Exploration Insights by Robert Tyerman

Colourful Frank Timis’s African Minerals has raised £80 million at £4 to develop its Tonkolili iron ore project in Sierra Leone, where it hopes to double estimated resources to ten billion and start production early next year.

At 399.75p, having soared from a 20p 12-month low, the shares should have further to go still, unless China, which has off-take agreements with African Minerals, decides its economy is overheating and cuts back its iron ore demand. Timis also has a stake in West African Diamonds, a former vehicle of veteran Irish entrepreneur John Teeling and now subject of a reverse takeover by Stellar Diamonds accompanied by a £7 million fundraising at 20p.

Stellar boss Karl Smithson talks of estimated resources of 1.2 billion carats at high grades of up to 500 carats per 100 tonnes of rock and is talking to fellow AIM counter Petra Diamonds (59p) about its Kono project in Sierra Leone. Stellar could be worth a flutter, as could African Aura at 73.3p, which stands to emerge with a major stake.

Uranium counters Kalahari Minerals (179.56p) and Niger Uranium (35p) are in focus again, as Niger’s biggest shareholder moves to force it to press for Kalahari, where it holds 13.5 per cent, to distribute most of its prize asset, a 40 per cent holding in Australia’s Extract Resource, owner of world-class uranium project, Rossing South. Hold on.

Gemfields sees green light
Ian Harebottle, boss of battle-scarred Zambian emerald play Gemfields, is targeting production from its Kagem mine of a monthly rate of 360,000 gem-quality stones this year. As the bombed-out AIM counter recovers from its bruising battle for partial control of TanzaniteOne – Harebottle’s old company – he has ditched the previous management’s grand visions to focus on mining.

Production is currently unprofitable, but Harebottle suggests a current recovery in emerald prices and a blitz on theft at the mine should turn that round. The company has some cash and saleable TanzaniteOne shares and at 5.25p, a fraction of their 45p 2005 float price but double their recent low, its own shares might repay a brave punt.  

Polish promise
Eastern Europe-focused Aurelian Oil & Gas intends to raise ?32 million (£29 million) to develop its Siekerki project in Poland. The AIM-quoted company, steered by chief executive officer Rowen Bainbridge and with other interests nearby, says it aims to use the placing proceeds to fund exploration and appraisal wells at Siekerki with a view to establishing an estimated value for the project of some £1 billion, with one appraisal well seen to target 346 billion cubic feet of gas, with an estimated value of £434.5 million.

Aurelian says it has received non-binding letters of intent to support the placing from shareholders with a combined 47.28 per cent of its equity. Floated at 55p in 2006, Aurelian shares fell to 11.5p at one stage, but have since rallied and now stand at 33p, valuing the company at a still-undemanding £77 million.

Predicting an AIM move
Pakistan-focused Oracle Coalfields is considering moving from PLUS to AIM after clinching two key agreements. Chairman Shahrukh Khan says the company, which hopes to exploit an estimated 1.4 billion tonnes of lignite in the Thar coalfield in Sindh Province, is talking to brokers about an AIM move after agreeing one memorandum of understanding about potentially supplying fuel to a major Pakistani cement maker, and another with a Karachi electricity supplier, which Khan argues clears the path for a bankable feasibility study of Thar V1.

Oracle’s PLUS-quoted shares at 4.625p (with a 0.75p spread) value the company at £5.7 million. Khan has talked of an AIM move before, but this time they could repay a bold speculation.