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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Oriel Res. | ORI | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
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|---|---|---|---|---|
| 0.00 | 0.00% | 121.50 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 121.50 |
| Top Posts |
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Posted at 07/3/2008 10:36 by eastwind 06.03.08 Oriel Resources Takes a Short Timeout MOSCOW, March 6. /FIS/ Directors Board of Oriel Resources Plc. recommended the shareholders 'not to take any decision regarding Mechel's offer'. The offer price and shareholding size have not been disclosed. Investors believe the recommendation is just the mark that Oriel Resources is ready to start active negotiations: the shares quotations grew by 12.85% yesterday and capitalization increased to USD1.26 billion. A source with Oriel confirmed that the Directors Board's refusal to support Mechel's offer at once is but a bargaining move. The source said the bargaining is likely not to last long and the deal may be announced by the end of the week. The delay could be also due to the need to agree everything with Kazakhstan's authorities. The British geology prospecting and production company owns Tikhvin Ferroalloy Plant near St.-Petersburg and two deposits in Kazakhstan. Source: Kommersant.-- |
Posted at 05/3/2008 16:03 by eastwind The trasnsaction price is 95p.HomePage Enlarge font Reduce font Baran records huge profit on Oriel sale Baran sold its 5.6% stake in the Canadian mining firm. Irit Avissar 5 Mar 08 11:16 Baran Group (TASE: BRAN; Pink Sheets:BRANF) will record a net capital gain of NIS 72-77 million on the sale its stake in Canadian mining firm Oriel Resources plc (TSX; ORL; AIM: ORI) to a foreign investor. Baran sold 47.3 million shares at ₤0.95 per share for a total of ₤44.94 million (about $78 million). Baran's net capital gain will depend in part on the shekel-pound exchange rate. Beit Dagan-based Baran owns a 5.6% stake in Oriel. Baran paid $2.5 million for 12.5% of IPH Polychrom Holdings BV, which in 2006 was merged with Oriel, in a reverse takeover, for Oriel shares. Baran received an Oriel stake through the transaction worth $30 million. The sale was made at a 4% discount on Oriel's share price on London's Alternative Investment Market (AIM) of ₤0.99. The share closed at C$2.10 on the Toronto Stock Exchange and closed at ₤1.10 on the AIM yesterday. Since 70% of the stake is held through a trustee, Baran will receive only 75% of the payment when the contract is signed, and the balance when the trustee releases the shares. Oriel owns metal and coal mines around the world. It has a market cap of $1.4 billion. Two days ago, Oriel said that Russian mining and steel company Mechel OAO (NYSE:MTL; RTS: MTLR) was "contemplating an offer for the entire issued capital of Oriel" and that the company was considering the offer. |
Posted at 04/3/2008 15:01 by eastwind Another one also says a billion dollars.Russian ferrochrome deal to fetch a billion dollars Nesis considers chrome sell-out in the most lucrative, short mining career on record. Author: John Helmer Posted: Tuesday , 04 Mar 2008 MOSCOW - A press leak in Moscow on Monday, followed by a confirming announcement from Mechel, the Russian stainless steel producer, indicated that Igor Zyuzin, Mechel's controlling shareholder, is trying to buy out chrome producer Oriel Resources, owned by Alexander Nesis and the ICT group of St. Petersburg. Mechel's corporate office was initially reluctant to confirm the reported talks, and the company's press release said only that Mechel "is currently contemplating the acquisition of Oriel. This process is at an early stage and there can be no certainty that any offer will ultimately be forthcoming." The target of takeover is an integrated ferrochrome producer based in the Leningrad region, the Tikhvin ferroalloy plant, with its own raw supply from two mines in Kazakhstan -- a chrome mine called Voskhod, and a nickel mine called Shevchenko. Nesis's ICT group have been involved in the chrome project for several years, when Nesis owned Polymetal, a St.Petersburg based silver miner. In 2006 Nesis sold Polymetal for $930 million in cash to Suleiman Kerimov, and began investing some of the proceeds in the chrome project. ICT remains a private holding. Its last website posting dates from December 2006, when ICT said it had completed "the merger between its metallurgical assets and those of Oriel Resources Plc. At their latest extraordinary general meeting, Oriel Resources Plc shareholders voted in favour of the deal, which will see a new integrated metallurgical company formed by uniting Voskhod, one of the world's largest chromite ore fields, and Tikhvin Ferroalloy Works. The Voskhod field belongs to Oriel Resources Plc., while Tikhvin Ferroalloy Works, located in Tikhvin, Leningrad Region, is owned by ICT Group and its partners. ICT Group President Alexander Nesis will sit on the Board of the new company." In 2007, Tikhvin started production of ferrochrome, with design capacity of 148,000 tonnes pa. The Voskhod mine is due to start production later this year. Oriel Resources is a London AIM and Toronto Stock Exchange listed company whose share price has jumped from 40.5pence on December 18 to 99.25p just before the takeover disclosure to the market. The website of Oriel Resources is currently inaccessible due to a virus warning. The Toronto Stock Exchange halted trading in the company's stock on Monday morning, but then resumed trading after official press releases were issued. Following Mechel's release, Oriel issued one of its own confirming that "that today it has received a non-binding indicative proposal from Mechel. Shareholders are advised to take no action at this time." On the share speculation since December, Nesis has seen Oriel's market capitalization almost double from GBP 331 million ($656 million) to GBP 616 million ($1,223 million). This gives Nesis's chrome venture a higher sale value than his silver mining company, when that was sold in 2006. Nesis has also sold out his shipbuilding and port assets in the St.Petersburg area. Oriel is a relative newcomer to the Russian chrome sector, but Nesis has been contemplating a chrome refinery and mine plan since 2003. In June of that year, when he was still the proprietor of Polymetal, Nesis announced publicly that he was at the final stage of making a decision to invest into construction of the Tikhvin ferrochrome plant, pledging to make up his mind "before the end of this year", and also promising about $60 million in capital expenditure on the project. At that time, Nesis said, he planned to source his chrome ore concentrate from Turkey. Alternatively, he said, he was considering the possibility of mining the Aganozerskoye chrome deposit in the Karelia region, north of St. Petersburg. That option would have cost Nesis another $50 million; he appears to have decided against it. Aganozerskoye reportedly had the capacity to produce 90,000 tonnes of chrome concentrate per year. Delays in investment into Tikhvin resulted, when a group of Israeli investors Nesis was considering for capital partners in the venture, withdrew from the project. Nesis was asked why he appears to be making his second exit from Russian mining so soon after his first, and whether he believes that the asset value of Oriel is peaking at present. ICT told CRU Steel News it is not commenting. A source close to Nesis said there are no negotiations at this point, but that developments can be expected in a week's time. The initiative for the deal, it appears, is coming from Zyuzin. MDM Bank warned Nesis to sit tight for the price to go up, but then warned Mechel shareholders against Zyuzin's temptation. "Valuation however could be an issue", reported analyst George Lilis, "because we are afraid that under the very hot environment for commodities, Mechel may be tempted to raise its offer and overpay at the peak of the cycle." If Nesis wasn't the source of the news, how is it possible, as Renaissance Capital, a Moscow investment bank, reported on Tuesday, that the Oriel share price has been moving up on knowledge of the bid from Mechel? According to RenCap analyst Yury Vlasov, "the market was anticipating this move as Oriel Resources' share price has advanced around 50% over the last month." Vlasov was no doubt referring to some in the market, not others. Volume of trading during this period, according to the Bloomberg chart, was minimal until a single day in mid-February, when it hit 21 million shares (3%), a 52-week record: Recent coal acquisitions in the Russian Fareast have obliged Zyuzin to load Mechel with $2 billion in debt. If Nesis opts for cash instead of Mechel shares, which is Nesis's likely preference, Zyuzin may require financing of another $1 billion for the takeover. Zyuzin has been signalling that he wants to spin off the Mechel group's mining assets, and list them separately on an international exchange. Mechel's coal mines are included in this scheme, but it has been unclear whether the IPO plan for this year would also include Mechel's iron-ore and nickel mines. Last year Mechel entered the ferro-alloy market, purchasing the ferro-silicon producer Bratsk Ferro-Alloy Plant. It produces 84,000 tonnes of ferroalloys. The possible acquisition of Oriel would more than double Mechel's capacity in this area. For years Mechel officials have been reluctant to identify their sources of supply of ferrochrome for stainless steel production. A veil of something like non-transparency also hangs over the Kermas group, a London registered holding for chrome and other ferro-alloy assets in the Urals region of central Russia. The assets include Chrome-Pik -- renamed Russian Chrome 1915 -- located in Pervouralsk, in the Chelyabinsk region; and the Serov Ferroalloys Plant, in the neighbouring Sverdlovsk region. The Mineweb backfile shows that the co-owner with Kermas of Serov was a Chelyabinsk group called Ariant, controlled by Alexander Aristov. Ariant also controlled the Chelyabinsk Electrometallurgical Combine, another ferroalloys producer. In 2004, according to Russian customs data, Serov and Chelyabinsk exported almost equal volumes of ferrchrome -- about 64,000 metric tonnes in H1 2004. However, the data indicate a significant difference between the two in customs value, suggesting the existence of transfer pricing, tolling or other schemes. Although Mechel denies it is under pressure to sell its steel division to the state metals company, Russpetstal (RSS), sources at the latter have confirmed that they have been negotiating for more than a year. The pressure was one of the factors that led to the decision of Zyuzin's co-controlling shareholder, Vladimir Iorikh, to sell out in 2006-2007. Defensive measures against a state takeover have been adopted by Zyuzin, and the acquisition of Oriel's chrome production chain creates both debt and asset value that may deter an RSS bid -- if it is retained within the steel division. On the other hand, industry sources believe that RSS is keen to secure chrome supplies for Russian steelmaking, and paying Nesis to hand over his internationally listed vehicle may be a move on which Zyuzin and RSS agreed in December, when the share price began its takeoff. |
Posted at 03/11/2006 19:09 by adam Oriel management recently presented at the Dubai Investment Conference. The updated powerpoint gives investors a good update on what the company will look like after the recent funding and vend-in of a new ferrochrome facility is complete. To view this report, please click on the following link: |
Posted at 03/11/2006 07:50 by kermit Oriel Resources (ORL-TSX), Daily Chart, Semi-log ScaleGSW ORL.JPG Editor's comments (November 1 2006, ORL-TSX last close $1.05): The share price has closed at its highest level of the last 18 months, closing at $1.05 after hitting a high of $1.08. This matches the high of $1.08 ($1.03 close) achieved on the volume spike of September 14, 2006, the day Bloomberg stated that Russia's wealthiest man wants to take a stake in Oriel (see below chronology of our comments, as marked on the chart above). We suspect that we are in the midst of a price trend that will continue on to new highs, in fits and starts, as the company progresses through development of its two projects, and becomes a cash cow that will rival Northern Orion and Wheaton River (now merged with Goldcorp). Long-time subscribers will recall that Endeavour Capital Group similarly sponsored those deals. We will continue to hold our shares through the inevitable corrections, to ensure that we are well represented when dividends are ultimately declared. You've been well briefed of what's going on (see below a chronology of my commentary). Review of our recent comments: Editor's comments (October 16 2006, ORL-TSX last close $0.85): Oriel is undergoing a three-way combination, transforming into a vertically integrated ferrochrome business with a strong financial footing and increased capacity to develop their world-class Shevchenko nickel project. Through this reverse takeover the new partners are investing $100-million (U.S.) in cash requiring shareholder approval within 23 days from posting of the admission document to Oriel shareholders. Oriel will acquire an unlisted Dutch holding company constructing a ferrochrome smelter at Tikhvin near St. Petersburg, Russia. Oriel will acquire 100 per cent of the issued share capital of IPH in exchange for the issue of 248,971,014 ordinary shares. Oriel will also acquire an unlisted BVI company. On closing of the acquisitions, Croweley's only asset will be cash of $100-million (U.S.). Oriel will acquire 100 per cent of the issued share capital of Croweley in exchange for the issue of 102,880,584 ordinary shares. This acquisition implies a price of 51.81 pence per share, being a 38-per-cent premium to Oriel's closing price of 37.5p on 14 September 2006 when the ordinary shares were suspended on AIM. As a result of these transactions existing Oriel shareholders will hold approximately 36.7 per cent of New Oriel, while the new shareholders will hold approximately 44.8 per cent and 18.5 per cent respectively. In effect, 63.3 per cent of the company has been exchanged for a ferrochrome smelter in an advanced stage of completion, and $100-million (U.S.) in cash, along with value-added management and sufficient resources to develop Shevchenko a huge potential cash generator. Editor's comments (September 14 2006, ORL-TSX last close $0.80): TodayBloomberg stating that Russia's wealthiest man wants to take a stake in Oriel. Abramovich lives in London, owns a soccor team there (Chelsea) and is likely the go-to man when it comes to Russia's resource wealth. We hear that Oriel is essentially his target for a reverse takeover (RTO) whereby he funds the company to fast-track it's project development, adds more potential properties to Oriel's already large holdings, and takes back shares to become Oriel's largest shareholder. Editor's comments (July 16, 2006, ORL-TSX last close $0.68): On June 6th Oriel announced the outcome of their SRK Feasibility Study. The study's outcome is leading the company to "fast-track development of the Voskhod Project". Oriel purchased the Voskhod chrome mine in northwestern Kazakhstan in February of 2005 for $15 million. The SRK study estimates operation cash flow for the life of the mine to be $1.2 billion with average annual cash flow of $85 million. The company is sitting on over US$30 million in cash and has just over 200 million shares outstanding. With capital costs estimated at $131 million, this alone provides an exceptional return: Pretax Posttax NPV US$472 million US$320 million IRR 50% 41% The most notable highlight of the SRK study is the potential for significant production increases, which could make Oriel Resources one of the three top chrome suppliers in the world. And then there's their massive Schevchenko project ... (see report for more). Editor's comments (June 5, 2006, ORL-TSX last close $0.61): With just over 200 million shares issued and an indicated NPV of US$472 million (pre-tax) and US$320 million (post tax), this is a significantly undervalued opportunity. Endeavour Financial is leading advanced negotiations with a number of leading international players on debt financing options. Endeavour is confident that the project economics is sufficiently robust to support over $100-million (U.S.) of debt which, in addition to over $30-million (U.S.) of Oriel's cash reserves, provides the security the project financing requires. Editor's comments (January 27, 2006, ORL-TSX last close $0.53): One of our most senior and undervalued holdings, Oriel should be a cash cow within 18 months. I met with management while they were visiting North America and reviewed their cash flow projections and the logistics involved. In a perfect world they will be able to proceed with both their projects without further dilution. This is very realistic. Cash flow in their first full year of production, pre-tax, is estimated at $0.42/share ... obviously the share price at yesterday's $0.53 close is very cheap on that basis. We are slowly adding to positions. Obviously, RAB Capital (see disclosure of increase in holdings) thinks it's cheap too - they do their buying on the London AIM market where Oriel trades better volume. Editor's comments (June 15, 2005, ORL-TSX last close $0.68): Our sources have confirmed that almost 20 million shares were sold out of an investment fund, the result of a new investment manager coming in after the old one was fired. There was also a significant amount of 1pence "founder" shares (owned by an initial founder, not part of current management) that came free-trading, requiring placement with new investors. This process has now been completed, as can be seen from the volume spikes on the AIM market chart. North American investors who assume that Oriel is not liquid enough to enter and exit on the TSX should find greater liquidity going forward, with market-makers now willing to enhance TSX liquidity as a new up trend commences. And the AIM market has now turned, trades great volume every day, and has technically bottomed. The fact of life for Oriel is that with over 200 million shares issued and mostly held by UK investors, the Canadian market place remains reactive to UK interests rather than proactive, at least until an institutional and retail following is developed in North America. However, with a breakout commencing on the AIM market after a "V" bottom, the timing looks good. Your Source for High-Potential Early-Stage Growth Stocks Since 1995 |
Posted at 16/10/2006 08:34 by unionhall Yes Novicedave I'm in RDG but I don't think this is in the same league given the scale of the transformation in the company and the bringing forward of cash-flow to early 2007 - always beloved by investors. |
Posted at 08/6/2006 06:53 by kermit Commodity Strategists: Nickel to Rise on Demand, Goldman SaysJune 7 (Bloomberg) -- Nickel prices will rise in 2007 and 2008 as demand, led by increased production of stainless steel in China, outpaces supply, Goldman Sachs said. Nickel prices may average $7.42 a pound this year, Goldman Sachs JBWere Pty. analysts Malcolm Southwood, Paul Gray and Marc Bonter said in a report yesterday. Forecasts for next year and 2008 were raised to $7.30 and $8.10. Previous forecasts were not given, and the report didn't specify if the forecasts were for the spot market or three-month futures prices. Surging demand from consumers and investors amid falling stockpiles and supply disruptions has spurred a three-year rally in the prices of many commodities. Nickel for delivery in three months on the London Metal Exchange has risen 53 percent this year, reaching a record $23,050 a metric ton on May 26, equivalent to $10.46 a pound. Prices have since slipped 11 percent to $20,625 at 9:35 a.m. London time today. ``We now envisage considerably stronger nickel market fundamentals in 2007 and 2008 than we had previously forecast,'' Southwood, Gray and Bonter said. Nickel, as well as copper and zinc, are ``expected to experience very tight, or tightening, fundamentals over at least the next two years.'' Nickel is added to steel to make it rust-proof. China's stainless steel production will climb 32 percent to 4.4 million tons this year, and 33 percent next year, Southwood and colleagues said. Output will increase by a further 23 percent in 2008, 20 percent in 2009 and 16 percent in 2010, they said. At the same time, nickel supplies will be tight, mainly because Inco Ltd.'s Goro project in New Caledonia and BHP Billiton's Ravensthorpe project in Australia would begin production later than expected, the analysts forecast. Goro, Ravensthorpe The first output from Goro may be in the fourth quarter of 2007, while Ravensthorpe will begin production in the second half of 2008, with ``shallow ramp-up profiles for both projects,'' the report said. Still, nickel prices may stabilize in the second half of this year as companies run down inventories of both nickel and stainless steel, the three analysts forecast. Rapid growth in Chinese stainless steel production could also push nickel prices lower in the coming months as other countries would produce less stainless steel, they said. Nickel may average ``just'' $6.40 a pound in the fourth quarter this year, the report said. Three-month nickel futures prices on the LME averaged $5.78 a pound during the fourth- quarter last year, according to Bloomberg data. To contact the reporter on this story: Meeyoung Song in Seoul at msong2@bloomberg.net Last Updated: June 7, 2006 04:39 EDT |
Posted at 26/3/2006 16:37 by holdontightuk From stockhouse.com......SUBJECT: Hidden Jem Posted By: howey1 Post Time: 2/25/2006 11:49 « Previous Message Next Message » Oriel Resources (ORL, TSX) -Bottom Fishing Alert It's not easy finding a bottom fishing opportunity within the mining sector at the best of times never mind being in the midst of a bullish metals market. I've had my eye on Oriel Resources since it first started trading on the TSX about a year ago after having found good support in Europe on London's AIM market. Surprisingly, no sooner did they get a isting in Toronto when the stock promptly opped like a rock thanks to a large nstitution who needed the cash and couldn't ait out the two years for the strategy to unfold. Too bad for them, but fantastic for investors today. Oriel is very much in a similar position as European Minerals was last summer when the market was waiting to see if they really would progress with their high potential Varvarinskoye gold project. After watching European for 2 ½ years ourselves, the market at large is just now connecting the dots, gold will be produced in 2007. We have been well rewarded for our patience and foresight and have enjoyed triple digit returns from our investment with a lot more to come in the future. Oriel looks to be the next one ready to make a move over the coming months. With Oriel trading at just 55 cents and their chromite mine starting construction this summer this stock is set to start attracting more attention in the market place. Before we reexamine the nuts and bolts of this deal, it's important to reiterate for our new subscribers a basic truism of small cap mining plays. Once a company has proven they have a valuable asset and the next stage is mine development, the stock will sit dead in the water until a mine has actually begun to be built. You can have all the world class engineering reports and top shelf financial institutions behind you to your hearts content, but the market at large is very fickle. Investors want to be convinced beyond a shadow of a doubt revenues will be flowing within a short time frame before they drop a cent on a junior mining play. I can appreciate that point of view however as most folks usually don't see 100% returns which go on to even higher stratospheres over time. The thing is, you have to know that the management team has the expertise and financial backing to get the job done or you end up with pie on your face which most investors do. Consequently, people don't come to the party until well after it's started. Anyway, here's the bottom line: Get in early, be patient, and expect dull activity in the early stages of with these type of plays. So let's take a look at Oriel. The company is readying itself to break ground this summer on its "cash cow" chromite mine. I would expect this stock will see a rise in price as the news flow begins to detail the mine construction and the production forecasts become more of reality as the company targets production early next year. The mine is estimated to cost around US $50 million to construct and will generate US $85 million is gross revenues each year for at least 25 years! Oriel could net a cool US $36 million a year from operations or CDN 20.5 cents per share. Using conservative price/earnings multiple of 8X, Oriel should be trading easily at $1.60 by the time production is in full swing. About a triple from today's price. Oriel already has $40 million in the bank so getting the financing on the balance will be a slam dunk. And it's important to note, there will be no further dilution with the number of shares issued. Sometime in 2007 I expect we will have taken profits with Oriel and will be holding "free stock" as we have with many of our other plays our original investment dollars will be off the table with some profits and we will have some shares left over to hold for future gains. And looking down the road a little further, Oriel's prospect's become even brighter. By mid 2009, the company plans to ramp up their nickel production at the Shevchenko deposit. Last December the company announced that the feasibility study conducted by Batmen Minerals confirmed this deposit will be a low cost nickel producer which could have a mine life of an incredible 47 years. Operating costs over the first ten years are estimated to be $1.91/pound of nickel and $2.36/pound over the life of the mine. With nickel prices hovering around $6.80/pound right now, the 45 million pounds of estimated annual production over the first ten years alone look truly awesome. This nickel property is truly world class in its scope and potential. Though I expect an easy triple in Oriel's share price just based on the chromite deposit, the nickel side of the business has the potential for a ten bagger. Though don't expect Oriel to pull this project off alone. With capital costs of US $594 million to build this mine, they will need at the very least a major company to joint venture this project, if not a total buy out of the Shevchenko nickel project. As an interesting aside, Oriel is still trading on the London AIM market where the majority of their original shareholders bought their shares. One large hedge fund doing business in the UK is RAB Capital who are also seeing a winner here with Oriel. RAB now holds 16.91% of Oriel's shares. Oriel is my top junior mining pick for triple digit gains. |
Posted at 19/6/2005 17:50 by bitterlemontart The Sunday Times - Money June 19, 2005 Ways to invest in the sector INVESTORS can cut the risk of putting money into the volatile commodities sector by limiting their holdings to about 10% to 15% of their portfolios. Mick Gilligan of Killik & Co, a stockbroker, said: "There is always a risk of a big short-term pull-back in a sector such as commodities, but we are bullish in the long term and would view any meaningful price falls as a buying opportunity." These are different ways of investing in the sector. Commodity funds Gilligan's favourite commodities fund is JPMF Natural Rescources, which invests in mining shares and has gained 217% over the past five years. However, its performance has dipped recently. The fund has dropped 10% since March, due partly to problems at its biggest holding, First Calgary. Shares in the AIM-quoted oil explorer fell more than 16% in one day this month after it called off a joint venture with Repsol, the Spanish oil giant. Even so, Gilligan is happy to recommend the fund to more adventurous clients. For cautious investors, however, he suggests the City Natural Resources High Yield fund. It invests in bonds as well as mining shares and is therefore able to pay a decent yield of 3.1%, which would cushion investors from any sell-off in the sector. For his most sophisticated investors, Gilligan likes the RAB Special Situations fund, but he warns it is twice as volatile as the market. Until recently, the scheme was available only to people who could invest a minimum of $50,000 (£27,000). Since May, however, investors have been able to get access to the fund by buying shares in the RAB Special Situations Company, which is quoted on AIM. In theory, this allows you to buy a stake for a few hundred pounds, but the directors stress the fund is meant for sophisticated investors. Philip Richards, the fund's manager, adopts a high-risk approach. He takes big stakes in smaller commodity companies, often before they have listed. About a quarter of his portfolio is in private companies. While this approach is high- risk, it has also produced high returns. The scheme is up 2,200% since January 2003. Gilligan said: "One of the big drivers of the fund's return has been its ability to buy companies while they are still private. The manager can then get an uplift of about four to eight times his stake when the stock comes to market." But he doubts whether Richards can repeat his performance: "The returns are due to a happy coincidence of his success in bringing companies to market and strong commodity returns. I doubt the two will coincide in such a way in future." Mining stocks Alternatively, investors could buy UK mining stocks. Graham French of the M&G Global Basics fund favours solid blue-chip miners such as Rio Tinto at £17.73. Richards thinks there are better opportunities among AIM-quoted stocks - if you have the expertise to avoid the likes of Regal Petroleum. One of his favourites is Falkland Oil & Gas. He said: "The firm may have found reserves of 8m to 24m barrels of oil, which would be worth $80 billion to $240 billion at current prices, yet the company has a market value of about $120m. I think I can make 30 to 50 times my money with Falkland Oil, but the risks are high." HOW THE LEADING FUNDS COMPARE Fund Initial charge Annual fee 5-year return Merrill Lynch World Mining - ¹ 0.95% 222% JPMF Natural Resources 5.5% 1.5% 217% M&G Global Basics 5% 1% 67% City Natural Resources High Yield - ¹ 1.2% 24% ¹ Investment trust; your stockbroker may charge dealing fees Source: Financial Express |
Posted at 01/6/2005 18:50 by bitterlemontart From yesterday's TimesAIM mining stocks plunge £1.4bn By Peter Klinger Weakness follows boom as demand from China and India brings a glut of listings THE value of mining stocks listed on the Alternative Investment Market has plummeted by £1.4 billion in less than three months over fears that the bubble surrounding the natural resources sector has burst. Some companies, such as Oriel Resources and Cambrian Mining, have seen their market capitalisations fall by more than 35 per cent. Asia Energy, one of AIM's best-performing stocks last year, has dropped in value by as much £196 million. The rout has affected most companies, ranging from Peter Hambro Mining, the profitable Russia-focused gold producer, to African Copper, which listed on AIM in November and is targeting projects in Botswana. MiningEYe, a new index run by Ernst & Young that tracks the fortunes of AIM mining stocks, has fallen 23 per cent since peaking at 1,222.93 points on March 14. If bargain- hunters had not led a recovery among mining stocks over the past week, the index would have been off 27 per cent, or about £1.7 billion, in terms of lost market capitalisations. The sector's sudden weakness comes after a nine-month bonanza for mining stocks, driven by soaring metal prices. The prices of iron ore, copper, coal and nickel have soared because the world's miners have been unable to satisfy the voracious demand from China and India. Investors, aware that new mineral deposits have to be discovered and mines built to satisfy those demands, have piled into start-up companies in the hope of participating in what has been dubbed a "resources supercycle". However, the glut of AIM listings - according to E&Y, 34 AIM mining flotations this year have raised £132 million, in addition to more than £100 million in secondary raisings - is taking its toll. Many fund managers have reached their quota of AIM holdings, while a temporary slump in metal prices in March and April, coinciding with a recovery in the value of the US dollar, has led investors to take profits and exit the sector. In addition, bearish investors have been building short positions. expecting the bubble to burst. Philip Richards, chief executive of the listed RAB Capital, which has about £440 million invested in mining companies, said that the fundamentals for the sector remained strong. He described as a paradox the wider market sentiment that on the one hand had investors raving about China's long-term growth prospects but on the other hand had given rise to fears that mining share prices had overheated. "It's indigestion [at the moment]," Mr Richards said. "Some people have overextended and have to cut their positions, and that's a time and opportunity for people with cash. "These hard times in the market will sort out the better companies from the worse." Just like the dot-com boom in the late 1990s, itself just a modern version of previous mining booms, the buoyant market conditions have attracted a mixture of quality assets and opportunists hoping to make a quick fortune. Australian and Canadian companies have flocked to AIM to cash in on the City's appetite for high-risk, high-reward punts. However, Peter Davey, E&Y mining and metals specialist, said that he expected investors to start looking more carefully at investment opportunities in the wake of the sector's weakness. "There is a bit of cooling off going on," he said. "Yes, I think [investors] should be more discerning, and are being more discerning, but I don't think the bubble has burst." Charles Kernot, director of metals and mining for Seymour Pierce, the stockbroker, said that the boom conditions had encouraged entrepreneurs to dust off old mining projects, ignored during times of low metal prices, and bring them to AIM. He said: "Someone mentioned to me that they looked at over 100 or so AIM companies and about 50 to 60 of them don't actually have a geologist on the board, and many don't have an exploration manager in the company. "[But] I think there's still value in some companies. If the AIM market stays weak, I think we will start to see a bit more merger and acquisitions coming through - there are some companies that are cashed up and there are some companies that have spent their money on exploration and are now looking for cash." The controversies surrounding Regal Petroleum and White Nile, two AIM-listed oil companies, have not helped to lift the sector's confidence. Regal's share price crashed more than 60 per cent after a much-hyped appraisal well failed to confirm an earlier discovery. The Regal failure highlighted the high-risk, highreward strategy of investing in exploration companies. White Nile, which is arranging a placement to provide much-needed stock liquidity, is hoping this week to return from an AIM-enforced share-trading suspension. |
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