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SA gets new R50bn junior index
David Mckay
Posted: Thu, 28 Sep 2006
[miningmx.com] -- NEDBANK Capital, a division of South African bank, Nedcor, is to launch a junior mining and exploration index that will track the fortunes of the sector, Paul Miller, a senior bank official said.
The NedSec Junior Mining and Exploration Index includes all mining companies across the JSE's boards and sectors, but excludes oil and gas companies. It also excludes any mining company that is a constituent of the Top 40 index.
"The problem with the junior sector in South Africa is that it isn't a sector," said Miller, who announced the launch of the new index at Nedcor's midcap conference, held in Cape Town. "It's not separately identifiable," he said.
This was owing to the fact that the JSE's top nine mining companies constituted over 94% of the total unweighted market capitalisation of all mining companies, Miller said.
However, the growth in the junior
mining and exploration sector was promising notwithstanding the difficulties of mining companies have found attempting to comply with South Africa's new mining legislation, Miller said. The sector was also encouraged by the global search for new metals and improved commodity prices.
In constructing the index, Nedbank Capital found that 58 companies could be included at various times since June 1995. From that date to now, the free-float weighted market capitalisation had grown to R48.5bn from R5.2bn.
As a result, the index rated slightly behind the construction sector and above the general industrial sector. "A perfectly respectable position," said Miller.
The capital gain excluding dividends and capital distributions had been 5.9%, which probably slightly underperformed the general market, but with a number of additional listings on the horizon, the prospects for South African junior mining were vast improved.
Traditionally, the South African mining
sector has lauded heft over entrepreneurial spirit. And there are few examples of junior mining successes - Metorex is one - and many instances of junior mining disasters.
Aquarius Platinum is currently the largest weighted constituent of Nedbank Capital's new index comprising 21%, followed by Northam Platinum (14%), sxr Uranium One (12%), African Rainbow Minerals (11%), Mvelaphanda Resources (8%) and Metorex (8%).
Other participants were Wits Gold, Trans Hex, Wesizwe Platinum, Eland Platinum and Merafe.
The junior mining index, including its full history, will be available on the I-Net Bridge service, Miller said.
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