Watkin planning £50m flotation
Apr 30 2007
By Nigel Stirling, The Journal
icnewcastle.icnetwork.co.uk
Entrepreneur Karl Watkin hopes to raise up to £50m from a stock market flotation of a company mining a steel strengthening metal in China.
The metal, known as molybdenum, has been picked as the next big thing in global metal markets.
Mr Watkin and business partner Frank Vanspeybroeck expect to list China Molybdenum Ltd on London's Alternative Investment Market (AIM) at the end of the summer, with up to 25% of its shares being sold off, valuing the company at up to £200m.
The company, majority owned by Mr Watkin and Mr Vanspeybroeck, acquired 12 mines near the county of Zhangjiajie in China's Hunan province six months ago and is expected to finish work on a further processing plant within the next fortnight.
Molybdenum has been hailed by commodities experts as the next metal to take off following booming prices for uranium and nickel so far this year.
The metal, resistant to extreme temperatures and corrosion, has climbed 16% so far this year to $4,225 per tonne, following warnings from the Chinese government that it will restrict its export in the face of demand from the domestic steel processing industry. Mr Watkin said: "We would have to sell to the Chinese because they are restricting exports of molybdenum for obvious reasons. It is in massive demand worldwide - there is a worldwide shortage.
"We bought the company six months ago. And just after we bought it the Americans had to double the amount of molybdenum they have to put in oil pipelines because of the BP situation with the (Alaskan) oilfields."
Shares in another business in the field, China Molybdenum Company Ltd (CMOL), which raised HK$7.37 billion (£450m) from an IPO on the Hong Kong Stock Exchange, surged by as much as 66% on their first trading day last Wednesday, as investors continued to pile into Chinese share sales to tap economic growth of more than 10% annually. Mr Watkin said: "Our 12 mines have a resource which is of a significantly higher grade than that of CMOL but with a lower gross output." Mr Watkin, a non-executive director of AIM-listed China Goldmines, which earlier this month announced it had paid £12m for eight gold mines, also in Hunan province, estimated his company's molybdenum deposits were 40% of CMOL's.
He said: "The illiquidity of the Chinese and Hong Kong (stock) markets is significantly enhancing values; we would not expect to get similar valuations in the UK.
"But as a result of (what happened with) CMOL, we are in discussions with our advisers to consider options for the business including an early listing for the company on the London market."
Mr Watkin said because of restrictions on listing companies without a three-year trading record, CML's directors could not list the company on the Hong Kong or Shanghai stock exchanges for another two years.
He said: "What we have got to look at is should we sell the company out straight away over here for cash to a trade buyer or trade it for the next three years and then do a joint listing on the Shanghai or Hong Kong markets."
China, the world's biggest producer of stainless steel, is expected to increase output by 37% this year to 7.35 million metric tons. |
