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Gold/Mining/Energy : GMD RESOURCE -- Ignore unavailable to you. Want to Upgrade?

To: Surething who wrote (602)	2/7/1998 2:20:00 PM
From: Mr Metals	Respond to of 1030

Asia, gold woes overhang mine explorers in '98 By Darren Schuettler CAPE TOWN, Feb 6 (Reuters) - Mineral prospectors will have a tough time raising money this year because of Asia's financial crisis, battered metal prices and the ghost of the Bre-X gold scandal. While Africa is a popular hunting ground for lucrative mineral deposits this year, cash is still tight and will likely remain that way for another 12 months, analysts and exploration company officials said at a mining conference in Cape Town this week. ''The difference now is we're flying in the back of plane instead of the front,'' lamented one executive with a Canadian-listed company. Just one year ago, buoyant equity markets supplied a steady flow of cash for new projects in mineral-rich African countries that were opening their doors to exploration and mining. ''Unfortunately, the wheels seem to have fallen off the bandwagon, at least for the time being,'' said Jeremy Wrathall, director of international mining sales for SBC Warburg Dillon Read. The turmoil in Asia economies has depressed base metal prices. Gold plumbed 18-1/2-year lows last month in a climate of uncertainty over central bank policies toward the volatile precious metal. Mining stocks still suffer the after-effects of several major frauds in 1997, including the saga of Canada's Bre-X Minerals Ltd which claimed to have made the gold discovery of the century deep in the jungles of Indonesia. The supposed Busang find turned out to be a huge bust which wiped out Bre-X's C$6 billion in market value and sparked a selloff in exploration stocks, which have yet to fully recover. Ample evidence of the sour attitude toward mining issues can be found in the Canadian market, which has been a major source of exploration funding. The number of mine equity financings in Canada sank to 37 issues in 1997 after soaring to 106 in 1996. There were 18 issues in 1995. About 80 Canadian-listed companies are scouring southern Africa for mineral finds, compared with 30 Australian and 25 South African firms. ''Considering the fact that the Canadian market was seen to be the main market for raising equity capital for mining and even more so for mining in Africa, the fall is of great concern,'' Wrathall said. ''1998 is not expected to be a better year given the current state of metal markets.'' Several prospectors about to hit the streets in search of more cash said competition for funds is stiff and investors' expectations are much lower than the heady days before Bre-X. ''I think they have cooled a bit. There was a time when you raised money and investors expected fantastic results in two months,'' said Terence McKillen, president of Toronto-based Rift Resources Ltd, which has interests in six African countries and plans to re-enter the market soon. ''It's not easy, but there are funds around.'' One spin-off from the Bre-X debacle has been a surge in demand for independent audits of projects and drill results. ''I think that is going to be an ongoing request from investors.'' Analysts and miners said it may take another 12 to 18 months before the depressed market turns around, forcing many cash-strapped companies to fold or look for joint ventures. Simon Malone, managing director of junior miner Metorex Pty Ltd, predicted smaller producers following closely on the heels of prospectors will account for most mining growth in southern Africa over the next five years. Malone estimated the number of junior mining projects will jump to 200 in five years from 162 today. He said funding for exploration has always been cyclical and he expected a rebound in about 12 months. ''If we don't have that exploration, the development will not come through.'' With most global mining indices still wallowing at low levels, analysts said there are bargain stocks out there with good projects, if investors are patient. Wrathall's list of underrated stocks with a focus on the African mining scene included Sutton Resources, Resolute Resources, Iamgold, Ranger Minerals, Golden Knight and Trillion Resources. REUTERS Mr M.