I thought this article might be of interest.Explorers 'really...

I thought this article might be of interest.


Explorers 'really suffering', miners decry low share valuations

By: Martin Creamer of Miningweekly.com
4th September 2008

Resources exploration companies were “really suffering” and the gap between midcap mining companies and explorers was “widening”, African Lion Funds manager Tim Markwell said on Thursday.

Markwell, who described his fund as an early-stage resource investment fund, was one of several presenters to the Africa Downunder conference in Perth who drew attention to the low valuation of the shares of many resources companies listed in London, Toronto, Sydney and Johannesburg.

He said that the US had “dropped the baton, so to speak” and the last six months had seen subprime fallout.

London’s alternative investment market (Aim) in particular, he said, was experiencing a “liquidity” issue.

Though equity valuations had been in decline across the board, small resources companies were suffering the impact far greater than larger companies and explorers were “really suffering”.

Gold-mining company Gryphon Minerals MD Steve Parsons drew attention to his company having “scope for more upside” with its $8-million in the bank juxtaposed against a market capitalisation of only $19-million.

Zambesi Resources MD Julian Ford said of market response to his company’s activities in Zambia that “fear is overtaking greed”, with the market’s perception of risk being greater than reality.

Anvil Mining CEO Bill Turner, whose highly regarded copper mining company operating in the Democratic Republic of Congo is in the process of clinching a valuable $237-million 25% private placement, spoke of Anvil’s share price “not doing well recently” and being only “a third of what it was in November last year”.

ASX- and JSE-listed Nkwe Platinum CEO Peter Landau spoke of “a lot of people in the last few months not being too kind to us”, and of the “unique” black-economic empowerment company’s market capitalisation being down at $130-million.

“Fully funded” were two words that conveyed project strength, though Markwell drew attention to the bogey of quickly rising costs – at an average of 38% – causing “still-high” net profit margins to erode revenues that were growing at an average rate of a lower 32%.

He said that borrowings were increasing to fund growth ambitions and that cash flows from investing activities were exceeding cash flows from operations.

He pointed to Geovic Mining’s 300% capital cost rise for its Nkamouna cobalt project in Cameroon – from $129-million originally to $379-million currently – being at the top end of the project capital-cost increase scale.