IT might wear the Latin name for an eagle, but that didn’t stop Aquila spending three years in the dog-house when it was overlooked in the highly-contentious 2001 bidding duel for the Ernest Henry copper-gold mine in Queensland.

But look at the difference now. Over the past 12-months, Aquila has flown from 70c to more than $4, winning a reputation as one of the best performing stocks on the Australian market, with a value that has risen from $34 million to $200 million.

Most of that remarkable rise can be attributed to a decision in September 2001 to peg eight coal claims in Queensland.

That was done six months after Pasminco accepted a bid from MIM Holdings for its 49% in Ernest Henry – thwarting a rival $145 million bid from Aquila, but triggering a fascinating legal action which continues to this day.

“We needed a new focus after Ernest Henry,” Aquila co-founder and executive chairman Tony Poli said.

“We took a close look at how the coal industry works in New South Wales and Queensland and could see that a lot of change was underway.

“Coal until then had been solely the business of big companies like BHP and Rio Tinto, but the acceptance of contract mining and other changes meant the industry was opening up to smaller players.

“We had $3 million in the bank and applied for eight areas in Queensland.”

Aquila was awarded all that it asked for, which is an interesting comment in itself on what the market thought of coal in 2001, and then watched with as much amazement as the rest of the mining industry as the price of coal took off and its decision to “take a look” became one of the best-timed management moves in the history of Australian mining.

Two other events cemented Aquila into its position as one of Australia’s new generation of emerging coal miners – a joint venture deal with American Metals and Coal International (AMCI), and more recently a deal that introduces the Brazilian iron ore giant, Companhia Vale do Rio Doce (CVRD), into the Australian mining industry.

If all goes to plan over the next few years, Aquila will emerge as a business with:

* A 50% stake in the small but very profitable Isaac Plains coal mine near Morambah in Queensland’s Bowen Basin;

* Either a half share in the big Belvedere underground coal mine – or a large pile of cash from selling it to CVRD;

* A string of other potential coal developments on its extensive lease position;

* A coal exploration play in the southern African country of Mozambique;

* Assorted interests in iron ore exploration projects in Western Australia’s Pilbara region; and

* The on-going Pasminco legal action, which is seeking extensive damages and is scheduled to go to trial in the first half of next year.

The two biggest winners from the rise (and rise) of Aquila are its founders and principal shareholders. Poli is sitting on 9.1 million shares worth $36.4 million with Eagle priced at $4, while his long-time partner Charles Bass has 8.5 million shares worth $34 million.

Needless to say, those numbers are a far cry from April 2001, when Aquila shares crashed from 74c to 21c in a matter of days after Pasminco sold its stake in Ernest Henry to MIM.

At that low point on the graph for Aquila, Poli’s stake was worth $1.9 million, and Bass’ $1.8 million.

To put the remarkable increase in corporate (and personal) value into perspective, the run from 21c to $4 is an increase of 1800% – or 450% a year since the “Ernest Henry rug” was pulled from under Aquila’s claws.

Poli, who must have felt deeply angry at the time, is a much more relaxed man today – and who wouldn’t be with a personal worth topping $36 million.

When Australia's Mining Monthly caught up with him in a South Perth cafe across the road from his office there was an obvious sense of satisfaction with the 2001 move into coal.

“There’s no doubt we picked a good time to get into the coal industry,” he said. “There was vacant ground available in the Bowen and Surat basins, the coal price was low, and some people probably wondered what we were doing.

“But when you look back on it, the real reason was simply that we needed a focus, and when you looked at the way the industry had changed, coal was the obvious way to go.”

If opting for coal because Poli and Bass could sense a change in the way the industry was governed was their first good choice, the second was in teaming up with AMCI.

Though not well known in Australia because of its private company status and American roots, AMCI had extensive coal knowledge, especially of the all-important marketing aspect – something that was foreign to Poli and Bass, who first made their names as the major shareholders in Eagle Mining, which discovered the Nimary goldmine in WA and was later acquired by Great Central Mines.

Armed with a fistful of dollars from…Click here to read Part 2