RIVERSDALE's operations in Mozambique, sold to Rio Tinto in 2011 for $4bn.

RIVERSDALE's operations in Mozambique, sold to Rio Tinto in 2011 for $4bn.

Riversdale Founder Creates New Iron Ore Champion

Issue 68, December 2013

Australia’s Michael O’Keeffe has created a new iron ore champion focused on the Labrador Trough, merging ASX-listed Mamba Minerals with Canada’s Champion Iron Mines.

A former Glencore boss and the architect behind Riversdale Mining, sold for $4bn to Rio Tinto in 2011, O’Keeffe became Mamba’s chairman and lead backer in August following an amicable boardroom overhaul.

“The company didn’t have any real structure or management to it,” he told reporters this week. “You don’t get half pregnant. You either get in and work with it or you don’t, so in August I decided I’d have a go and see if we could make something of the assets.”

The move brings Champion’s vast, untapped Fire Lake project under the oversight of O’Keeffe and Riversdale’s former finance director, Niall Lenahan. Rio Tinto took a $3bn impairment on its acquisition of Riversdale less than 18 months after the deal closed, having bid furiously for the company’s coking coal assets in Mozambique against Brazilian steelmaker CSN and India’s Tata Steel. Plans to barge coal down the Zambezi subsequently failed to win government support.

Pending shareholder approval and a $10m placement by Mamba, the new group, Champion Iron, will be valued at $105m with cash of $24m, funding Fire Lake through a bankable feasibility study. The deposit has reserves of 465m tonnes, within a 4bn tonne total resource. According to a prefeasibility study published this year, capital costs are projected at C$1.4bn ($1.3bn).

Mamba also has an earn-in agreement over the Snelgrove property, an iron ore discovery made by Labrador’s Altius Minerals, injected into Mamba in exchange for an equity stake. Whilst Mamba’s market value has more than doubled in the last year on drill results from Snelgrove, Champion has halved as its market cap has been increasingly outweighed by Fire Lake’s costs.

“This merger represents an excellent opportunity,” said Champion’s president Thomas Larsen, due to become the new group’s chief executive under O’Keeffe as chairman. “Mr. O’Keeffe and his team at Mamba have an outstanding track record in developing and financing bulk commodity infrastructure projects,” he said. “I am excited at the opportunity to work with Mr. O’Keeffe.”

“Mr. O’Keeffe and his team at Mamba have an outstanding track record.”

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