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Vallar: new mining company to be listed at LSE

June 25, 2010

“Vallar, a Jersey incorporated company, today announces its intention to proceed with a placing of its Ordinary Shares to institutional investors (the “Placing”) to raise gross proceeds of £600 million. Application will be made for the Ordinary Shares to be admitted to a Standard Listing on the Official List of the FSA and to trading on the London Stock Exchange’s main market for listed securities (“Admission”).

Following Admission, Vallar intends to acquire a single major company, business or asset that has significant operations in the global metals, mining and resources sector (the “Acquisition”).

The Company expects to focus principally on regions and commodities where it can leverage the extensive network and strong prior operating and investment experience of the Vallar Team within the sector. As such, the focus regions include the Americas, Russia, Eastern Europe and Australia, and potential commodities include base metals, coking coal, iron ore and thermal coal (and may also include gold, silver, uranium and associated co-products or by products). Other regions or commodities may also be considered where the Directors believe the opportunity presents an attractive investment. A prospective target for the Acquisition has not yet been identified.”

Source: London Stock Exchange, June 25 2010

Observations:

  • Vallar plc. was founded by banker Nathaniel Rothschild and former Anglo American coal executive James Campbell. They intend to collect $900 mln by an IPO at the London Stock Exchange.
  • Vallar hopes to acquire attractive assets by using a “flexible structure and decision-making process that will allow us to react more quickly than competitors”. The company is aiming at acquisitions worth $2.5-7.5 bln, indicating a high desired gearing.
  • There are some 100 public mining companies worth more than $2.5 bln around the world. Furthermore, hundreds of private companies or single assets of public companies could be bought.

Implications:

  • With the coal background of Mr. Campbell, it is most likely the company will try to buy a coal asset or company. With China transforming into a net coal importer, the global market for coal is becoming more and more attractive. However, as Vallar is translated as “crown”, it would not be unlikely if the company searches for gold assets too.
  • Once the company has acquired assets, it will have to build a team of professionals that could turn around the acquired business.

©2010 – thebusinessofmining.com

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