| |
Petmin to scale up business
David McKay
Posted: Wed, 10 Jan 2007
[miningmx.com] -- THERE’S a strange dichotomy between Petmin and First Uranium Corporation, two South African based mining firms that sought international listings in the dying days of 2006.
First Uranium Corp., which listed on the Toronto Stock Exchange on December 20, has a great story in its two uranium resources, but no producing assets as yet. As Ian Liddle, a fund manager for Allan Gray said on the Moneyweb Power Hour, a radio programme, First Uranium Corp., needs to produce profits to warrant its R1.4bn (C$232m) valuation. First Uranium Corp. is controlled by the JSE-listed gold producer, Simmer & Jack Mines.
By contrast, there’s Petmin which listed on Britain’s Alternative Investment Market (AIM), also on December 20. It has cash-producing assets, but no real story as yet.
Both companies fared well in their debuts. But it was First Uranium that has the wind under its wings trading 14% higher than the C$7/share level at which it placed shares with selected institutions.
“The market is hot for anything uranium right now,” said Brian Mok, an analyst for Research Capital Corporation in an interview with Bloomberg News. According to Australia’s Resource Capital Research, the uranium price is up 23% in the last three months of 2006 to $65.50/lb, and is expected to reach $90/lb by mid-2007.
The same level of price sexiness can’t quite be said for the silica and
anthracite coal that Petmin (profitably) produces. But Bradley Doig, COO of Petmin, has some plans which he hopes the AIM listing will help generate.
“We’re aiming to become a significant, multi-commodity international business. And we know we need scale to excite these offshore funds,” said Doig. The company has been far from specific expressing an interest in iron ore, base metals maybe; a little bit of fluorspar. However, Doig promises newsflow relatively quickly:
“We’ve done three deals in less than two-and-a-half years to get the company’s assets into their current shape. We’re looking at a couple of interesting things now,” he said.
Petmin would prefer buying assets over which it can exert its own methodology which is to be conservative, create cash flow from day one, abhor excessive debt.
Current debt:equity is 16% and Doig said there’s tolerance to take this to a maximum of 25%. In addition to debt funding, the company has a kitty of R45m for
projects and acquisitions after paying for the drilling of its Somkhele coal project and buying more entitlement to the Richards Bay Coal Terminal Petmin believes it needs.
About R50m was raised from the AIM listing before costs; a further R35m was raised after selling its interest in Baobab Exploration and Mining, a coal prospect, to GMV Metals, which debuted on the JSE in December.
| |
0% 
