Companies: BLT    HAWK    ICMI    PRE    RIO    URU    XTA   

Gold is back down below US$900 an ounce and oil has faltered from recent record highs. The same pressures have clipped the gains of many resource shares, though there is plenty of corporate activity about and many companies stand to reap big rewards even with raw material prices somewhat below their peaks. Among the giants, Swiss-based Xstrata, after rising from £8 to £37.40 in two and a half years, is below £32 on perceived credit crunch snags for the mooted bid from Brazil’s Vale group. Rio Tinto has shed £16 since December to £41.70, as it battles against the offer from BHP Billiton.

Uranium shares have mostly been similarly marked down, despite improved prospects for nuclear power, though cash-rich Niger Uranium, highlighted here in December at a depressed 24p for its prospects in West Africa, has edged up to 33.5p, following news of a five per cent aggregate stake held by UBS Investment Bank. The shares could still reward a medium-term speculation.

Previous strong performer and fellow AIM counter Nighthawk Energy took advantage of the market’s appreciation of its onshore US oil and gas projects to raise £14 million at 46p. This curbed the shares’ advance, though at 50p, there remains scope for longer-term improvement, stock market conditions permitting.

ICM moots gold spin-off
South America-focused International Consolidated Minerals is contemplating hiving off a three million oz-potential Peruvian gold mine. Headed by well-connected American investment banker and oilman Greg Smith, the AIM-quoted company is chiefly focused on Peru’s Pachapaqui silver, lead, zinc and copper concession in the same country, where 15 million tonnes of mineralisation have been established on one corner and good news about the resource should be on the way shortly.

Consolidated’s mine, in southern Peru, is thought to contain a possible three million oz of gold. ICM is believed to be considering offering shares on a pro-rata basis to its own shareholders ahead of a potential float in Canada, valuing the gold company at around £25 million.

ICM shares have fallen from 775p at the end of 2006 to 310p today. That is above the worst and, with more good news expected to come, they should outperform several sector peers.

New partners for Pan Andean
Pan Andean Resources, the volatile South America-focused concern steered by idiosyncratic Irish entrepreneur John Teeling, is thought to be poised to cede 70 per cent of two blocks on Peru’s Ucayali Basin to a Spanish subsidiary of French oil giant Total, in exchange for £1.6 million. The Spanish concern, Cepsa, would become the operator of Block 114, with an estimated recoverable resource of 90 million barrels of oil, and of the earlier stage Block 131.

Meanwhile, Indian conglomerate Reliance is understood to be in line to take a 50 per cent operating share in another Peruvian prospect, Block 141 in the Titicaca Basin. In both cases, AIM-quoted Pan Andean would keep a free carried interest.

The company, whose up and down stock market performance over the years has not enhanced its City credibility, has interests in the US, Bolivia, Brazil and Colombia. Pan Andean should start drilling soon at Antiorcha in Colombia, which Teeling claims could hold a potential 100 million barrels.

Pan Andean has given investors a bumpy ride. Floated at 18p in 1995, the shares were trading above 50p five years later, but fell to 8p by the end of 2005. Now 14p, they could have continued speculative recovery appeal as a trading punt, if the Peruvian and other deals work out as hoped.