Small Talk: Timis stands by his claim of ENRC buy-in

Monday 29 March 2010 00:00
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Zilch! Those are the chances of FTSE 100-listed Eurasian Natural Resources Corp (ENRC) investing in African Minerals, according to sources close to the Kazakh group last week.

African Minerals, the Aim-listed mining group run by the colourful Frank Timis, made a big claim last September when it said that ENRC was among a number of suitors.

ENRC, it's fair to say, was pretty enraged at the time, having had no prior notice of the announcement, and – embarrassingly – coming just days before it bought another Aim-listed miner, Camec, which had been run until that point by another small-cap mining behemoth, Phil Edmonds.

African Minerals has insisted that the ENRC has remained in the frame ever since, even in January when it announced a sale of 12.5 per cent of the company to the Chinese state-owned China Railway Materials Commercial Corp (CRM), a steel-trading firm.

Sources close to African Minerals at the time said that CRM deal was "strategic" and that talks were still ongoing with a number of parties regarding a corporate deal, including ENRC. And an offer for African Minerals might not be a bad idea for ENRC.

The Kazakhs are looking to "diversify" and as well as the buyout of Camec, last week the company declared that it was leveraging its balance sheet to make more acquisitions. According to Mr Timis, African Minerals' Tonkolili iron-ore asset in Sierra Leone, holds 10.5bn tons of the commodity, making it one of the biggest deposits in the world.

Mr Timis has, of course, a history of being surrounded by controversy. In 1996 he founded Regal Petroleum, which in 2003 acquired a 60 per cent of an oil field in Greece. Regal claimed that the field was one of the biggest in Europe, containing as much as a billion barrels.

Sadly, and after the share priced peaked at 509p, giving the company a market capitalisation of £500m, it transpired that in fact the field was all but dry, leading a 60 per cent loss in the value of Regal.

African Minerals last week said it stands squarely behind its statement of last September. Someone is not being straight.

Frontier Mining switching focus in Kazakhstan

Kazakhstan was in the news elsewhere on Aim last week. Frontier Mining, the very aptly named resources group with interests in Kazakhstan, said that it had extended a number of mining licences in the country, which it believes will allow it to start producing copper by the middle of next year.

Frontier is about the best example of how mining works on the Aim market. The group raised a whole heap of cash a number of years ago to explore various sites in Kazakhstan that it thought might have something useful buried beneath the surface.

Having spent the money on what turned out to be a busted flush, the previous management team then struggled to persuade investors to part with their cash to fund more adventures, and had to leave. Its new chief executive, Erlan Sagadiev, who has pumped some £13m of his own money into Frontier's projects, has changed the attention of the company to its Koskuduk, Baitimir, Naimanjal, Beschoku projects, which the group has now decided represent its best prospects. Investors are clearly of a similar opinion with the group's shares climbing by 900 per cent in the last 12 months.

Bellzone to use Aim listing to finance move into African iron ore

IPOs have been all the rage in recent weeks, both for those that have managed to get deals away, and more noteworthily, for those whose planned flotation has been scuppered by unwilling investors.

The latest to enter the fray is Bellzone Mining – the West African-focused, and Australia-based, iron-ore mining hopeful – which is hoping to get its hands on a $100m (£67m) when it lists on Aim on Wednesday. It does have advantages it can exploit, so long as it doesn't get greedy and ask for too much money.

The group is a bauxite miner, but the money it hopes to raise this week will go towards developing an iron-ore project in Guinea. The mining giant Rio Tinto last week agreed a joint venture with its biggest backer, Chinalco – with which it has only just made friends again after falling out over investment last year – over a project just up the road from Bellzone's site. Tom Albanese, Rio's chairman, reckons the site could end up being the world's biggest iron-ore deposit.

Bellzone estimates that it has a 2.4bn-ton resource, and that the Aim money will be able to shore up the project.

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