markets, including Australia, which hit its focus on foreign students.
Navitas chief Rod Jones saw the value of his stake increase by more than $34 million to $229 million in the period under examination, while his colleagues Peter Larsen and Peter Campbell enjoyed comparative improvements in their holdings.
Another huge winner for the past year was Nick Giorgetta, whose stake in Regis Resources has soared 82 per cent to nearly $110 million, generally going against the flow of many of the other top-flight resources directors. While much of mining is in the doldrums, good gold miners such as Regis have plenty to crow about, as its recent results showed.
Net profit for the 12 months to June 30 was up 88 per cent to $68 million, as Regis produced 25,000 more ounces of gold for the year from its Moolart Well operation than the 80,918oz mined last year. Further helping Regis’s year was a realised gold price of $1,574 per ounce, on cash costs of $512 per ounce.
Mark Creasy was another big winner for the period, mainly on the back of Sirius Mining, which soared 689 per cent in one day following discovery of a new nickel and copper sulphide deposit in the eastern Goldfields.
While Mr Creasy is the dominant shareholder in Sirius, with a stake worth $92 million, he also holds 30 per cent of the Nova deposit in the Fraser Range in his own right. The prospector holds various stakes in numerous listed companies, but that is only part of his fortune, estimated to be worth about $300 million, after making several significant mineral discoveries during his career.
Mining services
In the mining services sector, which has not been easy going for some, Frank Totnasi’s Southern Cross Electrical Engineering has had a stellar year, boosting his stocks by 73 per cent to nearly $80 million.
That has pushed him into the top 20, just ahead of Fleetwood Corporation’s Greg Tate and well north of a group of other service company heads such as Lycopodium’s Michael Caratti, Decmil Group’s Denis Criddle, and Monadelphous Group’s Robert Velletri.
In contrast, oil and gas sector equipment manufacturer Matrix Composites & Engineering’s poor performance has dragged down the holding of Max Begley, who has stepped down as a director and has seen his stake in the company deteriorate to $50 million from $92 million.
A rising star in this space is MACA, with founding director Geoffrey Baker joining this group at the top end of the wealth creators’ ladder since the company listed just two years ago.
Another strong performer was David Watson’s CTI Logistics, which claims to have won a big lick of business from contractors on projects such as Gorgon. While CTI did acquire Action Couriers it has otherwise been enjoying organic growth, although Mr Watson topped up his holding by around 20 per cent, helping to boost the stake’s value to $41 million from $27 million.
Positive > negative
Despite the difficulties in the market, 2012 had more winners than might be expected at the top end of the directors’ wealth list - which is cut off at $10 million. The ranks at that level were culled from 109 last year to just 85 this year, but of that remaining group only 38 lost wealth during the year and maintained a position on the list.
Two top 20 performers, notably, have a stable of investments rather than one big play. Former Galaxy Resources managing director Michael Fotios has seen the value of his known beneficial interest in listed equities double to more than $80 million, boosted in the main by Northern Star Resources, which has doubled in value in the past year taking his beneficial interest in that company to $68 million.
Mr Fotios, is associated with two companies to have invested heavily in Northern Star - Perth-based investor group Investmet and related entity Delta Resource Management. During the year, their net position reduced by 18 million shares.
The last major transaction was at the beginning of this year when they collectively realised more than $30 million in selling 34 million Northern Star shares at 90 cents per share, a huge gain on the 1.2 cent share price when they originally bought in 2009. At that time, Mr Fotios’s direct stake went from 5.2 million shares to 3 million shares when he sold 2.2 million shares for almost $2 million. He now has almost 3.2 million shares. According to the company’s annual report, the two entities and Mr Fotios controlled more than 49 million shares, or almost 13 per cent of the stock.
Another portfolio player is Barry Patterson, a unique representative at the top the ladder due to his technology and health bent. Most of his $75 million in known listed equities is in pathology and diagnostics group Sonic Healthcare, where his investment vehicle Polly Pty Ltd is among the top 10 investors in this $5 billion company.
Sonic has replicated its Australian growth strategy to become a major global player, claiming to enjoy top-three position status in the laboratory markets of eight countries - being the largest player in Australia and the U'K/Ireland, either the first or second largest in Germany, the second largest in Belgium and New Zealand, and the third largest in the US and Switzerland.
In addition, Sonic is the largest operator of medical centres in Australia, and the second largest player in the Australian radiology market.
And the rest ...
Despite the oil and gas sector’s strong presence in Perth as both a base for major developments in the North West and as a hub for the vibrant and active junior energy sector, the only top 20 representative of petroleum or its equivalents among the wealth creators is Jonathan Stewart from Aurora Oil and Gas.
Mr Stewart’s holding in the company has risen 70 per cent to $79 million, as the market has recognised Aurora, dual-listed in Australia and Toronto, for is shale assets in the US.
Aurora has also been very active in the mergers and acquisition space, in contrast to much of the rest of the market.
While it might seem odd to see oil and gas so under-represented (although Matrix and CTI Logistics are suppliers to that sector), a number of one-off players make the list.
Leading ISP iiNet’s Michael Malone continues to climb up the ladder, restoring wealth lost several years back when the company lost investor confidence in the wake of a poorly managed acquisition spree. Mr Malone has sold down about 20 per cent of his stake in the past year but still saw his holding’s value rise 33 per cent.
Bob Branchi’s stake in Automotive Holdings Group has surged 57 per cent to $55 million. He is now the biggest stakeholder represented on the list, since interests associated with former chairman Vem Wheatley sold most of their AHG shares to competitor AP Eagers, reducing the family stake by 75 per cent to be valued at $42 million.
Tony Lennon remains the wealthiest director, or former director, to represent the property sector. Mr Lennon’s stake in Peet is down 30 per cent to $73 million, even though he topped it up slightly during the past year.
Bill Hames, who chairs Cedar Woods, is further down the list after share acquisitions and good stock performance lifted the value of his stake 16 per cent to $39 million.
Richard Goyder is notable as the highest ranked local major industrial company leader. Mr Goyder’s stake in Wesfarmers jumped 41 per cent to $35 million, boosted in part by a 25 per cent increase in actual shares held.
• With Kirat Kaur and Clint Jasper
