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Emmerson PLC active in the hunt for resources deals

It may have taken a bit of a beating following the global financial crisis but the London-Australia resource-finance axis still survives in various forms.

Emmerson says its preference would be for a deal in the oil and gas space

One way is in the serious amount of London money that gets vested into Australian projects via the UK mining giants BHP Billiton and Rio Tinto. And British-based and banks and investors are among the top investors in local champions like Fortescue Metals (ASX:FMG) and Woodside Petroleum Ltd (WPL:ASX).

But money flows the other way too, as is evident from the way the Australian arm of RCF has supported Wolf Minerals over the years.

It’s also evident in a different way in the arrival of Emmerson Plc (LON:EML) to the Standard List of the London stock exchange earlier this year.

Emmerson raised around £1mln before costs, with the money sourced jointly from Australia via associates of non-executive director Cameron Pearce, and from the UK through brokers Optiva and Peterhouse.  

And it may not be a one-off.

“I want to do three Standard Lists over the next five years,” says Pearce. “We bring a group of Australian investors. Typically in these shells we bring half the money and UK brokers bring the other half.”

But the group or company that actually brings the asset that goes into these vehicles will be the one that determines their ultimate future.

As such, Emmerson is currently little more than a shell with some corporate expertise sitting on top of it.

But plans are afoot for a deal.

“We are a natural resources-focussed company,” says Pearce. “We currently have Optiva’s analysts going through a lot of potential projects.”

The reason Optiva is retaining such a close interest after listing is that it has promised to back any deal that Emmerson does. For that reason it also has something of a say in what deal does eventually get done.

Still, the scope is pretty broad.

“We’ve looked at graphite, we’ve looked at a bit of gold,” says Pearce. “But our ideal asset would be in oil and gas. Oil and gas can be funded and we’ve got a very clean vehicle.”

As to jurisdiction, Eastern Europe is probably out, as is Indonesia. But other than that the field is wide open, including the potential of a move into Africa.

“Anywhere in Africa would be fine,” says Pearce.

The asset size would ideally be in the US$30mln to US$50mln range and actively marketing itself.

But within the resources space that leaves the field pretty wide open.

“We’re looking for the right home to jump on the back of,” says Pearce simply.  

And if a whisper of the right deal comes along the company’s shares are likely to move pretty rapidly.

Quick facts: Emmerson PLC

Price: 4.7 GBX

Market: LSE
Market Cap: £32.25 m

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