MGR Resources

In April 2013, Amedeo made its second investment, this time in a ferrous metals and ore wholesaler and trader, MGR Resources.

The logic behind this investment was two-fold. First, Amedeo is, indirectly through YZJ Offshore, a customer of the large Chinese steel mills and has good relationships with them. By investing into MGR, Amedeo has further cemented those relationships by becoming a supplier to the steel mills. Second, offshore vessel construction has long lead times in which, typically, cashflows are received some two to three years after orders are placed whereas wholesaling and trading commodities provides immediate cashflow.

The investment into MGR was made by acquiring a 49% stake in MGR for £30,000 (US$49,900). In addition, Amedeo provided a three year 15% coupon convertible loan to MGR of up to US$1.95 million for working capital.

MGR’s principal activity was the amalgamation of iron ore from the Middle East and Africa and onward supply to China. Given the recent decline in the iron ore price and the immediate outlook for iron ore being poor, MGR is utilising its network to explore other opportunities for broking other commodities, including into China and elsewhere.

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