More to come from Petmin

[] — PETMIN, one of South Africa’s so-called junior mining companies, achieved positive cash flow of R58m from its activities for the financial year to 30 June 2006. And cash in the bank went up from R9m to R70m. That’s a remarkable achievement for a small or junior mining company, not only in South Africa but also against any standard.

Very often these small miners keep themselves occupied with exploration and the continual issuing of new shares to ease the pressure on cash flow. That’s why it’s a pleasant surprise to see Petmin quite simply following sound business practice, being involved in proper mining activities and even showing a positive cash flow. It’s therefore no surprise that Petmin’s price climbed from 70c to 140c/share over the past year.

But the latest set of financial results clearly leaves the impression that the group is highly dynamic and that much more could happen in the future. Over the past year, silica and anthracite contributed R90m and R86m respectively to turnover. However, the R19m profit from silica is significantly more than the R1.8m contribution from anthracite.

The group also has many plans for next year. Its Somkhele project – for which new shares to the value of R83m were issued last year and a R40m long-term loan negotiated – will come into operation at year-end. Elsewhere the group’s executive was considerably strengthened and it looks as if it’s only at the start of a long road of real cash flow profits.

The group has also obtained approval from the South African Reserve Bank to list on the London Stock Exchange’s AIM division, the so-called alternative investment market. That should generate considerable further interest in its shares.

The group’s total market capitalisation is currently just more than R600m, and along with its current low price of 140c/share it could attract considerable attention. It looks a very good buy for investors who like the mining sector.