Canadian mines play name game

UNTIL recently, the outlook for Canada's battered collection of small mining and minerals companies was pretty hopeless. Commodity prices have been sliding, mines have been running dry and the stock exchange has lost interest.

UNTIL recently, the outlook for Canada's battered collection of small mining and minerals companies was pretty hopeless. Commodity prices have been sliding, mines have been running dry and the stock exchange has lost interest.

But it takes much more than that to beat the fears of cunning prospectors. In the past year, a suspicious number of new internet companies have been arriving on Canada's CDNX exchange with names guaranteed to spark investor interest.

Little was anyone to know LasVegasFromHome.com and BroadcastMusic.com were just the hi-tech façades of Bronx Minerals and Afrasia Mineral Fields.

In an environment where anything with a dot com after its name was valued to the heights, all of these companies did extremely well. It is only now that the exchange has worked out that none of these miners really knows what they are doing.

The CDNX, which specialises in venture start-ups, has been forced to clamp down on the scam, and is taking measures to stop exploration companies reinventing themselves as e-commerce firms just to get a piece of the dot com action.

Gerry Romanzin, executive vice-president of the CDNX, said: "We want to make sure that any change of business is done for the right reason, that there is a good business plan and it's not flavour of the week."

Mr Romanzin added that the exchange is stepping up its due diligence and will make more detailed management checks and reviews.

Many of the companies have managed to change their appearance through reverse takeovers of dormant shells. Since January, 15 mining companies have applied to take that route, and over 40 did so in the closing months of last year.

One mining analyst in Vancouver admired the miners' opportunist strategy, saying that "while some of the changeovers are surprising, companies in the mining sector have always been quick to change their businesses if faced with lack of investor support."