Heemskirk Consolidated

Almost 350 years ago, a Dutch explorer and mariner called Captain Abel Tasman discovered the eastern coast of Australia. The ship that transported him on the expedition was called the Heemskirk, which was then used to name a mountain on Tasmania’s west coast.

It also gave ASX-listed (HSK) Heemskirk Consolidated its name, representing the concept of discovery, new frontiers and alignment with the resources industry.

“We listed in October 2004 and our business structure was that we were aiming to be a reasonably diversified mining company with a focus on the more traditional commodities such as gold and base metals,” says Peter Bird, executive director, corporate and markets.

Since that time, Heemskirk has incorporated three operations into the business: Canadian industrial minerals, the Spanish Los Santos tungsten mine, and the Pajingo gold mine in Australia.

Focusing on the Pajingo mine, the firm is in the middle of a competitive takeover bid to take ownership and operatorship of 100 per cent of it.

Competitive takeover

While Heemskirk owns 40 per cent of the Pajingo gold mine, the remaining 60 per cent is owned by North Queensland Metals (NQM), a firm that has found itself in the middle of competitive takeover bids from Conquest Mining and Heemskirk.

“We have been very happy joint-venture holders with NQM for the past couple of years since we purchased the project jointly,” explains Bird. “NQM was subjected to a hostile takeover bid by Conquest Mining and we have put in a counter bid of 1.2 Heemskirk shares for every NQM share. At the moment it is a contested situation. We are hopeful we can ultimately end up with 100 per cent of Pajingo.”

NQM directors have previously shown favour to the bid from its joint-venture partner by rejecting the bid from fellow-listed Conquest Mining. However, the Australian Takeovers Panel has ruled that NQM issue an amended target statement in relation to the Conquest bid, stating that “deficiencies” had been identified in the initial statement sent to shareholders. Conquest has raised its offer to 15c and 0,5 of its own shares for every NQM share held, to compete with an A$84-million all-scrip offer from Heemskirk.

Pajingo gold mine project

Heemskirk and NQM executed a sale and purchase agreement to buy the Pajingo gold mine from Newmont. The project acquisition price was $25 million, with Heemskirk’s share coming in at $10 million, and replacement of the existing environmental bond. As part of the acquisition price Heemskirk issued three million shares to Newmont and has taken an equity stake in NQM.

The mine has produced over 2.3 million ounces since 1996 at a grade of approximately 11 g/t Au. “It is an epithermal gold system,” explains Bird. “The status of the operation today is that it is an underground mining operation.”

Objectives in the current joint venture are to continue to exploit the mineralization that is currently in place and grow that with additional resources as time goes on, but Heemskirk also has its eye on 100 per cent ownership and operatorship of the lucrative mine.

Los Santos Tungsten project

If Heemskirk is successful in its takeover bid the firm will be dominated by gold. However, the company also owns 100 per cent of the Los Santos tungsten project in Spain along with its associated exploration tenements. In fact, they have just completed an upgrade and refinement of the operation.

“The objective of that process was to improve the recovery grade of the plant,” says Bird. “There were some issues with construction that we have appeared to have resolved now.”

At full capacity production, Los Santos is in the top four tungsten mines in the western world. Tungsten production is mainly generated out of China and there are very few tungsten operations in the western world.

“Certainly in the wake of the global financial crisis the tungsten market has increased significantly and clearly the supply side of tungsten is very tight,” says Bird. “We are moving into quite an interesting situation in terms of supplying into what looks to be a very tight market in terms of product supply and demand.”

Diversified offering

Besides the Pajingo gold mine in Australia and the Los Santos tungsten plant in Spain, Heemskirk has an industrial minerals business based in Canada and is also in the process of establishing a development arm to investigate ongoing opportunities in the European region.

“Collectively we have international experience,” says Bird. “We have a very diversified group of people. If we operate 100 per cent of Pajingo, we will have about 290 employees. All of our projects are in First World countries, which means access to technology and infrastructure is literally at hand.”
Heemiskirk’s main goal in the next couple of months is to successfully complete the takeover of Pajingo operations and thus refine and run the operation more efficiently. “The subsequent goal to that,” adds Bird, “is to return the company to a strong profitable small- to mid-tier Australian mining company dominated by gold.”

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