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Miners sell $3b shares while metal prices soar
Source: Bloomberg
Publication: South China Morning Post (Business)
24 August 2005
Alexander Mining and other miners sold a record £120 million ($3 billion) of stock on London's Alternative Investment Market in the second quarter after a surge in commodity prices, Ernst & Young said yesterday.
Twenty-five mining companies sold shares on AIM in the quarter, a sixfold increase from a year ago. Investors "sought exposure to rising commodity prices", said Peter Davey, a mining and metals specialist at Ernst & Young.
Copper prices reached a record on the London Metal Exchange on August 16, buoyed by surging demand from consumers such as China. The world's biggest copper consumer reported an annual growth rate of 9.5 per cent hi the second quarter.
Copper prices were gaining as "China's growth continues to exceed expectations", Mr Davey said. "This coupled with signs of economic growth in the US bodes well for the mining and metals sector, which is set for continued prosperity that could last well into early 2006."
Forty-six mining companies listed on AIM in the first half of the year, selling £166 million of shares, Mr Davey said Last year, 36 mining firms raised £229 million. That would be exceeded by the end of next month, he said.
Seven new mining companies, including Shanta Gold, which explores for gold in Tanzania, raised £40 million on AIM last month. Five more miners were planning to sell shares before the end of next month to raise as much as £50 million, Mr Davey said.
Of the 1,250 companies trading shares on AIM at the end of June, 140 were miners, with a combined market capitalisation of US$6 billion, Ernst & Young said.
Alexander Mining, which explores for copper, gold and silver in Argentina and Peru, raised £20 million in the second quarter, the most --among all the new entrants. Platinum Mining Corp of India, which explores for precious metals, raised £14 million.
About 50 per cent of all AIM listed miners were gold companies, while 20 per cent focused on copper, Mr Davey said.