NZ's King Solomon mines to float on ASX

The company, which has mining prospects in Chinese-controlled Inner Mongolia, raised a similar amount last year when it placed shares to high net worth individuals.

The IPO opened on Friday and closes on April 2.

King Solomon has a possible giant copper deposit as its main target and gold and nickel as secondary targets.

King Solomon has completed an initial drilling programme on its lead project and got "significant encouragement", which it says has confirmed the existence of very large scale porphyry (giant copper deposits) copper system.

John Quinn, one of Australia's mining industry heavyweights as the former CEO of Newcrest Mining, has agreed to chair the company.

Founder Stephen McPhail told NZPA King Solomon bypassed the local market because of its lack of depth in the mining sector. However, most of King Solomon's current shareholders are New Zealanders.

Australia, along with Toronto, is the main market for raising capital for mining stocks.

"We're serious about building a company a great deal bigger than what we've reached already. We need to be positioned for that," said Mr McPhail, a former managing director of venture capital company Morel & Co. He is also a former executive with Todd Energy.

He said there was considerable investment from New Zealand in King Solomon and New Zealanders routinely invest in mining stocks in Australia.

While it was a mining stock with all the attendant risks, the sovereign risk of being based in communist China was probably less than in many other Asian countries, said Mr McPhail.

"You have a very stable government there with a long-term commitment to the World Trade Organisation."

He said it was the largest destination in the world for foreign investment outside US treasury bonds.

"If China wants to rock the boat on any particular situation, they have a huge amount at stake and I think the evidence is there that they are committed to, if you like, taking over the world, by controlling the financial markets."

King Solomon's largest shareholder is Mongolian entrepreneur Fu La, who has helped the company negotiate regulatory and licensing issues.

Mr Fu, who is an executive director, will see his 20 per cent holding dilute to 10 per cent after the IPO.

Next largest shareholder is New Zealand-listed company Widespread Portfolio, whose 16 per cent will dilute to 8 per cent. Its executive chairman Chris Castle is a director.

The company was founded when Auckland geologist Bruce Bell had a chance meeting with Fu La in 1999 in Inner Mongolia. It took another four years before the company got going.

Over the next four years with Mr Fu managing the Chinese business affairs and government relations, Mr Bell looking after the geology and Mr McPhail taking the corporate development role, the company built a portfolio of copper and gold exploration projects in the fringe-lands of the Gobi desert.

Mr McPhail said the area King Solomon was working was an under-explored part of a massive fold belt that elsewhere in Mongolia, Khyrgistan and Kazahkstan is yielding some of the world's largest copper and gold deposits.

The centrepiece of the company's portfolio is a large-scale copper exploration project called Marmot Ridge.

It is not far away from Invanhoe Mines' Oyu Tolgoi mine, 80km north of the Chinese Mongolian border in the South Gobi desert. It is one of the world's largest copper mines. Invanhoe has a market capitalisation of over $A3.33 billion, largely based on that mine.

"It is a very large hydrothermal alteration system with widespread copper anomalism at surface," said exploration director Mr Bell.

"Our initial drilling has given us some excellent insight into the geology of the system and the task now is to unravel the complexities and chase grade. That will involve some sophisticated geophysical surveys and a lot more drilling."

King Solomon's second project is at Wuritu, 15km from Marmot Ridge.

It has found samples of high-grade copper mineralisation over several hundred square metres at surface and the site has been readied for drilling through the 2007 exploration season.

Elsewhere in the same district, the company has two early stage gold projects and another copper area with nickel and lead soil anomalies waiting to be followed up.

Mr Bell and Mr McPhail previously had a company called High Lake Resources which they listed in Australia in the 1990s and it was taken over by Ballarat Goldfields in 1998. Ballarat has a market capitalisation of $A450m.