At first glance, there’s something of a conundrum about Mila Resources PLC (LON:MILA). The company came to the main board of the London Stock Exchange in early October and raised £1.05 mln as a cash shell.
Given that the company issued 21 mln new shares and that there were already 2.2 mln shares in existence, that gave it a total market capitalisation at the open on its first day of trading of £1.16 mln.
Yet, the current market capitalisation, barely one month on is a tidy £1.45 mln, representing a gain of nearly 25% in a month for a company with no assets.
Why is this?
The short answer is: people. The opportunity to do deals in the mining sector is as good now as it’s been for several years, as commodity prices have turned, equity markets are back and the last of the laggard metals are now moving as a result of the Trump infrastructure boost.
Yet to do good deals, you need good people.
And although it hasn’t yet got any assets to its name, Mila has got a deep pool of experience to draw on, both at the executive level and in terms of advisory board members.
First, there’s George Donne, a former mining specialist at JP Morgan. Then there’s Mark Stephenson, a man with much corporate experience, including at Blue Oar and Panmure Gordon. And Anthony Eastman, with notable public company exposure across both the ASX and Aim, along with formative experience with Ernst & Young and a subsidiary of Warren Buffett's CalEnergy.
But it’s on the advisory board that real heavyweight presence makes itself felt. Stuart Murray was a founder and prime mover in making Aquarius Platinum the major player in platinum that it is today. Neil Herbert was involved with major success at Uramin and was also a key man at Polo Resources. And Andrew Crozier has held senior management positions in Kennecott Copper and Hatch and has worked on some of the biggest mines in the world, including Escondida and Yanacocha.
Between them, this team stands as good a chance as any of putting together a company-making deal for Mila and rewarding the patience and the expectation of those who’ve bought in at higher than net assets. This investor support base, which saw the initial raising heavily oversubscribed, should also enable Mila to look at deals well in excess of its current size.
But what will it do?
“Our strategy is to be able to identify the right kinds of projects at the right time in the cycle,” says George Donne.
“There’s a huge demand for de-risked projects, but because of strict internal rules private equity often cannot move on them.”
And that’s where a company like Mila can come in.
Its standard listing on the London Stock Exchange makes it relatively nimble when it comes to deal-making, unhindered by the bureaucracy of Aim’s NOMAD system and not hidebound by Aim’s increasingly restrictive regulation.
With its expertise, its cash backing and its shares, Mila will be able to move fast on any deal that comes its way. And it may not be long now.
Although there aren’t yet any confidentiality agreements signed, the company does see opportunities all the time, according to Donne.
“We’ve seen a lot of quality projects that are nearly there but not quite there,” he says. “Our ideal investment would be an asset that’s shown it’s got value, that it’s got a clear path to development through the meeting of milestones.”
On the whole, he adds, the projects that Mila wants will already have a lot of the geology worked out and will be moving towards the pre-feasibility stage.
This removes a lot of the risk, but also needs a canny approach when it comes to assessing value.
Which brings us back to the quality of the people. At the moment, the market’s betting that they will deliver. Time will tell.