Mercury Asset Management buys 6.7% of Ivernia West

THE mining investment arm of Mercury Asset Management has become the third biggest share holder in Ivernia West following the sale last week of Outokumpu's 24.5 per stake in the Irish mining company.

Mercury disclosed this week its Mercury World Mining Trust now holds 3.37 million Ivernia shares or 6.7 per cent of the company, and is now the third largest shareholder behind Minorco, which has 24.5 per cent of Ivernia, and AIB Investment Managers with 14.4 per cent.

Mercury did not previously have a disclosable stake in Ivernia and market sources believe Mercury bought the bulk of its 3.37 million shares from Outokumpu last Friday when the Finns sold their entire 12.4 million shares for 75p each.

It is understood Mercury which tends to take substantial share holdings in companies had found it difficult to assemble a size able stake in Ivernia and took advantage of the Outokumpu divestment to build a stake. Given Mercury's investment strategy, market sources said it was likely that the British investment group would increase its stake further through share purchases in the market.

"Mercury was a frustrated buyer of Ivernia shares and its arrival on the register is a strong vote of confidence in the company," said one source.

Market sources welcomed the increasingly diverse nature of the Ivernia share register and said the willingness of Irish and institutional institutions to pay 75p a share for a quarter of the company would undoubtedly under pin the share price. Ivernia is currently trading at 80p on the Irish market and is well supported at that level.

Ivernia chief executive, Mr David Hough said yesterday that it was likely that Ivernia would come to the market at some stage for cash to fund part of its share of the £120 million Lisheen lead/ zinc mine development costs in Co Kilkenny. "We are talking to a number of mining finance houses and specialist banks about the funding for the project, and whatever they say will dictate what we raise in the market.

Eight Irish and British institutions took up the shares sold by Outokumpu and, following the sale, about 45 per cent of Ivernia's shares are held by institutions in Ireland and Britain, 24.5 percent by balance held by shareholders and Ivernia directors.

Apart from whatever equity Ivernia raises in the market, the Irish company will fund the rest of its share of Lisheen development costs with loans from both Minorco and banks.

Minorco Lisheen the joint venture company established to develop the orebody is to get planning development by year, with a construction period of 18 months to two years, bringing the mine on stream by mid to late 1998.

There is speculation that once Minorco Lisheen has got through the planning process and developed the orebody, it might move to buy out the Irish partners. This could be done by Minorco bidding directly for Ivernia's 50 perk cent of Lisheen or using its existing 24.5 per cent stake in Ivernia as the springboard for a takeover bid for the Irish company.