Rich-listers bank on the Maloney family Midas touch for $250m gold float
A decade since they made $340m in the resources boom, the world’s most precious commodity has brought the Maloney family back to the public markets.
Of all the entrepreneurial skills Kevin Maloney has passed on to his four children, he believes one trait was in their genes.
“A lot of them were born with my common sense,’’ the straight-talking 74-year-old family patriarch tells The Australian.
The family’s Tulla Group, named after the Maloneys’ Irish home town, became part of Australian corporate folklore 11 years ago when it reaped $340m from the sale of their stake in listed mining services firm MAC Services to US oilfield services company Oil States International.
Investors in what became known as “The MAC” got four times their money back in just three years after its listing.
Since then, Tulla has built on its wealth to give the Maloneys a cool $550m valuation on The Australian’s list of the nation’s top 250 wealthiest people by investing in venture capital, private equity, debt, food and agriculture and gold.
Now it is the latter, the world’s most precious commodity, that has brought the Maloneys back to the public markets with the upcoming float of a firm known as Tulla Resources.
Its attraction is a 50 per cent interest in the Norseman Gold Project in Western Australia’s Eastern Goldfields, a joint venture with ASX-listed Pantoro Limited.
Located 200km south of Kalgoorlie, the Norseman region has long boasted of containing one of Western Australia and the nation’s richest gold endowments.
With funding from the float, the Norseman mine is now expected to start producing gold in the second quarter of next year.
“This has been 10 years in the making and there has been a lot of thought and planning that has gone into de-risking it and making sure it is investment ready. “Norseman is a premier asset,’’ Maloney says. Two highly credentialed mining executives, former senior BHP Billiton executive Michael Anglin and former BHP and Xstrata manager Andrew Greville, have agreed to join the board.
“We’ve put together a board of worldwide operators,’’ Maloney says. “They are not guys that have retired — they are very active people on good boards. It is very different to your typical West Perth-style mining board. It is a people’s industry, the mining industry.”
Tulla has successfully raised more than $78m for its IPO at 90c a share, giving the new listed company a $245m market capitalisation when it hits the ASX boards on Wednesday.
Large US gold funds and number of Australian family and private investment offices are understood to be investing in the business.
Tulla will retain a holding of 65 per cent in the listed entity.
“I am normally capital agnostic. It is normally what is best for the asset. But when we talk about resources, the best source of capital is listed capital. That has been proven over the years,’’ says Kevin Maloney’s son Mark, who will be an executive director of Tulla Resources.
His father will be executive chairman.
Mark and his brother Andrew both carry the title of managing director, Tulla Group on a day-to-day basis.
Andrew, who is based in the Spanish capital Madrid, spent time in London after securing an MBA at the IE business school in Spain. Mark was previously an investment banker at JPMorgan in London and then Goldman Sachs.
“We had a very good experience in listed life with ‘The Mac’. Out of that we generated a lot of close relationships with the Australian and offshore institutional investment community,’’ the latter says.
“In this current deal we have some great cornerstones and strong backing from those players but also some very large family office names. The board we have put together has been 10 years in the making as well on the back of our global resource network.”
Nearly $44m of the float proceeds will be used to develop the Norseman plant, while another $9m will be spent on exploration. $20m will be used to repay a loan to Tulla to leave the new company debt-free, with a clean balance sheet.
Kevin Maloney says the Norseman project also has a “smorgasbord” of other minerals, highlighted by recent drilling discoveries.
But some in the industry aren’t so sure.
Respected Perth mining writer Tim Treadgold noted last year that investors had not rushed to embrace Pantoro’s Norseman adventure because of the project’s chequered history on many levels, including production challenges in the mine and at the processing plant.
He also noted a full-scale development at such a remote location would be expensive. Others in the industry have called it an “ordinary project”.
Kevin Maloney admits it has had its problems.
“We made a big punt getting into the project based on our gut feel and what we know about the resources industry,” he says.
“But the perceptions are changing given the drilling results.”
His son also acknowledges the historical perception is correct but believes it has changed dramatically in recent years.
“WMC had a good experience there. Then along came a few underfunded operators. And the gold price is massively different now to what it was for those underfunded operators,’’ Mark Maloney says.
He also stresses future mining will be open-pit, as opposed to more expensive underground operations.
“A large part of what we are now doing is open cut using new strategies and new technologies. You have a very low cost of production here. And this is known as the highest grade mine in the eastern goldfields,’’ he says. Mark Maloney also stresses the Norseman project is just the start of a broader vision for Tulla Resources.
His father was part of the senior management team that created Elders Resources in June 1985.
Over the next two decades, it lent money to resource projects all over the world. He now has a similar vision for Tulla Resources.
“The vision for Tulla Resources is to build it into a similar resource house, an investment vehicle which identifies assets, gives them a development overlay, de-risks them and then brings in operators who can run them. And Kevin and I to work at the more strategic and capital level. Then to move on and find the next opportunity,’’ he says.
“Within the gold space, there are some good consolidation opportunities in the region that we are currently looking at. We also think there will be a number of opportunities that emerge there in copper, especially given its importance to the tech market. We would focus on Australia and tier 1 international jurisdictions. If you look at our board there is a strong North America and South American bent.”
But for the next 12-18 months the focus will solely be on Norseman.
In the twilight of his corporate career, Kevin Maloney says he is undaunted by a return to public company life. He’s been on several listed boards since the sale of “The MAC”.
“To a large degree public companies don’t worry me. If you put good boards around you, and you are a strong chairman, you get any delicate matters discussed before the board. I don’t interfere with businesses. I believe in working on businesses, not in businesses,’’ he says.
“I only like to be an executive chairman for 12-15 months to get companies going. Then I step back.”
Investors in Tulla Resources will be banking on what the Maloney’s have long called the “Tulla touch” and their strong family ethos rubbing off on their latest sharemarket play.
Kevin’s two daughters, Rachel Campbell and Suzanne Grosvenor, continue to involved in the private Tulla Group (Campbell runs the company’s marketing and communications, as she did for MAC before it was sold) and work with their mother, Leslie, on the family’s philanthropic interests.
“The scoreboard speaks for itself. We have found that working together we have been even more successful. Kevin has a lot of expertise in areas I don’t have. Same as Andrew and vice versa,’’ Mark Maloney says.
“Family business can be tough, we know that. There has been challenges for us along the way. But we are a close family. We have been able to talk through differences and come together stronger.”
