The patrons of profit
26 Mar, 2011 01:00 AM
IN October last year, Fairfax newspapers published a story explaining how Nathan Tinkler turned $1 million into $400 million in just six months in 2005-06 with the purchase and sale of the Middlemount coalmining prospect in Queensland.
The article told how Mr Tinkler "knocked on every door in Sydney" looking for finance early on, eventually selling 15 per cent of his company, Custom Mining, to 60 clients of a Sydney stockbroker for $2.5 million of seed money. That lucky 60 got their money back many, many times over.
What the story does not say is that a small group of Newcastle investors led by prominent businessman and Bradken director Phil Arnall also looked closely at the Middlemount deal, but that they knocked it back.
Mr Arnall has social and business connections with two other important people in this story, Andrew Poole and Craig Ransley.
Mr Poole is the public face of the "patrons' trust" - a trio (so far) of would-be benefactors prepared to put $6 million over four years into the Newcastle Knights rugby league club, while leaving the club in public ownership.
Mr Poole and the Tinkler group have been engaged in a series of tit-for-tat full-page ads in the Newcastle Herald, putting their respective cases for the Knights.
Mr Poole worked with Mr Arnall at Bradken, which, coincidentally, supplied two of the past three Knights chief executives, in the form of Ian Bonnette and Steve Burraston.
Mr Ransley, a coal industry entrepeneur who introduced Mr Tinkler to Mr Arnall and others, is a partner with Mr Poole in the ResCo group of mining companies. Mr Poole and Mr Arnall were also on the board of Mr Ransley's previous business, the Tesa group.
Mr Poole is also a director and prominent shareholder with NuCoal - the company behind the Doyles Creek training mine proposed for Jerrys Plains.
Some Tinkler supporters have encouraged a belief that the patrons' trust was at least partly motivated by revenge or sour grapes against Mr Tinkler over the missed opportunity with Middlemount.
Mr Poole, Mr Arnall and Mr Ransley deny these claims.
"I have never met Nathan Tinkler in my life - except maybe bumping into him once in a lift - and I was never approached to invest with him," Mr Poole said yesterday.
"Craig [Ransley] and Phil [Arnall] have done business with him but I wasn't there at the time. I don't care who wants to buy the Knights as I said the other day, it could be the Dalai Lama. All I want is for people to know there is an alternative to privatisation."
Mr Arnall, whose other board seats include Newcastle Cruising Yacht Club, AJ Lucas and Ludowici, was on the Tesa board at the time of the Middlemount negotiations.
Mr Arnall said Tesa did buy the labour-hire section of Custom Mining from Mr Tinkler.
"I've told this story, against myself, to all of my friends, how I was the one who didn't make $42 million by not going with Nathan," Mr Arnall said yesterday.
"I wish Nathan very well in all he has done. He has defied all odds in what he has done and I respect him for it.
"To the extent that I could have been part of it all, well, we made our decision at the time and he went on to prove everyone wrong."
Mr Arnall acknowledges the Bradken links to the Knights, but says they are "coincidental" as much as anything and not unusual in a town like Newcastle where business people often socialise together.
According to the October newspaper article, Mr Tinkler "took an enormous punt" on the Middlemount lease because conventional wisdom held the coal was of little value.
Mr Tinkler, it seems, saw geological similarities between Middlemount, near Moura, and the Bengalla mine near Muswellbrook.
Mr Tinkler's instincts proved correct.
In June 2007 he sold Custom Mining to Macarthur Coal for $265 million.
His partners took their $65 million slice in cash, while Mr Tinkler took his $178 million windfall in Macarthur shares.
Six months later, Macarthur's share price had gone from $8 to $20 and he sold his stake for a personal return of $445 million.
Two years later, he made a similar leap with the Maules Creek proposal at Gunnedah. Maules Creek had been on Coal and Allied's books for years and when Mr Tinkler bought it in late 2009 for $480 million, the market reaction was that Mr Tinkler had heavily overpaid the Rio Tinto subsidiary.
In August last year, Mr Tinkler floated Aston Resources - major asset Maules Creek - for $1.2 billion, or nearly three times what he paid for it.
The shares began at less than $6 and, again, much of the market commentary was sceptical of the float. The same shares this week are $9.30.
Whatever people think about Nathan Tinkler, his nose for a profit is extraordinary.
And after humble beginnings he has the money to make things happen.
http://www.theherald.com.au/news/local/news/general/the-patrons-of-profit/2114782.aspx?storypage=2
