[miningmx.com] — SIMMERS’ SHARES – currently trading at around 385c – are close to their 12-month low of 370c. However, the stock finds itself in good company at those levels. Heavyweights Harmony, Gold Fields and AngloGold Ashanti are all in the same boat.
South Africa’s junior mining shares have taken a hammering across the board in recent months because of the “flight to safety” triggered by the sub-prime credit crisis.
South Africa’s gold shares have fared particularly badly due to negative foreign investor sentiment towards this country.
Just to round it off, Simmers has a large exposure to uranium through 62,3% subsidiary First Uranium – and the uranium spot price has dropped sharply over the past six months.
The difference between the heavyweights and Simmers is that Simmers has yet to prove itself – so a punt on the company as a recovery stock carries a lot more risk.
This year is effectively “put up or shut up” time for Simmers, as a number of its projects are slated to start production or ramp up production over the next 12 months.
Successful delivery on those projects will increase investor confidence that Simmers’ management can succeed with its other medium- and long-term projects, which could turn the junior into a mid-tier gold and uranium producer.
It could also rectify the market’s poor valuation of Simmers’ gold assets. After allowing for the value of Simmers’ stake in Toronto-listed First Uranium, its gold assets have sometimes had an implied negative value. But above all good management is crucial to ensure delivery – and that’s where I think Simmers scores.
I rate chairman Nigel Brunette and applaud the recent appointment of Aquarius CEO Stuart Murray to the board. Likewise, I think CEO Gordon Miller has what it takes to deliver on the company’s promises. So I reckon Simmers is certainly worth a punt.
* Ryan holds shares in Simmers.
