Issues planned in choosy market

Fund managers and institutions have been digesting the documents for the Oppenheimer and friends offer for diamond giant De Beers, as precious metals and precious metal shares have tended to drift. Grubbier materials such as coal and copper have been more popular, helped by US power shortages, with coal royalty holder Anglo Pacific up 13.5 per cent on the week to 24.5p and coal miner RJB firm at 96p - although the short-term performance of other mining and exploration companies has been mixed.

Even in this climate, however, bold spirits are tapping or planning to tap investors' wallets. Broker SG is hoping to float a new diamond company, though it is playing its cards close to its chest for now.

First Quantum Minerals, the Canadian copper miner which listed on Aim last Monday, is seeking to raise between £6.6 million and £10 million to fund development of its copper prospects on the Zambian copperbelt. This will be the company's second raising in six months and is backed by extremely bullish projections for its Nkana and Mufulira mines, being developed with metal trading giant Glencore.

Headed by Clive Newall and advised by the Cannacord broking group, First Quantum has high ambitions and shows impressive projections. At around 147p, it remains a long-term punt for the bold.

Elsewhere, word has it that Nick Graham, ex-mining chief at Algy Cluff's former vehicle, Cluff Resources, is hoping to launch a new company, but no details have so far emerged. Speculation surrounds the game plan of Andrew Woollet, former Reunion Mining boss, now nursing zinc hopeful ZincOx towards floatability.

The Oppenheimer-orchestrated offer for De Beers comes at a time when some analysts believe the shine has come off the rough diamond market, for a while at least. Stocks of rough stones were built up towards the end of last year to meet an expected Christmas boom for cut and polished gems, but this was not as strong as some had expected.

That slowed demand along the chain, from retailers to cutters to rough diamond producers. Whether this relatively subdued climate will affect SG's diamond float project remains to be seen, but it could have increased the chances that the Oppenheimers will succeed in their plan to take De Beers out of the public arena, or so some market watchers claim.

De Beers holders are being offered 43 per cent of an Anglo American share, plus $14.40 cash plus a 565 cents dividend for each De Beers share. At recent prices, that values De Beers at around £26 a share, fractionally above its recent price and more than twice its 2000 low of £11.50, though £4 below its high.

Many in the City say the terms are not good enough in asset terms and resent what they consider the Oppenheimers' high-handed approach. De Beers now is a punt on the chances of better terms.

Several analysts believe the odds could now be moving in the Oppenheimers' favour. If you are showing good profits, it is still worth hanging on, but buying now is only for the extremely bold.

At the opposite end of the market, Aim-listed gem explorer European Diamonds has eased to 142.5p, against a year's high of 190p. Investors are waiting for more news of progress at its Finnish licence area and convincing good news could provoke a rebound.

Meanwhile, Ofex-traded gem explorer River Diamonds is still making progress in Brazil. But City-based investors in two other companies, Paramax and Paramount Ventures, express some confusion about joint ventures in Brazil and Canada between those companies and Harry Baines, the mining engineer with whom River Diamonds is seeking to pursue potentially exciting gem prospects.

Paramax shares have halved recently to 35 Canadian cents (15.4p), Paramount's price has shed 25 per cent to 9.25p and River Diamonds at 4p is between a 2p low for this year and a 7p high. Pending clarification on drilling and corporate structure, these are for gamblers only.

Gold has lately been drifting at around $258.50 an ounce and many shares have been doing little better, if not worse. Anglo American is anyway a mining colossus rather than a simple gold miner and helped by the weakness of the South African rand, is trading at £40.25, nearer its £47.50 12-month high than its £20.50 low, but others are not so lucky.

One which could be is Navan Mining has fluctuated between 45.5p and 130p over the past year and now sits at 86.5p. The market is waiting for imminent news of its estimated gold reserves in Romania.

Recent bullish estimates as high as five million ounces have been discounted by Navan's advisers, but there are grounds for thinking that the data could still be encouraging. If so, that should be good for Navan and could possibly give a boost to Aim-listed Hereward Ventures, another Bulgarian gold digger.

London-listed Australian gold miner, Normandy, could be lifted out of its doldrums if the market takes a favourable reading of its deal with the American group, Franco Nevada. The Americans are getting 20 per cent of Normandy, whose pre-deal market tag was £103 million, and giving in exchange £32 million cash and the Ken Snyder gold mine on the Carlin trend in Nevada, a high grade operation with claimed costs of around $120 an ounce.

Robert de Crespigny, Normandy's abrasive and sometimes controversial boss, has a reputation as a tough negotiator. At 32.25p, down from a 43.25p 12-month high, Normandy, whose operations should also benefit from a weak Aussie dollar, could perk up on the deal, overall market sentiment permitting.

Closer to home, followers of Aim-listed Golden Prospect at 17.75p are keen on its Ethiopian gold licences and believe significant developments could soon be afoot. Speculative.

Tantalum, that newly fashionable mineral without which, we are told, neither the old nor new economies could thrive, has lately been at the centre of a political furore. Cabot Corporation, the Boston-based metals group which is buying into junior UK tantalum prospector Angus & Ross (A & R), has been accused of buying tantalum from the strife-torn Congo Republic.

This brouhaha has affected sentiment in parts of the stock market, but it has not stopped Cabot exercising its option to buy one million shares in Ofex-quoted A & R at 10p each for £100,000. That gives New York Stock Exchange-listed Cabot 4.99 per cent of A & R.

More significantly, Cabot has agreed to pay £800,000 to subscribe for four million A & R shares at 20p. Cabot has also been granted an option to subscribe for up to five million new A & R shares at 20p either on 28 February next year or 45 days after the results of A & R's pre-feasibility studies on its exploration programmes in Greenland and Ireland are made known to it.

A & R's shares have bounced up from 16.5p on the news to 20p, 5p off their 12-momth high. Even for ethical investors, Greenland and Ireland are a long way from the Congo and A & R could still reward a brave speculation.

Shares in several platinum miners and explorers have been oscillating fiercely of late. The metal market sees platinum shedding some $30 to around $550 an ounce by October, but many companies could make good money at $550 an ounce and analysts believe several groups are currently keen to acquire platinum assets in southern Africa.

Lonmin, more than £2 off its year's high at 840p could come into the frame sooner or later. Market speculation suggests Aquarius Platinum, at 277.5p down from a 12-month high of 360p, could soon be attracting predatory attention and be prepared to consider proposals - at the right price.

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