Russell Lamming joined Chromex Mining to build revenue streams and expand its operations. It only took him a few weeks to close his first deal. Mark Dunne reports

Russell Lamming has had a dream start to his career at Chromex Mining plc. The South African geologist-turned-businessman became its chief executive in April, just in time to put the finishing touches to a deal that he hopes will underpin the chrome explorer’s value.

That acquisition was Ilitha Mining, which holds the mining right on the 15 million tonne Stellite project to produce chrome to sell into the ferrochrome industry, a chrome and iron alloy used to make stainless steel.

The mine covers 271 hectares on the Western Limb of the Bushveld complex in South Africa and adds a second project to London-based Chromex’s portfolio. The AIM-listed company’s other site is the Mecklenburg Project on the Eastern Limb of the Bushveld.

The deal more than doubles Chromex’s controlled chrome resources from 9 million tonnes to some 24 million, an increase of 166 per cent. More importantly it moves the company a step closer to becoming a producer rather than exclusively an explorer, a strategy Lamming has been appointed to spearhead.

“The chrome market is going through a structural change,” Lamming said. “It has gone from a fairly dreary place to something that is quite sexy. There is huge amount of enthusiasm and excitement as the company is now perfectly posed to take advantage of the huge demand for stainless steal that is being driven out of India and China.”

Immediate action

The first acquisition in this strategy was Mkhombi Stellite which owned the controlling 51 per cent of the Stellite chrome project, costing Chromex ZAR34 million (£2.4 million). The consideration comprised some £900,000 in cash, funded by existing resources, with the remainder paid in more than 6 million shares at 25p each.

The remaining 49 per cent previously owned by Hernic has been acquired for ZAR45 million (£3 million), which includes equity and shareholder loans. Chromex will manage the Stellite project with a view to accelerating its development.

Chromex Mining plc is an AIM-quoted chrome company established in September 2006 as a chrome explorer focusing on increasing its chrome resources in southern Africa to fill the niche market of exporting beneficiated chrome products to the global stainless steel market. The policy of acquiring projects that are close to production is driven by the strong cashflow potential in a robust chrome market.

Room at the top

Lamming was asked to join Chromex by its chairman, Brian Moritz. When Moritz explained the goals and direction of the company he did not hesitate to accept the role. “It is an exciting company,” he said. “Nigel and his team have done a fantastic job of getting it to where it is.

“It is a good time to join. China has limited chrome resources so they are having to import most of the feed for their ferrochrome smelters, and we are lucky to be in a position to fill that gap.”

Lamming is a qualified geologist with an honours degree in geology from the University of the Witwatersrand and a Bachelor of Commerce in Economics and Law from the University of Natal. He has spent several years in the resource sector as a company director, as well as working for a South African mining consultancy and as a precious metals analyst for an international broker.

More recently he was involved on the technical and the commercial side at mineral exploration and developer African Platinum plc, where he met Brian Moritz, the Chromex chairman, who was also chairman of Afplats.

Lamming replaced Nigel Wyatt, who had been asked to front a copper mining project, but who remains with the company as an executive director. Joining the new chief executive are Guy Gibbons as head of finance with Graham Stacey as chief operating officer.

Gibbons, a South African accountant, previously held similar positions at Lazard, Pearson plc and Mindscape International before joining Penguin Books as head of financial control. He was also head of finance at Metal Bulletin plc, a news and information service for the metal markets, until 2007 when he joined Marwyn Investment Management as a consultant.

Stacey, a mining engineer, has more than ten years of operational experience in the sector, working with Anglo Coal and was a director at Venmyn.

The Stellite project is part of this strategy, but Lamming admits that selling beneficiated chrome products from Stellite will take a while to achieve. “It is a fairly strange situation where it has a mining right, but no bankable feasibility study,” he said. “We have to re-jig the mine design a little and complete the testwork for the processing plant feasibility study. In the meantime we are going to start selling run of mine ore into the market to start generating early cashflow.”

Win-win situation

Initiating the deal was not difficult as Lamming describes South Africa’s mining industry as “a small place”, so Chromex’s board already knew the people running Stellite. He also believes that the vendors could see the advantages of being part of the enlarged entity. “It just made sense for both parties to put the mine into Chromex where it can benefit from our marketing structures and resources.

With the Stellite deal completed Lamming is not resting on his laurels. “We are always looking. We think like an acquisitive company and we plan to continue that way.”

With the growing demand for chrome, the value of potential targets is rising. “At the moment the market is pretty frothy so it is expensive to obtain properties. We have got to keep our eyes open and make sure that we get the right projects.”