By Alastair Ford
Times change, and so do entrepreneurs. Matt Wood and Brian McMaster have made a pretty penny for themselves and their investors over the years through the creation and onward sale of such stellar companies as Highfield Resources, Hunnu Coal and Avanco.
“Anybody who put money in when we did and came out when we did made money”, says Matt.
Highfield is now a US$400 million potash company with assets in Spain, Hunnu won successively IPO of the year and Mines & Money deal of the year before being taken over for nearly A$500 million, while Avanco is now worth more than A$100 million and will start producing copper in Brazil very soon.
Sharp-sighted investors will detect an Australian theme to all this, and indeed Brian and Matt do both hail from Australia.
But their focus now is increasingly moving to London – in part because regulations in Australia make operating any projects in their own back yard an increasingly onerous undertaking, and in part because being based in the capital markets in London makes much more sense in terms of access to Brazil, which is where their attention currently lies.
There’s also the question of the money. “The market here’s so much deeper”, says Brian. As everyone knows, capital in Australia is now very hard to come by, and in Canada it’s no better. Not that London’s all singing and dancing, but you can at least get things done.
Accordingly, Matt’s been in London for nearly a year now, and Brian is eyeing up properties as we speak.
Together, they operate an umbrella organisation called Garrison Capital, which provides seed and ideas, but it’s in respect of two discreet operating companies that they are now doing the rounds here with a view to establishing a more permanent presence in due course.
Both companies have Brazilian assets, and both are pretty well advanced. “Historically we worked exploration properties up into development properties”, says Brian. “But we’ve moved up the curve. We are now interested in taking forward later, pre-development stories.”
And so it is that Matt sits as executive chairman of Five Star Diamonds, which has a 3.5 hectare kimberlite pipe in the Goias region of Brazil, while Brian is executive chairman of Harvest Minerals, which has a major potash project on the east coast, and which has also just acquired a phosphate project inland in Minas Gerais.
The plan is that both companies will in due course seek fresh capital in London, and that both will end up with an Aim listing before too long. Harvest is already listed in Australia, but Five Star is currently held privately.
Will there be an appetite here? Well, that’s what Brian and Matt are currently evaluating. But so far so good. They’ve already been able to raise funds to continue with development work for both companies, and are currently in the process of lining up all the relevant advisors to ensure a smooth transition.
In the case of Five Star, Matt is very clear as to the opportunity. “For 150 years Brazil was the world’s largest diamond producer”, he says, and it still has huge potential. No major kimberlite pipe has ever been found there, although there have been several smaller economic pipes, including the pipe that lies at the centre of Five Star’s aspirations, which is 3.5 hectares in area.
What’s more, diamond demand is looking up, as Brian points out. “There are people who view diamonds as another form of currency”, he says. “And De Beers has said that by 2020 they don’t have an explanation for how demand will be met.
So, although the Five Star pipe is small, that doesn’t mean it won’t end up generating significant cash. After all, as Matt points out, size isn’t everything. “Diavik is a one hectare pipe”, he says. “We’re looking at pipes with high grade and quality stones.”
Now that the new money’s in, construction of a pilot plant has commenced. If that goes well then the hope is rapidly to move on to a feasibility study and then full scale production at the rate of upwards of 500,000 carats, using the money raised in conjunction with the Aim listing to get there.
Meanwhile, the transition of Harvest from tin to fertilisers initiated by Matt and Brian is now complete. The phosphate project should be the first cab off the rank, funded by the proceeds of the mooted Aim listing. That fundraise should also put something in the kitty for a bankable study for the potash, but by then Harvest will be up and running, producing cash in a country that is the biggest importer of fertilisers globally. As far as positioning goes, it couldn’t be better.
“This time next year we’ll have cash from our phosphate and all the questions on the potash will be answered”, says Brian.
Copyright: Alastair Ford
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