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Legend Int'l Holdings

December 04, 2010 – Comments (2) | RELATED TICKERS: LGDI.OB

Australian Miner Legend Looks to Cash In   By ALISON TUDOR

HONG KONG—Legend International Holdings Inc. is looking to sell its phosphate mines for between $500 million and $1 billion, said a person familiar with the matter, as the Australian miner aims to cash in on growing demand in Asia for fertilizer.

The Melbourne-based firm said Thursday that it has appointed Tokyo-based Nomura Holdings Inc. to search for an investor. Companies that have already expressed interest include China's formerly state-owned enterprise Wengfu Group, the person said. Wengfu didn't reply to requests for comment.

Phosphorus is one of the key nutrients in fertilizer along with potassium and nitrogen. Phosphorus is extracted from phosphate rock, which Legend mines.

Legend has three phosphate deposits in the Georgina Basin of Queensland. Depending on the level of interest, the firm could sell all the deposits or take on an investor in its plans to go up the value chain by building a phosphate fertilizer complex.

Nomura will send out invitations to bid along with information about the mines next week and expects initial bids in January.

Legend has chosen an opportune time to put the fertilizer business on the block. The price of phosphate rock has risen steadily this year after dropping sharply in 2008, according to data from the World Bank.

"The outlook for global phosphate demand and prices is very attractive on the back of the growth in global food demand, increasing importance of food security and emergence of phosphate fertilizer as a key ingredient in enhancing food supply," said Sheryar Chishty, global head of Industrials Investment Banking at Nomura.

The Food and Agriculture Organization of the United Nations forecast in 2008 that by 2012 Asia will use nearly 59% of fertilizer consumed globally.

International awareness of the importance of fertilizer has never been higher following BHP Billiton PLC's highly publicized failed bid for Canada's Potash Corp. of Saskatchewan Inc.

A more direct comparison for bankers to use for valuing Legend's assets would be Brazilian miner Vale SA's sales this year of stakes in a phosphate rock mine in Peru to Mosaic Co., a fertilizer subsidiary of U.S. agribusiness giant Cargill Inc., for $385 million, and to Japanese trading house Mitsui & Co. for $275 million.

Legend expects its phosphate fertilizer complex near the three deposits to start commercial production in 2013. It also forecast that the complex will be able to produce a base case of 600,000 tons annually of monoammonium phosphates and diammonium phosphates.

Write to Alison Tudor at alison.tudor@wsj.com