LISTED investment group Asset Backed Holdings is embarking on an ambitious plan to create a China-focused phosphate-based regional mining and resource group.
LISTED investment group Asset Backed Holdings is embarking on an ambitious plan to create a China-focused phosphate-based regional mining and resource group.
It has agreed to buy China-based Norwest Chemicals and its entities, part-owned by ABH director David Argyle, for a $6.4 million cash and scrip deal.
That will be funded by $2.12 million in cash and the issue of 21.4 million ABH shares.
The China play linking PRL and Norwest has been on the cards for several years. Besides its Norwest play, ABH holds 32.6 per cent of Christmas Island phosphate miner Phosphate Resources Limited.
Norwest founder Mr Argyle was also a founder of PRL, a company created to bring employment to the phosphate miners of Christmas Island.
He left that enterprise to set up Norwest – only to be drawn back onto PRL’s board two years ago. Mr Argyle also brought ABH into PRL by selling it 700,000 shares he held in the Christmas Island miner in 2002 in return for a seat on the board.
Back then ABH was controlled by Michael Perrott and Peter Huston. Mr Huston also had a history with PRL. He had been on its board from 1992 until 1994.
In 2002 they had planned to create a phosphate-based power-house focused on China.
That plan foundered under the weight of recriminations over related party transactions and the flak that followed an attempt to increase ABH’s holding in PRL through a $4.5 million share buyback followed by a $4.5 million rights issue that ABH partly underwrote.
Both Mr Perrott and Mr Huston left the ABH board last year, along with fellow directors Anthony Rigoll and Ludger Komäscher, to make way for the new governing team of Mr Caruso and Susmit Shah. Mr Argyle remained on the ABH board through that time.
And now the China project is back on the table.
Norwest’s fully-owned subsidiary Sichuan Mianzhu Norwest Phosphate Chemical Company owns and operates a phosphate rock mine and a downstream chemical processing plant in Sichuan Province, China.
It is one of the only companies in China to receive government approval to increase its shareholding in SMNPC from 60 per cent to 100 per cent.
At ABH’s annual general meeting last year Mr Argyle told WA Business News that Norwest had customers including Lever and Kitchen.
ABH chairman Mark Caruso said China’s growth made it an ideal market.
“The expansion into China represents a key second step in our plan to build a major regional resources company in phosphates,” he said.
“Norwest Chemicals has significant operating and resource experience in China, including world-class technology for specialty phosphates production.
“Phosphates will remain a strong pillar of our business focus, although there will be opportunities in other resources in China.”
One of the key planks of ABH’s push into China was the success of Norwest there.
Mr Carfuso said the company had a sound future because it owned its own resource.
“It also acts as a good beachhead for us to bring other products into the Chinese market,” he said.
Mr Caruso is also looking at the possibilities of allowing other, larger international companies to make use of the entry Norwest has made into the market.
To make the most of the links it would appear that ABH would have to take over PRL.
While it has about a one-third stake in the Christmas Island miner, it has no representation on its board.
Mr Caruso stopped short of saying that ABH was about to launch a takeover.
However, he said the company would take on a further 3 per cent stake in the Christmas Island player through bracket-creep provisions.
p See story ABH deal put under question
