Ernest Henry A Winner For Mim

Sydney Morning Herald

Thursday July 29, 1993

By BRUCE HEXTALL Resources Writer

MIM Holdings Ltd has emerged as the ultimate winner in the dust-up over the rich Ernest Henry deposit in Queensland's Cloncurry district.

Analysts yesterday said that in one move MIM had been able to establish a strong position in the Cloncurry district after having failed to get in on the ground floor two years ago, when the region was re-rated as one of Australia's most prospective gold/base metal plays.

Although the analysts suggested that a more astute exploration and land acquisition strategy program might have seen MIM avoid outlaying more than $80 million on Ernest Henry and related lease areas, they suggested the deals done would have longterm benefits for MIM.

MIM's managing director, Mr Norman Fussell, said the deal fitted with MIM's basic objective of expanding its low-cost copper production.

The agreement announced on Monday will see MIM part with $80 million for a 51 per cent interest in the Ernest Henry lease and 10 other leases, while the big Queensland resources house will also hand over a further $17.5 million to WMC's junior partner, Hunter Resources Ltd.

MIM spokesman Mr Alan Hutchings said last night that MIM was comfortable with the deal because of the potential of Ernest Henry to maximise the group's copper profits. "It is significant because of the economies of scale that it adds to the Mt Isa smelting operations. The scale and proximity dictate that,"he said.

The deal, which came to fruition after Western Mining Corp surrendered in a court battle over rights to the Ernest Henry lease, will see MIM's copper reserves boosted by 25 per cent.

"That alone means that the events of this week will have a material impact,"Mr Hutchings said.

Market recognition of the benefits of MIM becoming a major player in the Cloncurry area has so far been subdued. MIM's share price has nudged up only 2c to a close of $2.09 yesterday.

Analysts said entry to Cloncurry was only the first step. MIM now had to prove that it could bring a major new mine into production on budget with the capacity to deliver the returns anticipated.

Savage Resources Ltd, which secured title to the lease as a result of the court battle, has been seen as a more leveraged play.

Its share price continued to gather pace yesterday, rising 11c to a close of 94c, which was 32c ahead of the price before the settlement in its favour.

© 1993 Sydney Morning Herald

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