Small Talk: On the hunt for Botswana's new copper reserves
Monday 15 November 2010
The FTSE 100 is awash with copper miners. Investors have their pick of the big diversified groups or more focused players such as Antofagasta and Kazakhmys, both of whose shares tend to move in tandem with the copper price.
At first glance, the small-cap sector seems better resourced with oil and gas companies. But there are options for those seeking to increase their exposure to the red metal – and last week, one of those options, the Alternative Investment Market-listed Discovery Metals, published a drilling report that could trigger renewed interest its shares.
The copper exploration and production group is currently focused on its fully owned Boseto Copper Project in north- west Botswana. Production is slated for the second quarter of 2012, giving investors much to look forward to. But we've also been waiting to hear about the potential for activity beyond Boseto – and on Wednesday, we got the first hint of what that might look like.
Discovery said it had zeroed in on a new mineralised area located just 40 kilometres south-west of Boseto. It is too early to say what this might eventually yield, but the drill intercepts from all three holes drilled to date point to copper grades of 1 to 1.6 per cent.
Given the promise, Discovery is pushing ahead with a prospecting campaign in the area, which will proceed against the backdrop of building work at Boseto. Managing director Brad Sampson said that while further drilling was required to verify the find, "the initial success bodes well for our search that could support a standalone mining operation, beyond the immediate environs of Boseto".
The potential for a second mine also bodes well for the share price. The last year has seen some strong gains in the copper price, which struck fresh records last week. This has coincided with some heady gains in theDiscovery's share price, which is up more than 165 per cent since the beginning of January.
Part of that must be down to the fact that Boseto is coming closer to production. But the uptick in copper prices is also likely to have played its part in the rally.
News on the new mine could help offset the possibility of short-term profit-taking as current investors await further updates and new ones study the potential for further upside.
Looking east with Fidelity
Last week's newspapers were full of headlines to do with China as the Prime Minister, David Cameron, led a delegation to drum up business for British companies. The trade visit neatly coincided with an update from Anthony Bolton's Fidelity China Special Situations fund, which unveiled plans to issue new shares early next year as it seeks to meet strong demand.
Mr Bolton has in effect staked his stellar reputation on the new venture. And for now, it looks as if he is on track to bolster his standing.
The new share announcement was accompanied by some pretty upbeat figures. In the period since it listed in April, for instance, Fidelity China's net asset values per share have climbed from under 100p to 115.02p, notching up a pretty healthy 16.2 per cent rise and outperforming the benchmark MSCI China index by more than 5 per cent.
The share price has also booked healthy gains, boding well for those who backed Mr Bolton from the start – and for Mr Bolton's reputation.
Planet Payment flashes plastic
Talking of foreign lands, wouldn't it be nice when you're on holiday to be able to pay for things in sterling, instead of fishing out your card and doing the conversion in your head only to find out, when the bills arrive at home, that you got the sums wrong and that your bargain purchase wasn't much of a bargain after all?
Planet Payment's main offering allows you to do that – its platform does the maths and allows you to pay in your own currency. One of its products also looks up the conversion rates and ensures you get the best deal. The company works with banks, who outsource processing to its platform.
Recent regulatory changes, including Visa's decision tooverturn rules that restricted the expansion of the company's Pay In Your Currency service in Asia Pacific and North America, have boosted the shares, but they remain below the peaks seen in April.
The chairman and chiefexecutive Philip Beck is hoping that positive results, such as the quarterly figures posted last week, spark some new interest in the stock.
And to tie in with the previous piece about China, those looking to up their exposure to thecountry might be interested to hear that more than 60 per cent of revenues stem from the Greater China region.
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