20/05/2010 - 00:00

Poli’s past business experience accounts for much of Aquila’s success

20/05/2010 - 00:00

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YOU can take the boy out of small business, but you can’t take small business out of the boy.

Poli’s past business experience accounts for much of Aquila’s success

YOU can take the boy out of small business, but you can’t take small business out of the boy.

At least not in the case of Perth mining baron Tony Poli, chief executive and major shareholder of Como-based iron ore and coal company Aquila Resources.

Today, the low-profile mining executive is one of Western Australia’s richest men, with his 26 per cent stake in the company worth a touch over $800 million at current prices of around $9.70 a share.

The Perth-born University of Western Australia accounting graduate owes his fortune to Aquila’s transformation from a 20-cent junior gold explorer just 10 years ago to a $3 billion miner with world-class coal and iron resources in Queensland and the Pilbara.

Aquila is now one of Australia’s biggest independent coal and iron ore companies, with more than 5 billion tonnes of coal resources in Queensland and 740-plus million tonnes of iron ore in the Pilbara.

Its key operating asset is the 2mt a year Isaac Plains coal mine in Queensland, half owned by Brazilian miner Vale, where output will almost double over the next year.

It also plans three new mines over the next four years, including the massive $2.8 billion Belvedere underground coal mine, the $1 billion Eagle Downs mine and the $400 million Washpool mine.

In the Pilbara, it is set to develop the more than $3 billion West Pilbara iron ore project, slated to start production in 2013 at an initial rate of 40mtpa.

But Mr Poli, who started his career as an auditor with Deloitte before setting up his own small accountancy practice, says much of Aquila’s success can be traced back to those early days as an accountant with his own small business. In particular, he says he learned the importance of caution and diligent risk management.

“With the accounting background and upbringing there is certainly a cautious element in Aquila,” Mr Poli told WA Business News.

“It’s always about where would you be if something doesn’t work, so I don’t think you’ll ever see us betting the farm as such. We’ll keep making positive steps and adding to the base.”

That approach may be more cautious than the bells and whistles path taken by more flamboyant miners, yet it has still richly rewarded Aquila shareholders, with fabulous capital growth and regular issues of free bonus shares to all its investors.

For the many loyal punters who backed Aquila from the outset, the results have been spectacular.

“If you roll back the bonus issues, the entry price of those shareholders … is about six cents,” Mr Poli says. “So we’ve got some pretty happy shareholders.”

Among those happy shareholders are his long-time business partners and co-directors, Derek Cowlan and Charles Bass, who respectively own stakes worth $350 million and $105 million.

While he and his fellow directors have been big beneficiaries of the bonus share issues, Mr Poli says issuing free shares to all shareholders on a pro-rata basis is no different to a conventional share split.

He says it has also been vital in increasing liquidity with minimal dilution of existing shareholders, and has underpinned a 10-fold increase in Aquila shareholders to about 5,000.

Taking the “right” risks has also been absolutely pivotal to Mr Poli’s success.

His first bold move came when he ditched accounting to team up with Messrs Cowlan and Bass to float gold explorer, Eagle Mining, in 1992.

Within a year, Eagle had discovered the rich Nimary gold deposit near Wiluna, where mining started in 1995. Two years later, Eagle was taken over by Joe Gutnick’s Great Central Mines for $240 million.

Cashed up and keen to start again, the trio floated Aquila in 2000.

Within months Aquila had struck a $150 million deal to buy a half stake in the massive Ernest Henry copper-gold mine in Queensland from Pasminco.

But, at the last minute, Pasminco gave existing partner MIM Holdings more time to exercise its pre-emptive rights over the stake, effectively leaving Aquila with nothing.

Though a disaster at the time, it ultimately proved to be the making of Aquila.

“That loss made us think about other opportunities,” Mr Poli recalls. “We gave consideration to a whole lot of things and landed on coal. We went to NSW and Queensland to get an understanding of the coal industry and … came back thinking we could see a real opportunity.

“This was at a time when coal prices were very low, so companies weren’t exploring and miners were just trying to make ends meet … and the land nearby to producing mines was open tenure.

“So we applied for ground left, right and centre.”

Aquila then took the same counter-cyclical approach in the Pilbara, pegging iron ore leases amid falling prices and the common orthodoxy that iron ore was for global miners only.

The rest, they say, is history.

As passionate as Mr Poli is about his company, the father of four boys also believes making time for family is crucial for anyone to truly claim success.

“I have a very understanding family,” he says. “But every year for the last 14 years, I have taken five to six weeks off at Christmas time, and we all head down to our little beach house at Mandurah.

“I still make calls and look at emails, but it’s a different environment down there. You have a barbecue and a few beers each night. I hate coming back to Perth.

“And then generally during the year I take at least another week and we go somewhere as a family.”

Eschewing the flamboyance often associated with great financial success, Mr Poli also says his upbringing has kept him grounded.

“At the end of the day, you are the person you were brought up to be by your parents,” he says. “Certainly things on the margin change, but you still think about the dollars you spend.”

Not surprisingly, the most important guiding principles he has learned from his years in business are equally straightforward.

“Be honest, be ethical as a person, diligent and thorough.”

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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