Kiernan and Forrest are now directors of MRS. Kiernan is chairman of CRS. They are about to build a processing plant. Kiernan is said to be looking for suitable gold deposits to feed the plant. SIB is one. What will be next? CRS??? Or will Kiernan use CRS to takeover MRS? Which do you think will be the vehicle? Any ideas.
Kiernan, Forrest hook up
JOHN PHACEAS
Two of WA's most prominent and colourful mining identities - Michael Kiernan and Andrew Forrest - have agreed to join forces in a $60 million merger aimed at creating a substantial new Australian player in the Goldfields.
Kiernan-controlled explorer Monarch Resources yesterday unveiled a friendly one-for-two scrip bid for Mr Forrest's stuttering gold vehicle Siberia Mining that will seat the outgoing Consolidated Minerals chief and Fortescue Metals Group founder at the same board table and give them equal top billing as shareholders.
It will also lay claim to the biggest Australian-owned landholding around Kalgoorlie with over two million ounces in identified gold resources.
The bid caps a frenetic few weeks of dealmaking by Mr Kiernan, who will step down as chief of the $750 million ConsMin mining group next June, and last week became chairman of Kalgoorlie miner Croesus Mining with a vow to build a new career in the gold industry.
That in turn came two days after Monarch acquired Croesus' mothballed Davyhurst gold project north of Kalgoorlie, which had treated ore from Siberia's namesake mine until February when Siberia was forced to shut its loss-making operation.
Speaking from London, where he plans to list both Monarch and Croesus, the Monarch chairman said partnering with Mr Forrest would benefit both companies regardless of any perceptions of a potential clash of egos.
"The general perception is that having two prima donnas at the same board table is going to be an interesting experience," he joked. "But Andrew and I have known each other for a long time, we're good mates. He's quite clearly focused on FMG and I'm quite clearly focused on the gold, and that's about the size of it."
Under Monarch's one-for-two scrip bid, which valued Siberia shares at 17¢ yesterday, or $40 million, Mr Forrest will become a non-executive director of Monarch and hold about 12.5 per cent of its shares, matching the post-deal stake of Mr Kiernan.
Siberia shareholders will emerge with 64 per cent of Monarch, and three other directors are slated to join Monarch's existing five-man team, arguably giving it the most unwieldy board in the junior sector.
Siberia chief Andrew Stocks and co-founder Jonathan Downs will also become executive directors of Monarch alongside its existing managing director, John Davis.
Mr Kiernan said a board restructure was inevitable at some point.
"Obviously there's got to be some form of rationalisation in the future - I think the ideal board situation is six or seven," he said.
Mr Kiernan said the merger should help Monarch attain annual production of 250,000 ounces within three years, and could even potentially lead to a merger with Croesus "down the road".
"It may well be that in the foreseeable future, a couple of years down the road or so, there may be a merger of the two," he said. "But that's conjecture down the road."
In the short term, Croesus and Monarch would be focused solely on their own businesses, he said.
In particular, Monarch planned an intensive exploration program over the next 18 months at Davyhurst, where it hoped to be producing 120,000oz a year within a couple of years.
An intensive program around the Siberia mine, and Siberia's Ida gold project would hopefully lead to a second mine, he said.
That will be a challenge given the failure of the Siberia mine which did not live up to expectations as the project was rushed into production.
Mr Davis, who will head the expanded group, said Monarch would methodically test new targets and optimise existing resources before resuming production.
Mr Forrest was overseas and could not be reached for comment yesterday.
Monarch shares slipped 1¢ to 34¢ on the news, while Siberia soared 66 per cent to 13.5¢.
CRS Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
(20min delay)
