Middlemas portfolio approach pays dividends with Coalspur

THREE years ago, Xenolith Resources was bumping along the bottom of the performance tables, with shares rarely worth more than a few cents even before the chaos of the GFC.

The company had a glad bag of investments, mainly focused on nickel, gold and uranium potential in the northern Goldfields but with a few colourful additional opportunities such as a gold project in Indonesia and a Canadian oil and gas development.

In December 2008, it had a change of heart.

It decided coal was the way to go, announcing a deal to buy a project in Alberta, Canada, via the acquisition of a private Australian company CIP Coal Pty Ltd.

While such a move is not unusual for a Perth-based exploration company, this one, announced during the very worst of the GFC aftermath, has clearly paid dividends for shareholders who have seen their shares outperform most on a three- and five-year basis, and do extremely well over one year.

Xenolith, of course, has followed another Western Australian junior tradition and changed name, taking on the moniker Coalspur Mines.

The move to develop thermal projects in Alberta has paid off handsomely for shareholders, notably chairman Ian Middlemas, whose stake in the company is worth just over $25 million on prices reached earlier this week, via his private investment vehicle Arredo Pty Ltd.

Mr Middlemas’s colleague Mark Pearce, who can be found on many of the same boards, has a stake valued at nearly $7 million.

According to WA Business News records, Mr Middlemas and Mr Pearce are both members of the boards of at least five listed companies including Coalspur, Odyssey Energy, Sovereign Metals, Equatorial Resources and WCP Resources. They were also both board members of Mantra Resources, although Mr Pearce stepped down as a director about 12 months before Mantra merged with JSC Atomredmetzoloto earlier this year in a deal that valued Mr Middlemas’s stake at around $11 million at the time.

Apart from Coalspur, the pair’s interests include two other companies that have performed well in the WA Business News TSR survey. For the year to June 30, Equatorial shareholders had enjoyed a 572 per cent gain and Sovereign’s investors a 226 per cent improvement.

Equatorial has continued performing well in the past month, closing above $3 a share on Monday, to value Mr Middlemas’s stake at more than $15 million and Mr Pearce’s at more than $2 million.

An examination of the holdings of Mr Middlemas in companies in which he has a directorship – including Global Petroleum, Wildhorse Energy and Papillon Resources – show he is sitting on shares worth nearly $60 million from that stable alone.

Papillon, in which he holds about $2.5 million worth of shares, has been another strong performer over the past year, with a TSR of 293 per cent.

Not that everything Mr Middlemas or Mr Pearce touch turns to gold, however. Several of the companies mentioned above did not show up among the top 50 companies over one, three or five years.

Nevertheless, it is clear their portfolio approach and focus on where the market is moving has paid dividends this year.