With very little fanfare last month, Northern Iron Ltd managed to successfully conduct the year’s biggest mining float, raising $140 million to fund the development of an iron ore mine in Norway.
With very little fanfare last month, Northern Iron Ltd managed to successfully conduct the year’s biggest mining float, raising $140 million to fund the development of an iron ore mine in Norway.
The iron ore hopeful made its debut at a difficult time on the stock market, with many new entrants taking a battering as recession fears in the US sent shudders through global markets.
Yet shares in Northern Iron have managed to significantly outperform the market, hitting a record high $2.97 last week and delivering retail investors a 40 per cent return on the $2.15 they paid ahead of the company’s December 13 debut.
Northern Iron is backed by experienced operators, including well-known company directors Neil Hamilton and David Griffiths, and ex Aztec Resources boss Peter Bilbe.
Global share markets may be wobbly but Northern Iron has entered a world white hot with demand for iron ore.
Yet, it is operating in a country more known for its fjords than iron ore.
“When you think iron ore, Norway certainly doesn’t jump out at you,” managing director Mick McMullen said.
Northern Iron’s project, the Sydvaranger iron mine, started production in 1910, and, apart from interruptions during the two world wars, continued to operate until 1997, when iron ore prices were much weaker than today.
It is located in northern Norway with existing infrastructure nearby including rail and ice-free port loading facilities.
The Sydvaranger mine is 51 per cent owned by Norwegian shipping company The Tschudi Group, which bought the project in 2006.
It agreed to sell 49 per cent to Northern Iron.
Northern Iron plans to get the necessary approvals and refurbish the mine, with production anticipated in mid 2009.
The company plans to produce 7 million tonnes of ore a year and sell it to European markets.
Sydvaranger has an estimated 19-year mine life.
The cost to re-start the mine is estimated at $US100 million.
Mr McMullen has been cautious not to oversell Northern Iron.
“I’m one of those guys who prefers to under-promise and over-deliver,” he said.
Mr McMullen previously owned a share of RSG Global Consulting and headed up its auditing division, during which time he acted on behalf of the banks looking to finance projects.
RSG Global Consulting was sold to Coffey International Ltd in a $16 million transaction about 18 months ago.
Working for the banks was an eye opener for Mr McMullen, who has spent his fair share of time on the other side of the ledger, primarily in establishing and developing Tritton Resources, which was later acquired by Straits Resources.
