Stitching up a good deal
The Note has always been a fan of the focused management strategy known as ‘sticking to your knitting’, though we admit it’s hard to find good historical evidence for this.
So it was with rare enjoyment that, while trawling Clive Palmer’s Hong Kong float Resourcehouse prospectus for the quirky and unusual (beyond the good adjunct professor himself), we discovered a little gem of our own.
The prospectus reveals that Mr Palmer’s Mineralogy acquired the key Balmoral lease in the western Hamersley in 1985 from a US company called the Hanna Mining Company of Cleveland, which had taken them up in the mid-1970s when it was the world’s second biggest iron ore processor.
In the mid 1980s, Hanna Mining had been in the minerals business for 100 years but was in a process of divesting its resources assets to get into plastics and polymers.
In 1998, Hanna merged with polyvinyl chloride giant Geon Company to become PolyOne Corporation.
A check by The Note reveals that PolyOne is today worth a whopping $US1.38 billion. It’s a classic case of cashing in on all that bygone era stuff and getting into a value-adding sector at the cutting edge of the smartest technology, right?
Then again, maybe Hanna should have just sat on what it had. The Balmoral deposit, which sat in Hanna’s tenements, is the key element of the 10 billion tonne deposit of magnetite ore that forms the centrepiece of Resourcehouse’s mineral business. And that’s not to mention the Sino Iron Project of Citic Pacific, which has already started mining another part of that deposit.
According to Resourcehouse’s prospectus, the First China Iron Ore Project, has a base case net present value after tax at an 8 per cent discount rate in the first year of operations (proposed 2014) of $8.6 billion.