| |
Eland share not crashing - Leon Esterhuizen, Investec Securities
In an interview on 702 @ 18:00 on Tuesday, 12 June 2007
[miningmx.com] -- THE decline in the share price of Eland Platinum, down 17% on June 12, did not represent a crash, said Leon Esterhuizen, an analyst for Investec Securities. The share lost another 8.4% to R91/share on June 13, the day after Esterhuizen spoke.
Part of the valuation of junior mining companies such as Eland Platinum was that the company had 'option value'. This refers to the block of ground the company had bought neighbouring its Elandsfontein property in the Bushveld. Eland has said this extra land could help it develop into a one million ounce producer one day.
"There is a lot being said today about Eland having acquired a block of ground next to it potentially containing as much resource as it currently has for a very small amount of money," said Esterhuizen.
"What you're buying is growth. I'm not saying that the metal prices will stay where they are, but you
have to account for the fact that this company is going to grow significantly," he said. "With the recent acquisitions there is scope for even further growth." Esterhuizen was speaking on The World at Six, a week nightly radio programme aired on Talk Radio 702.
Shaun Bruyns from RMB Asset Management agreed there was significant earnings growth in Eland Platinum that the market was factoring into its relatively high valuation.
"I think in a perfect environment where everything goes according to plan, commodity prices remain at multi-year highs. But in 24 months time he’s [Esterhuizen] talking about a price to earnings multiple of 12 times. Now that is fantastic growth," said Bruyns.
Business Report said on June 11 that Xstrata was considering a bid for Eland Platinum and that further details about corporate action in the company would be unveiled shortly.
| |
