Paul Garvey - The Australian OWEN Hegarty’s private equity fund...

Paul Garvey - The Australian

OWEN Hegarty’s private equity fund is set to stump up a large portion of a major equity raising by phosphate explorer Highfield Resources.

According to a term sheet obtained by The Australian, Mr Hegarty’s EMR Capital will subscribe for $12.75 million worth of the almost $32m being raised by Highfield through a placement. EMR will pay 51c for the new shares, compared with the 48c per share that other investors will pay. Highfield last traded at 52c a share prior to entering a trading halt on Tuesday.
The participation of EMR will see the group maintain its prominent position on the register of Highfield, which is studying a collection of potash projects in northern Spain.
The funds will be used to complete a definitive feasibility study over the Javier potash deposit, which an earlier study suggested could support a net present value of about $US1.1 billion ($1.17bn) and generate an internal rate of return of about 50 per cent. The project has been slated for first production in 2017.
EMR is chaired by Mr Hegarty, the former Oxiana managing director and one of the Australian resources sector’s more prominent names, while former KPMG partner Jason Chang is the group’s managing director. The private equity group originally emerged on Highfield’s register just over a year ago, when it bought $10m in shares at between 21.6c and 30c a share.
Shares in Highfield have been trending upwards and the company believes rail and port facilities near its projects will lead to a lower capex cost, while shipments from Spain to Brazil will enjoy a freight advantage of around $US80 a tonne compared with Canadian producers that dominate the global potash market.
The potash projects being eyed by Highfield are also believed to be amenable to development via a decline, which the company believes is a cheaper alternative to the vertical shafts or solution mining used at most other potash mines.
Spain’s sluggish economy has prompted an overhaul of the country’s environmental approval process.
Foster Stockbroking and Taylor Collison are joint lead managers on the raising, while Numis Securities and GMP Securities are assisting in the distribution of the placement to investors in Britain.