Gamble of the week: a zinc-rich miner

This zinc-rich miner may be a gamble, but investors could stand to make four times their money, according to broker Seymour Pierce.

Annunziata Rees-Mogg
By Annunziata Rees-Mogg
published

Shares in this company may "have risen strongly in the past few weeks", says Investors Chronicle, but the best is yet to come.

On the basis of the present value of future earnings streams, broker Seymour Pierce suggests that the shares could be worth 16.7p per share over four times their current price.

Aim Resources' (AIM:AIMR, 3.7p) primary asset is 100% of the Perkoa zinc project in Burkina Faso, west Africa, which, according to a feasibility study, "contains 6.3 million tones of ore grading 14.5% zinc". This means each tonne of ore contains metal worth $307 not bad, given the cost of getting it out is thought to be only $53.50 per tonne.

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At the time the study was done, the zinc price was $1,815 per tonne. It's now more than $2,000 and, with the global supply-demand balance still tight, Macquarie (for one) expects the metal to average $2,589 per tonne in 2006.

This is all good news for Aim. Production is expected to start in mid-2007 after an investment of about $72.5m in plant and machinery, financing for which is said to be "well advanced".

Annunziata Rees-Mogg
Annunziata Rees-Mogg

Annunziata was a deputy editor at MoneyWeek, covering financial markets, politics, economics and comment pieces. She then went on to the Daily Telegraph as a lead writer where Annunziata wrote a column on young women’s financial issues. Since then, she has been a member of the European Parliament for the East Midlands region in the UK as part of the Conservative Party and Annunziata continues to write for titles as a freelance journalist.

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