Cluff's Christmas cracker
Article Date: Jan 03 2001Mining shares have not been among the better performers in the post-Christmas lull. But the prospect for the New Year, at least initially, is for renewed interest in mergers, takeovers and deals. Some of the stars among the smaller miners, such Aquarius Platinum and new issue European Diamonds, like Aquarius a Williams de Broe float, remain buoyant.
Others, however, such as Conroy Diamonds and Gold came under severe pressure before Christmas. In Conroy's case, this selling came despite a bullish circular from broker Seymour Pierce Ellis.
Algy Cluff - still smarting from Aim's savage treatment of Cluff Mining - is to place 940,000 shares in the company at 114p, to raise £1.1 million as part of an agreement to buy Sperrylite Resources of South Africa. The placing issue is underwritten by Stancroft Trust, which shares a director, Nicholas Berry, with Cluff and some analysts are even suggesting it could be a prelude to a virtual reverse takeover of Cluff.
Sperrylite brings Cluff access to platinum group metal prospects in South Africa's Bushveld Complex, which currently produces more than 70 per cent of the world's platinum and 25 per cent of its palladium. Cluff is pay $500,000 (£300,000) cash and issuing 500,000 new Cluff shares to buy 20 per cent of Sperrylite, with the option to buy the remaining 80 per cent for the same amount of cash and shares again within six months.
To a literalist, that might imply the value of Sperrylite is set to plunge during that time, but, presumably, it seems worthwhile for Cluff to pay a premium to get his toe in the door. When and if an 'independent expert' agrees that certain target levels of indicated resources on the four blocks in the Bushveld Complex have been reached, another three million 'consideration shares' will be issued to the Sperrylite vendors.
If it works out, the deal will bring Cluff into the fashionable platinum group metals. These are held to be more likely to impress investors than some of Cluff Mining's existing interests, such as West African niobium, however useful and versatile they may be.
Further analysis of Sperrylite and its Bushveld assets is needed before the market can judge the deal Cluff has struck. In the past he has pulled off some highly advantageous deals but, until the picture is clearer, it would be rash to pronounce too firmly.
Cluff has several irons in the fire, in Zimbabwe and elsewhere, and is known to be wondering if there might be any pickings in the Ashanti situation. Meanwhile the shares at 114p, down from a 220p Aim issue price, remain a recovery speculation.
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