Companies: AFE    CER    CNM    EPD    MANA    PDL    PGL    ZOX   

Whatever concerns there may be about blips in China’s growth rate or the cost of finance, deals of one kind or another are the talk of the town, with oil recently resting new highs and gold still fairly resilient. Former AIM pet Celtic Resources has sold its Miheevskoye copper and gold project in the Chelyabinsk region of southern Russia for £16 million to Russian Copper Company and intends to reinvest at least some of the proceeds in new Russian projects.

Celtic, which draws its cash flow from gold mining in Kazakhstan, likes the look of several projects in Russia, where, despite its problems with previous joint ventures, chief executive Kevin Foo says most mining companies have been making money. At 193.5p, a fraction of earlier highs, the shares could now be worth another look – as could African Eagle at 13.75p, with a listing on South Africa’s alternative ALTX market on the way and commitments for a £7.4 million placing.

Diamond delights
Gems remain a hot market. Petra Diamonds has pleased the market with a second joint venture in Angola with mining giant BHP Billiton, this time to develop the Luangue deposit, next door to the promising Alto Cuilo, where the two companies are already working together. Recommended by Growth Company Investor at 67.5p last year, the shares now look well supported at 144p.

West Africa-focused Mano River, neglected at 10.25p, has, in common with Malaysia-oriented Peninsular Gold at 29.5p, chosen to raise funds from a grudging market through issuing convertibles. But Mano has also raised £4.2 million at 87.1p in a pre-float placing for its subsidiary Stellar Diamonds, which has several promising gem joint ventures in the region with the likes of BHP and Petra. Whether its post-float progress will also be stellar cannot be guaranteed, but it is in there with a fair chance.

Meanwhile, Tim Read, the ex-merchant banker who steered Congo-focused Adastra Minerals to a rewarding takeover by the First Quantum group, is driving a recovery campaign at European Diamonds. The company was a highly successful 2000 float devoted to Finnish diamond prospects, which never fulfilled its optimistic early ambitions.

Now, European is concentrating on the Liqhobong project in Lesotho, which independent pre-feasibility studies suggest could host 15 million carats, with a potential value of US$70 (£34.1) a carat. On that basis, Liqhobong is potentially capable of yielding 900,000 carats a year, for annual earnings of more than £12 million.

The company argues a high incidence of ‘bonanza’ stones could significantly lift the average value per carat and increase the size of the resource. European raised £3.3 million at 20p in May and envisages a £50 million project cost for Liqhobong.
Read is considering changing the company’s name and floating the remaining Finnish interests as a separate AIM company. At 22.75p, European’s shares are a small fraction of post-float highs and will deserve a substantial re-rating if Liqhobong comes up trumps.

Yemen cheer for ZincOx
AIM-quoted ZincOx has won approval from the Yemeni Parliament to develop its 870,000-tonne Jabali zinc project. The company, headed by the indefatigable Andrew Woollett, has 52 per cent of Jabali, which is estimated to contain a ‘measured and indicated’ resource of 10.8 million tonnes of ore at 8.7 per cent zinc, 1.2 per cent lead and 68 grammes of silver per tonne – with more potential goodies in the ‘inferred’ category.

ZincOx says it expects to produce 70,000 tonnes a year of high-quality zinc oxide from Jabali. The estimated project cost is £188 million. ZincOx says London investment bank boutique Exotix is in ‘advanced discussions’ on a banking facility for this.
Recommended by Growth Company Investor at 129.5p in 2005, ZincOx shares have now hit 374p. Partial profit taking might be cautious, but they could well have further to go.