Thursday, August 11, 2005
AIM story
mining market heats up, as independents take new exploration role � analysis
Proprietary Intelligence
Story:A series of mining listings on London�s Alternative Investment Market (AIM) have prompted fears of a bubble similar to that suffered by AIM oil stocks earlier this year, but industry participants say that the sector is not in danger, as mining independents increasingly take the exploration role previously held by the industry's majors.
Oil and gas shares listed on the AIM exchange lost more than 60% of their value in a single day earlier this year, following an overestimate of crude reserves by Regal Petroleum. However, mining industry participants say that their market has different characteristics from the oil market, so they expect the flow of new mining listings to continue.
A source at an AIM-listed independent mining group with upstream assets in Latin America noted that independent mining players often served as the exploration and production arms for the mining majors like Anglo, BHP Billiton and Rio Tinto. In this context, the source said that there was still considerable value to be gained from an AIM listing, as when proven reserves are discovered by the listed independent, a buyout from a major often swiftly follows.
'Mining is a poor relation to oil. The E&P [Exploration and Production] cycle is much cheaper in minerals than in oil and gas,' the source continued. This means that mining groups could continue to launch cheap and cheerful IPOs, without the high financial risks often associated with the oil market. The person adde"
Proprietary Intelligence
Story:A series of mining listings on London�s Alternative Investment Market (AIM) have prompted fears of a bubble similar to that suffered by AIM oil stocks earlier this year, but industry participants say that the sector is not in danger, as mining independents increasingly take the exploration role previously held by the industry's majors.
Oil and gas shares listed on the AIM exchange lost more than 60% of their value in a single day earlier this year, following an overestimate of crude reserves by Regal Petroleum. However, mining industry participants say that their market has different characteristics from the oil market, so they expect the flow of new mining listings to continue.
A source at an AIM-listed independent mining group with upstream assets in Latin America noted that independent mining players often served as the exploration and production arms for the mining majors like Anglo, BHP Billiton and Rio Tinto. In this context, the source said that there was still considerable value to be gained from an AIM listing, as when proven reserves are discovered by the listed independent, a buyout from a major often swiftly follows.
'Mining is a poor relation to oil. The E&P [Exploration and Production] cycle is much cheaper in minerals than in oil and gas,' the source continued. This means that mining groups could continue to launch cheap and cheerful IPOs, without the high financial risks often associated with the oil market. The person adde"
