Minera IRL Is Riding High After A Stellar Performance In 2008, And Is Now On The Hunt For Deals
By Alastair Ford
minesite.com
Far be it from Minesite to spread gratuitous compliments around the place, but when we ran into Courtney Chamberlain a little while ago, we felt compelled to mention that his company, Minera IRL, was recently referred to by a (nameless) competitor as “the darling of Aim”. This produced about as deep and as booming a laugh as you could stretch to imagining from Courtney, who isn’t exactly heavy set. And you could see he wasn’t entirely displeased with the epithet - even if such praise often morphs over time into something of a poisoned chalice, as expectations get raised and raised.
But in a way, 2008 was always going to be a good year for Minera IRL. The real eye-opener was how bad a year it was for everybody else. Thus, when Minera had well and truly put the teething troubles of the previous year behind it, had established production from the outcropping Corihuami project in Peru, and then, as the year progressed, began to exceed production and cost expectations by some margin, there were grounds for all concerned to sit back and look around with some satisfaction. Minera IRL’s shares duly rose. Meanwhile, on the corporate side, the Lima listing kept liquidity on the boil, and also took serious trading out of the reach of Aim’s army of short-sellers and piratical price manipulators. To cap it all off, the gold price stayed strong in the face of weakness from virtually every other metal. So reasons to be cheerful for Minera IRL shareholders.
And reason to be miserable for virtually everyone else in the world it seemed. Because one reason why it was legitimate to call Minera IRL the darling of Aim last year was that it was in fact one of only two Aim mining companies to put in a rise at all over the course of 2008. That’s right, every single Aim miner, bar Minera IRL, Kalahari Minerals and Obtala, dropped in value over the course of 2008. But Minera, which more than doubled, was actually the best performing London-listed miner of them all. This is a brilliant position for Courtney to find himself in, so no wonder he’s laughing deeply, if a little self-consciously. Minera’s a small company but its backers wield some punch - they include, among the more robust names, BlackRock, JP Morgan and Macquarie. So when Courtney says that Minera’s activities on the corporate front are moving “full steam ahead”, it’s clear that, as London’s best performing miner, with several heavyweights on his share register, he’ll get the backing he needs for any type of deal that he wants to put together. Currently, says Courtney, Minera is party to “a number” of confidentiality agreements, and that there are “five projects that are of interest”.
There’s a certain specific profile of project that Minera has in mind here. Corihuami for all its’ sainted virtues, has a short life. The company’s next cab off the rank, Ollachea, a project that some at the company’s joint broker Fox Davies think has potential for over two million ounces, is some years away from production. That leaves Minera IRL looking like it may face a production hiatus in a few years time, just at about the time it will have become fully established in everybody’s mind as a staunch and reliable producer. It’s therefore essential to plug the gap with the acquisition of a near-term production asset or two. Courtney’s fairly upbeat that he’ll strike a favourable deal over something or other. The companies he’s talking to are, he says, “faced with either doing a deal, or going under”.
Although there has been some wilful value destruction during the most recent bearish turn this market has taken, only the real ostriches have kept their heads in the sand all the way to the administrators. So if Courtney’s assessment of the financial state of his targets is accurate then someone should sign on the dotted line sooner or later. Whether any such deal will be spectacular enough for rivals to continue to refer to Minera as the “darling of Aim” remains to be seen. But, such accolades aside, what really matters is delivering value for shareholders. Minera is beginning to establish a track record on that. The next deal will give some indication as to how good it will be at keeping up the momentum. |
