Luxury lodge developer Richard Magides is building his stake in Kakadu uranium miner Energy Resources of Australia (ERA), despite the company’s major shareholder calling for a permanent end to mining at the Ranger lease.
Shares in ERA have lost 70 per cent of their value since June 11 when 68 per cent owner Rio Tinto declared it would not support an expansion of the mine now nor in the future.
The decision has prompted some analysts to speculate that ERA shares could be worthless given it has no prospect of further mining in the forseeable future and may need to spend all of its cash balance on rehabilitating the Ranger lease.
But despite those predictions, the stock appears to have found a temporary floor around 38 cents, and documents submitted to the ASX suggest Mr Magides is building on a stake that is already the second largest in ERA.
Having already lifted his take from 5.4 per cent to 6.6 per cent on June 15, Mr Magides has continued buying over the past ten days and declared his stake on Thursday at 7.6 per cent.
Documents lodged to the ASX show that he has bought shares on every trading day since Rio’s announcement was made on June 11 and sold just one small parcel of shares in the same period.
Mr Magides investments are held under the name of Zentree Investments, and he has declined opportunities to explain his interest in ERA.
Steve Diggle ran a successful hedge fund called Artradis with Mr Magides between 2001 and 2011. Mr Diggle declined to comment on his former business partner apart from saying; “he is one of the most talented traders I have ever worked with.”
Another source familliar with Mr Magides said he was a believer in uranium having a bright future, even if it is a long-term punt.
With Rio determined to see the end of mining at Ranger, Mr Magides’ interest in ERA may relate to the company’s other uranium asset, Jabiluka.
Jabiluka is a high grade uranium deposit located close to Ranger, but has lay dormant for many years out of respect for the traditional landowners of the area, who consider Jabiluka to be a sacred site.
Local opposition to mining at Jabiluka is so strong that some analysts, including at RBC, apportion no value to the asset.
Mr Magides has recently sought to buy swathes of land around Queenstown in New Zealand, where one of his companies plans to build luxury lodges.
He has also bought wineries in New Zealand and Australia’s Yarra Valley in recent years, and broke a New Zealand record when he paid $NZ8 million for a penthouse apartment in Auckland in 2014.
source:-http://www.smh.com.au
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