[miningmx.com] — WHAT’S going on at the normally sedate mid-cap miner, Petmin? The company seems to have wandered lately from a relatively safe pursuit of the anthracite business into early stage pig iron, iron ore and copper exploration, the latter two in Liberia and Turkey respectively. What will happen next?
Well, manganese for one.
Executive chairperson Ian Cockerill, who has been the driving force behind Petmin’s sudden emergence from the shadows, says manganese is perhaps one of the assets yet to be added to the R1.64bn group’s asset mix. “Manganese is the only thing that’s missing now,’ according to Cockerill, who says Petmin’s strategy is to find minerals that help feed China’s infrastructure.
“But don’t expect us to be bidding in order to create a multi-zillion dollar company. We will look for opportunities others have missed, or are too small. It will take time, however,’ he says.
Petmin stocks, at R2.85 per share, are midway between the company’s 52-week trading range after peaking at R3.33/share in March. Analysts declare themselves satisfied with what’s gone on. “Cockerill does seem to be delivering on what he said he’d do,’ said Stephen Meintjes at Imara SP Reid, although he added the stockbroker had still to properly cover the share.
Commenting on Petmin’s latest exploration foray, the direct 10% holding taken in Red Crescent Resources (RCR), which owns the Shivas copper project in central Turkey, UK stockbroker Numis says: “… it has the potential to be a sizeable and profitable project in a favourable country … it fits with Petmin’s geographical and commodity diversification strategy’. At a 10.7 x PE, the company is trading in line with its peers, says Numis.
Petmin has flashed the cash lately. In addition to the R122m investment in RCR, Petmin spent R120m expanding Somkhele, its anthracite mine, and is to spend a further R14m helping to explore the Mount Ginka iron ore deposit in Liberia. Hummingbird Resources, an AIM-listed company, is its partner and as one of its directors, Cockerill knows it well.
Liberia, war-torn in the past, impresses Cockerill: “The country is weary of war and has attracted investment already: Ginga is 15 clicks away from Nimba (iron ore fields) where BHP Billiton and Vale have licences. I saw nothing that gave me cause for concern.’
In the meantime, Petmin will plug away at its Somkhele business to which it will add a second revenue stream. There will be no significant strain on the balance sheet; in fact, confidence is such that Cockerill reckons the company will remain almost ungeared at a mere 8% debt:equity. “We’re not unhappy with this. We’ll handle projects using internal resources, but if we do require dollars we’ll look to debt,’ says Cockerill.
