Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Medinah Mining Inc. (MDHM) -- Ignore unavailable to you. Want to Upgrade?

To: bully who wrote (3353)	6/11/1998 10:46:00 PM
From: Handshake™	Read Replies (1) \| Respond to of 25548

Interesting reading: -------------------------------------------------------------------------------- Thursday June 11, 6:17 am Eastern Time ANALYSIS-Tight controls post-Bre-X may help London By Martin Hayes LONDON, June 11 (Reuters) - Tougher controls being mooted in Canada following the 1997 Bre-X Minerals scandal will go some way towards restoring investor confidence in the resource sector, although the market is likely to remain bruised for years, industry specialists said. And because Canada's reputation has been tarnished by the gold mine fraud, exploration funding activity may swing more towards London. ''It was long overdue that the Toronto Stock Exchange (TSE) smartened up its act ... any moves are positive, but it will take years to recover from Busang,'' a director at a London firm specialising in exploration financing said. Busang, owned by Alberta-based Bre-X Minerals Ltd and once touted as the gold find of the century, proved to be a massive hoax after independent testing revealed data was falsified on a massive scale. The scandal wiped out $3 billion in investments. On Monday, the TSE and Ontario Securities Commission issued a report recommending measures such as requiring mining firms to appoint a licensed professional to review and sign public disclosures of key information, including drill results and reserve estimates. It also called for the adoption of a code of national standards for company news releases and a uniform set of securities and stock exchange rules to govern mining firms. ''During the halycon days of the exploration boom Toronto was earmarked as the mining centre of the world,'' the director, who declined to be identified, said. Vancouver was perceived as riskier, ''but its due diligence was better than Toronto.'' The U.K. market, though, escaped the fallout from Bre-X, so there was now an opportunity to rebuild its dormant mining exploration sector, said Malcolm Burne, Chairman of Golden Prospect Mining Co Plc, a London-based mining investment company. He told Reuters there were now many small Canadian and Australian companies trading at a big discount to cash and asset value which were ripe for merger and aquisition (M and A) by ''vulture'' funds, which build stakes in special situations. ''Many junior companies whose share prices have already collapsed will be in need of refinancing for the exploration projects and this can be done or achieved on very favourable terms,'' Burne said. Share prices in the sector had fallen so low that there were opportunities to buy up undervalued assets, the director said. Much of that business was expected to take place on the London market. M and A activity was also taking place among major mining companies, with significant industry consolidation already seen this year, Graham Birch of Mercury Asset Management (MAM), managers of Mercury World Mining Trust Plc (quote from Yahoo! UK & Ireland: MWM.L), noted. Aluminum Co of America (AA - news; Alcoa) has agreed a bid for Alumax Inc (AMX - news), Glencore is bidding for Consolidated Metallurgical Industries Ltd (CMIJ.J), Homestake Mining Co (HM - news) is after the minorities in Prime Resources Group Inc (PRU.TO - news) and Alcan Aluminium Ltd (AL.TO - news) has tendered for Indian Aluminium Co Ltd (IALM.BO). Meanwhile Western Metals Ltd (WMT.AX), sought by Asturiana de Zinc SA (AZC.MC), has bid for Aberfoyle Ltd (ABF.AX), he noted in MAM's latest Mining Newsletter. In the longer term, the normal market cycle should broadly return in mining equities, but the small juniors might not be ''flavour of the month'' as many were before Bre-X. Stockbroking analysts noted that the primary London market tended not to list resource companies whose activities were purely exploration, although there were some in the Alternative Investment Market (AIM) of the London Stock Exchange. Some analysts said the market tended to forget the stunning exploration successes of the juniors -- such as Diamond Fields Resources Inc's discovery of the huge Voisey's Bay nickel deposit in Labrador, later bought by Inco Ltd (N.TO - news) -- and focused on the spectacular duds, such as Busang. ''Certainly Busang and one or two other problems, although not of the same magnitude, impacted on the metals sector,'' one said. After Busang, investor appetite for Canadian companies disappeared almost overnight. Mining stocks plummeted and fund managers deserted the sector in favour of high-flying general equity markets. ''It will take a long time for them (junior companies) to get credibility back...Pure exploration companies will find it difficult to raise money for grass-roots exploration as requirements for proving resources will be higher,'' the director said.