Beament unveils hybrid growth ambitions for Develop

The maverick in former Northern Star Resources boss Bill Beament made the choice of location for last week’s release of a five year strategy for his new mining vehicle Develop Global a natural one(reports Barry FitzGerald on MiningNews).

A standard conference call would have been just that, standard. Instead, Develop bussed 50 analysts and investors from Sydney down to the Woodlawn zinc-copper mining site near Canberra for the strategy unveiling.

It is a unique sort of place.

Wind turbines skirt a ridge behind the treatment plant, and the old open cut takes as much as 40% of Sydney's garbage in a methane drainage project.

Then there is a A$650 million plan to build an incinerator to generate up to 30MW of power.

Those operations and plans are owned and operated by others and make Woodlawn one of the most intense uses of land on the planet, with a distinct renewable energy overlay. Develop is out to step up the land use intensity to another level by resuming underground mining at the site.

Acquired from creditors of Heron Resources in May for the knockdown price of $30 million in shares and cash up-front, and $70 million payable on success milestones being met, Woodlawn is one of two mining assets now under Develop's belt.

The other one is the near-shovel ready Sulphur Springs zinc-copper project in the Pilbara, Western Australia, where a definitive feasibility study is due for completion early next calendar year.

On a combined basis, the projects are good for annual production of more than 50,000 tonnes of copper equivalent as a starting point.

The two mining development assets sit alongside Develop's underground mining services arm, making for a hybrid business model that only Mineral Resources - a 15% Develop shareholder - mirrors, albeit with a surface mining focus, rather than Develop's underground focus.

The mining services arm has got off to a flying start by picking up the $400 million contract for the construction, development and production activities for Bellevue Gold's namesake high-grade project near Leinster, WA.

Develop (formerly Venturex Resources) became Beament's chosen vehicle to make his return to the world of ASX-listed miners after moving on from Northern Star early in 2021.

In his 14 years at Northern Star, the company grew from a penny dreadful explorer to the number two gold producer with a market capitalisation of $9 billion. But as Beament made clear at Diggers & Dealers in early August, and as he reiterated at Woodlawn, he wants to stay outside of the ASX 100 this time around.

"People heard me at Diggers & Dealers. I don't want to get in the ASX 100 ever again. It's not fun. It's a different shareholder base, and a very annoying shareholder base," Beament said.

To ensure he is his own master this time around, Beament has followed the lead of another industry maverick, Fortescue Metals Group's Andrew Forrest, by having his foot on 30% of the $515 million Develop (fully diluted).

Despite wanting to avoid the ASX 100, Beament's plans for Develop are not on the smaller side of things.

"We have already got the building blocks for a multi-billion dollar company," Beament said at Woodlawn.

"We have a unique investment opportunity in Develop. We have got mine ownership of energy transition metals, and we have a specialist underground mining services business. They are going to go hand in hand," Beament said.

"Both of those business units are set for exponential growth over the coming years."

"When you look at our forecast production from our two (mining) assets in coming years, plus our mining services, we're going to have revenue of well over $1 billion, and we are targeting EBITDA margins of 40-50% ... you know what means when you start applying whatever multiple you guys want to use.

"And there is no more dilution guys (200 million shares fully diluted). That's it. Mining services is covering our bills moving forward, and we have a great cash balance."

The initial combined output at Woodlawn and Sulphur Springs - up to 70,000t looks possible - will establish Develop as a go-to stock in the energy transition metals space behind the likes of OZ Minerals and Sandfire.

But, thanks to its hybrid business model, Develop's exposure to what Beament described as the explosion in demand for underground mining expertise makes it a unique offering on the ASX.

"Have a look at the underground activity in Australia which is going to explode. It is happening now. But you can't get underground staff with the right skill set," Beament said.

"We say how the hell are you going to get the underground development teams and the underground teams to do it. So it (the mining services arm) is set for exponential growth.

"We are going to capitalise on a huge increase in demand. People are going to have to pay for that skill set guys. I can't emphasise that enough," Beament said.

But again, Beament does not want to get too big in either mining or underground mining services.

"We have a vision to basically to cater to five or seven. We already own two, we have got one contract, and I have said we are going to do two or three mining contracts, so it means we can buy some more mines or partner up at some mines. But I don't want to have any more mines or operations than there are days in the week," he said.

Under Beament's plan, Develop is unlikely to ever have a workforce of more than 1200-1500 people.

It goes to his belief that big business has lost touch with their workforces, with COVID-19 exacerbating things.

"And I will throw in another one - the workforce changed three or four years ago. Unless you have got a set of core values and vision that everyone in the organisation from the top-down talks the talk, and walks the walk, if that doesn't happen, you've lost your workforce."

"Everyone running large scale workforces are telling me the same. If you are not on the ground floor with your workforce., you are in a world of pain that the moment."

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