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GVM Metals' fundraising

• FROM: July 2006 |
• TAGS: mining, gvm metals |
• COMMENTS: Add yours

• GVM Metals' fundraising
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GVM Metals’ name is becoming a misnomer. While it owns a nickel magnesium alloy manufacturer its main growth prospects come from its more recently acquired SouthAfrican coal mining activities.

Last month GVM added a 74% stake in the Limpopo coal project to its 49% stake in the Holfontein coal project. There was extensive drilling on Limpopo in the 1980s but more work needs to be done to confirm the resource. There may even be more than currently estimated.

Holfontein has an indicated resource of 56m tonnes and Limpopo an inferred resource of 352m tonnes.

Holfontein should be able to produce 800,000 tonnes of steaming coal and 400,000 tonnes of soft coking coal each year. That would give the mine a life of 20 years. A banking feasibility study shouldbe complete by September and production could commence early in 2008. GVM is raising £5m in cash to take this project through to production and finance drilling on
Limpopo.

House broker Corporate Synergy believes that GVM’s stake in Limpopo alone could currently be worth £10min the ground even before additional drilling has been done. The nickelmagnesium alloy business is profitable so on a conservative basis that underpins the majority of the valuation before the proposed £5m fundraising anyway.

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