Andrew Forrest has expanded his extensive commodities portfolio, investing millions into a developing uranium company just days after purchasing WA beef exporter Harvey Beef.
In a $12 million deal signed in early May, Mr Forrest made his first foray into uranium, becoming a majority shareholder in junior developer Energy and Minerals Australia (EMA).
Mr Forrest’s holding company Forrest Family Investments reportedly bought 400 million EMA shares at $0.03 per share, with the funds to go towards the development of Mulga Rock uranium and base metal deposits Ambassador, Emperor, Shogun and Princess, 240km northeast of Kalgoorlie-Boulder.
The pending sale included one unlisted option for each share a an exercise price of $0.05, with an expiry date of 30 June 2016. When the securities are placed and converted, Forrest Family Investments will hold a 28 per cent stake in EMA. EMA is run by Mike Young an Julian Tapp, two former management figures at Fortescue Metals Group, where Mr Forrest remains as non-executive chairman after stepping down as chief executive in 2011.
“My investment is a strong vote of confidence in the executive team of Mike Young and Julian Tapp, with whom I have had a long and successful working relationship,” Mr Forrest said. Mr Young told The Australian that
Mr Forrest expected the uranium market to recover to pre-Fukushima levels into the long term, making the Mulga Rock project viable.
“He’s backing me and Julian, that was his primary driver,” Mr Young said. “And he can afford to take a long view, which is what you need to do with uranium.” Mr Forrest, who has a net worth of about $5.7 billion, paid $40 million for Harvey Beef – which processes beef for domestic and overseas markets – in the week before the EMA deal. EMA has undergone a complete company restructure after negotiating a ‘debt-for-equity swap’ with Macquarie Bank and investment firms Acorn Capital and Element Resources Fund.
The swap wiped $24.5 million of company debt in exchange for shares. Macquarie and Acorn will join Mr Forrest as EMA’s primary shareholders, taking 21 per cent and 23.2 per cent stakes in the company, respectively.