The Outlook For AIM Listed Mining Companies In 2002. (Part 1)

Date: January 2, 2002


The Outlook For AIM Listed Mining Companies In 2002. (Part 1)

First a few statistics. There are now thirty one mining companies listed on London's AIM market and their combined market capitalisation is around £850 million. With a bit of luck and some bullying from fund managers and private investors, a few more retail brokers will wake up to the attractions of the sector.

The best of the Aussie imports such as AuIron Energy, Aquarius Platinum, Gympie Gold, Murchison United and Portman are well managed and conscious that dividend payments nowadays are a high priority. The worst of them such as New Millennium, which gives no reason for listing here except that Greenland is nearer London than Perth, has not even bothered to have its price quoted in the Financial Times. All of them are waking up to the fact that UK investors have to be treated as well, if not better, as their compatriots. It is a long way from London to Perth and confidence erodes quickly if communications fail.

Two new listings from Australia ended off 2001 on a good note in Centamin Egypt and Dwyka Diamonds. The latter, however, made little effort at communicating with the media or investors while listing and raising funds over here, so hopefully it will put this right in the New Year. Even its name is spelt wrong at the moment in the list of Recent Issues in the Financial Times which indicates that someone has not got their eye on the ball. These are the sort of things that investors over here, wary of incomers, will be watching closely.

By the end of next year there could be forty plus mining companies on AIM if all goes to plan and 2002 is kicking off with a couple of goodies in Consolidated Minerals and Consolidated Broken Hill. These two Australian companies were pulled back in the last quarter of 2001, but for different reasons.

Michael Kiernan of Consolidated Minerals thought that the New York disaster would affect investor appetite's for new issues and he was probably right. Anyway he is not after money with cash flow running at around A$1 million per month so timing was not vital. His company moved onto the international scene a comparatively short time ago through the marketing of manganese ore, and more recently chromite, and he would prefer to be able to demonstrate to northern hemisphere institutions the true worth of the company before asking them for any funds. Kiernan is running his rule over a number of projects at the moment and if something materialises he reckons that a dual listing in Australian and London would help in putting together a very competitive financing package.

In the case of Consolidated Broken Hill its present priority is to buy Pasminco's assets at Broken Hill and it has been joined in this by Toho Zinc of Japan and Clough Engineering . It is quite a mouthful for Consolidated Broken Hill as the mine itself is big - 2.8 million tonnes a year producing around 180,000 tonnes of zinc and 100,000 tonnes of lead - in addition to the plant. However, the Pasminco operations surround CML7 on three sides and the mineralised lodes extend across the respective lease boundaries. A purchase of the Pasminco assets would therefore bring the 8 km long Broken Hill lode system under a single operation for the first time in its 120 year history. It is too good an opportunity to miss and if Cons BH succeeds it will be a classy addition to AIM.

First Quantum is the only Canadian dual listing on AIM at the moment and it has performed stoutly despite the fall in the copper price. Others will surely join it in 2002 as things are still pretty dim on the Canadian mining front. A contributor to Minesite recently commented that British Columbia was now recognised as the most difficult region in the world for mining companies to operate in and Vancouver , its capital, was about the same as far as raising money for mining ventures was concerned. Let us hope that any new Canadian candidates for AIM are up to the standard of First Quantum. One which gets mentioned is Ivanhoe Mines run by Robert Friedland of Voisey's Bay fame.

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