FROM THE BROKING DESK
Hummingbird Resources*† (LON:HUM) has raised US$3.8m in a private placing with Fidelity Investments. This was done through the placement of 11,100,000 ordinary new shares at 26p/share, a premium to the market price and an 18% premium to its US$71m fundraising in June. RFC Ambrian acts as Nominated Adviser and Broker to Hummingbird.
The addition of Fidelity to the shareholder register is significant. It is joining other ‘blue chip’ investors such as the Capital Group, Odey Asset Management and Pala Investments as backers of the 2.2Moz Yanfolila Gold Project in Mali. Production is targeted for the end of 2017. The addition of further equity funds gives Dan Betts’ team increased flexibility as it negotiates the debt portion of the construction financing, which we estimate to be some US$110m. For further details please see Jim Taylor and Imogen Whiteside’s piece Hummingbird Resources — Raises US$67m for Yanfolila Development, 2 June 2016.
This is a reflection of the fact that the equity markets are beginning to invest heavily in mining projects. This is being led by gold, which is only to be expected. Capital raisings in the space are now an almost daily occurrence, and it is the institutions in North America that have led the way. London has been slow to raise weightings in the mining space, and it has a fair amount of catching up to do. Outside gold, we have seen a significant pick-up of interest, which really started with mineral sands. After years in the doldrums, in the past few weeks we’ve seen the recapitalisation of Kenmare Resources, with a major investment being initiated by the State General Mining Fund of Oman, and the announced takeover of Sierra Rutile by Iluka Resources.
Sierra Rutile was widely held by UK institutions, and the company set to benefit from this is Base Resources*†. We have marketed Tim Carstens of Base repeatedly over the years, and it is clear that recent institutional interest in the shares has risen dramatically. Base shares have performed strongly in 2016; Jim and Imogen updated their price target to A$0.30 (around 18p) in July (Base Resources — Valuation Update, 21 July 2016), so we see 100% upside for it from the current levels.
Such is the momentum, we’ll be marketing Tim again in London. This will be over the week of 19 September, so please let me know if you would like to see him again or even hear the story for the first time.