Institutional thumbsup for gold explorer
16 June 2002 Miningweb Review
Junior Mining
By Ken Gooding
LONDON – Two more institutional investors have become big shareholders in AIM-listed Mano River Resources [LSE:MANA, TSEX: MNO], which is exploring for gold and diamonds, mainly in Africa. The institutions are warmly welcomed by Guy Pas, the Swiss financier who is co-chairman. He says small private investors stopped taking an interest in junior exploration companies some time ago, “so it is good to have institutional support”.
One of the new shareholders is Golden Prospect [LSE:GOL], another AIM-listed company that describes itself as “a hybrid of a mining company and investment fund”. Golden Prospect has as executive chairman Malcolm Burne, a serial investor in small resource companies – he has been on the boards of 20 of them in the past – and a wheeler-dealer who has operated in Australia, Hong Kong and North America, as well as in London. Among his non-executive directors is Richard Lockwood, an investment manager at Invesco and another well-known face in the mining sector.
Golden Prospect is putting £244,000 into Mano in exchange for a non-brokered placement of 6.1m shares at 4p each to take its total holding to 6.6m, or 5.7 percent of the exploration company. There is a considerable sweetener involved for Mano because the deal also involves the two companies putting together their contiguous exploration licences in the Sonfon region of central Sierra Leone so that they can be explored jointly. Mano as operator will undertake and fund the initial US$75,000 of a gold exploration programme for the 50:50 joint venture.
Pas says this arrangement makes a great deal of sense and Mano has been pressing for the joint venture almost since the two companies became “neighbours” in Sierra Leone in the mid-1990s.
The second new Mano institutional shareholder is the Synergy Asset Management Group of Geneva which acquired, off the market, 17.28m Mano shares at an average of 6.6p each, giving it a stake of about 16.5 percent in the exploration company. Pas says the two beneficial owners of Synergy, George Catsiapis and Majid el Solh, the chief executive, are investment bankers and old friends of his. The shares Synergy acquired were from a group of people who invested in Mano in its early days, between 1995 and 1998. He said none of the shares acquired by Synergy came from Mano directors or from his own investment vehicle, Eastbound Resources, which owns about 17.6 percent of Mano.
Pas says that Catsiapis and el Solh see the investment as a longterm one and are willing to wait for five years or more for a reasonable return.
Mano’s arrangement with another institutional investor, Resources Investment Trust [LSE:REI], has also worked out well for the explorer. On Tuesday Mano banked a cheque for about £63,500 following the sale of its 68,750 shares in ReIT at 92.5p each.
ReIT was set up to provide a way of investing in junior mining companies for people who wanted more liquidity in the shares they dealt in. ReIT gained a full London Stock Exchange listing in January and subsequently completed a twopart deal with Mano. One part of the arrangement was the issue by Mano of 2.1m of its shares to ReIT at 3.25p each, netting the company the equivalent of about US$100,000. The other part of the deal was the acquisition by Mano of the 68,750 ReIT shares in exchange for 2.5m Mano shares. ReIT still holds this investment.
An unusual feature of the ReIT launch was that it offered investors the chance to take part in the original placing by transferring shares in suitable natural resources companies to the Trust in lieu of cash subscriptions. By accepting appropriate stocks from investors, ReIT hoped to build a ready-made portfolio without affecting market prices.
David Hutchins, ReIT’s investment manager, says all the ReIT shares exchanged in this way have recently been sold by the corporate holders. This involved about 9m shares, or roughly 48 percent of the issued capital, going through the market without causing much disturbance – “which was very pleasing”. The price did dip to 95.5p but has climbed back in the past week to 106.5p compared with the 100p at which the shares were placed before the London listing.
Institutional investors now make up most of the names on ReIt’s share register, according to Hutchins. The price rebound was undoubtedly helped by Deutsche Bank’s investment arm, which bought 1.1m ReIt shares, or 5.98 percent of the company, in the past few days.
Meanwhile, Mano is also to collect more cash from a brokered private placement of 3m shares at 4p each, arranged by Loeb Aron, the specialist resources broker. This will bring in £244,000 gross.
Mano’s share price has risen by 50 percent in the past week, from 4p to 6p, after being boosted by two other announcements. The first gave details of a joint venture with International Taurus Resources of Vancouver that will focus on diamond exploration in the prospective Otish Mountains area of Quebec. This particularly pleased Mana’s Canadian investors. The second reported “encouraging results” from the first phase of Mano’s diamond exploration programme in the Kono district of east central Sierra Leone. Nevertheless, the share price is still lagging the 15p it reached last summer after Mano announced results from its diamond exploration efforts in Liberia.
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