Agoracom

Dear Shareholder:

The following article has been written about Joseph Gutnicks and his desire to feed the Indian market with Legend's Phosphate.

Sincerely,

AGORACOM

How Diamond Joe fell for phosphate

Matt Chambers | June 07, 2008

FITTINGLY, a search for diamonds led renowned mining entrepreneur and Lubavitcher rabbi Joseph Gutnick to his latest venture: an $850 million mine to send phosphate to the Indian market to turn into much-needed fertiliser.

Now, after getting out of most of his Australian companies and tapping US investors for the better part of seven months, "Diamond Joe" Gutnick has bought a house in Mt Isa and plans to spend a lot more time in his home country.

The quick journey from precious stones to fertiliser began last year, when a search for diamonds in the Northern Territory with his US-registered company Legend International led the enigmatic Mr Gutnick across some uranium and phosphate deposits.

With the uranium market running too hot at the time, Mr Gutnick's interest turned to phosphate and, in a similar way to how mining entrepreneurial royalty Andrew Forrest and Ivanhoe Mines' Robert Friedland started their latest ventures, he found ground that had been discarded by bigger players.

If Mr Gutnick has his way, this unclaimed land near Mt Isa could be producing 5 million tonnes of phosphate annually by the end of 2009.

"I got interested in phosphate, looked across Australia and came across the Georgina Basin and then serendipity, or luck, or divine providence, however you want to put it, came my way," Mr Gutnick said in an interview from his Melbourne office that overlooks the Albert Park.

The luck or divine intervention that Mr Gutnick has thanked for leading him to past deposits re-emerged when Incitec Pivot, concentrating on the nearby Duchess phosphate project that it bought from BHP Billiton, allowed tenements that came along with Duchess to lapse. "They were developing Duchess, so they just dropped it," Gutnick said of the Lady Annie deposit north of Mt Isa.

"It became available again through the mining department and we were very lucky to be first-day applicants.

"No one was looking at phosphate because it wasn't exciting at the time."

The market is excited now though, with prices surging as the world is threatened by food shortages and as China's and India's middle classes develop more agriculture-intensive diets containing more meat.

Rock phosphate traded at an average $US42 a tonne between 2001 and 2007 but the price has recently shot through $US400.

Legend's mine, which will pipe slurry 350km to the Karumba port on the Gulf of Carpenteria, is expected to produce at $50 a tonne, which will make it a hugely profitable venture provided there has been a step-change in phosphate prices.

After last month raising $100 million in the US to get the plan on the road, and in the process bringing on board some of the biggest names on Wall Street, Mr Gutnick has bought a house in Mt Isa, which he says will make his kosher food requirements a little easier, and is ready to get down to the business of finishing a pre-feasibility study and looking at further options for finance and development.

New York hedge fund Atticus Capital has taken a 10 per cent stake in Legend International and other big Wall Street names are set to appear on the company's register in coming weeks.

Legend is also in talks with Indian Farmers Fertiliser Co-operative, that country's largest fertiliser seller, to take either a stake in the project or the company. IFFC has already signed a 15 to 20-year off-take agreement for 3 million tons of phosphate and could take the whole lot.

Mr Gutnick has been quiet on the Australian corporate scene of late and says this has mainly been due to his capital raising in the US.

He said he planned to list Legend on the ASX -- it is currently traded on the US over-the-counter market -- though this is not imminent. "We were looking for diamonds, which was why we were in New York, getting support from the diamond industry there," he said, adding that he has spent a lot of time in North America recently to raise capital for his phosphate plans and gain expertise in the field. The latest $100 million raised came through the Bank of Montreal.

"We'll be listing within the next month or so on the American Exchange, or Amex, and then, somewhere down the track, whether it's six months or nine months, we'll do a dual listing," he said.

"I do intend listing on the Australian stock exchange because I'm Australian and we have an Australian asset, but at this stage the backing I have is from the US."

Mr Gutnick's local reputation was soured by the 2001 failure of Centaur Mining in the same laterite nickel industry that tainted Mr Forrest for so long, partly leading both men to find backing easier to get overseas.

The pair have a long history together and were once quite close. They fell out over a deal gone wrong between Mr Forrest's Anaconda and Centaur that wound up in the Victorian Supreme Court. They have not spoken since.

Still, Mr Gutnick speaks in glowing terms of Mr Forrest's achievements.

"He has to be admired for his passion and his tenacity and his vision, he's created a model, in this particular case, not in some others, for people to follow" he said. "There's still massive potential in Australia in resources for massive wealth to be created and it needs a type of person like Andrew Forrest, despite my differences with him, to be so successful."

Mr Gutnick said he hoped to have finance sorted out by the end of the year and, while it was likely the first rock would be shipped in 2010, it could be up by December next year.