Tim Treadgold: The float of gold hopeful Mont Royal is more about Michael O’Keeffe, less about the company
Playing the man is frowned on in football because it means taking your eye off the ball, but in business some of the best investments are made by following the man, and that is probably the only reason for taking any interest in a new mining float called Mont Royal Resources.
Very much a speculative stock, Mont Royal is starting life with two exploration assets. A well picked-over gold prospect 170 kilometres north-west of Kalgoorlie in WA, and an option on another gold prospect about 40km from Port Hedland in WA’s Pilbara region.
It’s not being unkind to say that neither asset is exciting. Yule River has been the subject of at least eight previous exploration programs, as has the Edjudina project near Kalgoorlie.
Previous players at Yule River between 1996 and 2011 include Resolute Mining, Normandy Exploration, Greenstone Resources, Red 5, De Grey Mining, Troy Resources and Brumby Resources.
Edjudina has an equally impressive roll call of previous explorers between 1992 and 2014, including Newcrest Mining, Aberfoyle Resources, Sons of Gwalia and St Barbara Mines.
Long before those relatively modern exploration efforts it’s highly likely the oldtimers kicked a few rocks at both locations before trekking on to more fertile ground.
So, you might reasonably ask, if there’s not much new in the two prospects named in the Mont Royal prospectus, why is it interesting?
The answer is that Mont Royal the company is not interesting.
It’s the man behind the company who is extremely interesting because while he’s not known to have had much experience in running a gold exploration company, he certainly knows how to make money in mining.
Michael O’Keeffe was the key man in Riversdale Mining, a coal explorer, sold to Rio Tinto for $4 billion, and more recently a key player in Riversdale Resources, a Canadian coal project developer acquired for $600 million by Australia’s richest person, Gina Rinehart.
The O’Keeffe commodities pedigree goes a lot deeper than two big-ticket transactions because with his long-term business partner, Gary Lawler, he is also heavily involved with ASX-listed but Canadian focussed iron ore miner, Champion Iron.
And well before he made headlines with the Riversdale Mining sale which caused Rio Tinto no end of headaches, the metallurgy-trained O’Keeffe made a name as a commercial executive at Mt Isa Mines, and for nine years up to 2004 as managing director of the Australian operations of the giant commodity-trader and miner, Glencore.
What he has in mind for Mont Royal falls into the same category reserved for Russia by Winston Churchill: “a riddle wrapped in a mystery inside an enigma”.
But if there is one thing certain, the lowly $4.5 million being sought by Mont Royal will not go far, paying for a bit of field work at Edjudina which is a project that falls into a goldfields category known as “moose pasture”, because that might be its best use – if there was any pasture, and if there were any moose, in WA’s dry-as-dust Eastern Goldfields region.
If there is a clue in where Mont Royal might be heading once it has raised its small pot of capital it’s in the home of the moose, Canada, which is also the home of Champion Iron and the coal business (Riversdale Resources) just acquired by Rinehart.
That observation cannot be supported by any facts, except a note in the prospectus that “the company proposes to actively pursue further acquisitions which complement its existing focus” – which is mining.
The possibility of a Canadian deal can be supported by O’Keeffe’s Canadian iron ore and coal involvement, and name of the company.
Mont Royal is a suburb of the big Canadian city, Montreal, and then there are the fascinating Canadian photographs on the home page of a company which only has assets (Edjudina and Yule River) in the Australian outback.
There are no dry as dusty outback scenes on Mont Royal’s home page, just rather a pair of stunning Canadian “outback” scenes which look awfully like lakes surrounded by the Rocky Mountains of western Canada.
If there’s anything that looks less Australian it’s the Canadian Rocky Mountains, even if the Mont Royal photograph pays homage to the opening page of the Wikipedia article about the Rocky Mountains.
For the financially minded, Mont Royal is proposing to issue 25 million shares at 20c a pop with the prospectus having opened last week, and April 8 nominated as the closing date, followed by a tentative ASX listing day of May 15.
O’Keeffe and Lawler will be major shareholders of the new company and two of the three directors. The third spot goes to Peter Ruse, a fund manager.
Looking further ahead, it is possible that the moose pasture at Edjudina and Yule River might yield something interesting to their ninth owner but the real interest in Mont Royal is O’Keeffe and his track record of knowing how to make money in mining.