Research Alert

Thursday 22 December 2005
Stocks covered in this note Head of Equities Stock/sector Analyst


Research Team

Mkt cap (£m) Recommendation


AIM Resources

Charles Kernot

13.4 Buy


Richard Ratner 020 7107 8037 Head of Research Jim McCafferty 020 7107 8070 Deputy Head of Research

FTSE All Share – recent performance

Alan Matthews 020 7107 8021 Key Indices UK FTSE 100 FTSE All Share FTSE Mid 250 Close Daily % chge Research Analysts Gerald Farr 020 7107 8332 Tessa Guy 020 7107 8043 Charles Kernot 020 7107 8069 Kevin Lapwood 020 7107 8337 Paul Leyland 020 7107 8059 Stuart Lunn 020 7107 8068 Event Analyst Sav I. Neophytou 020 7107 8034 Charles Peacock 020 7107 8001 Richard Slape 020 7107 8042 Amit Thakar 020 7107 8022



5587.38 2827.11 8663.96 1022.61

0.71 0.71 0.79 0.11




2550 26 3 10 17 24 31 SEP OCT FT SE ALL SHAR E - PR IC E IND EX 7 14 21 N OV 28 5 12 DEC 19



Source: Datastream

Forthcoming In-House events 2005 Company

All lunches 12.45 for 1.00 pm – unless otherwise stated. If you wish to attend, please email the relevant analyst.

Rhys Williams 020 7107 8049

Please see regulatory disclosure notes at the end of this document

Research Alert Thursday 22 December 2005

AIM Resources 3,5
Metals and Mining

BUY 2.75p

Perkoa delights
• AIM Resources has announced the results of the feasibility study at the Perkoa zinc project in Burkina Faso. The study has been undertaken by Snowden to Australian standards and indicates total ore production from the mine at some 6.3Mt at a diluted head grade of nearly 14.5% zinc. • The net present value calculated for the project amounts to US$147.7m (£85.4m or 16.7p/share) with a capital cost of US$72.5m. All of the capital costs should be repayable within two years of reaching full capacity, and the mine is expected to have an operating life of some 12.5 years. • The high grade of the deposit is a key advantage and it is for this reason that estimated operating costs of US$53.50/t equate to only US¢18/lb of metal in concentrate, after allowing for all transport costs to port. There is scope for the feasibility study to be tweaked in order to enhance returns further, and this may include the potential of reducing transport costs. • Infrastructure is generally available in the area so setting up a mine should not be overly complex – and the government has been helpful as it is keen to develop a local mining industry. Indeed, the government organised the construction of a dam which will be able to supply water to the process plant as well as providing water to local farming communities. • The vicinity of the mine remains geologically interesting and there is scope for the discovery of additional deposits. Indeed, this style of mineralization generally occurs in multiple zones and so we believe that there should be good prospectivity in the area. • Barclays Capital has been appointed as debt financing advisors for the project and has been involved in the feasibility work for some time. We therefore anticipate that negotiations on the provision of debt should be able to proceed at a good pace. • AIM has a number of other projects across Africa, but this is by far the most advanced. We expect the project to move up a gear over the next few months as the company lines up plant and equipment and therefore expect further newsflow to support the share price. • Indeed, with the NPV of the project so far above the company’s share price we consider that there will be considerable upside to the shares over the coming weeks. We will be writing a full report on the company to be published in the New Year but in the meantime rate the shares a BUY.

No of shares (m) Market cap (£m) Net cash (£m) Enterprise value (£m) (%) FTA relative 1m +17.6 3m +20.5

510.8 13.4 2.2 11.2 12m na

12 month high/low (p)


Next news December quarterly – end January Business Development of the Perkoa zinc project in Burkina Faso and other assets in Africa

AIM Resources – rel. price performance
AIM RE S OURCE S (I S E) 3.00 22/12/05







So u r c e : D ATASTR EAM

Source : Datastream

Contact Charles Kernot 020 7107 8069

Seymour Pierce Research


Research Alert Thursday 22 December 2005

Long term zinc price (US$/lb)






0.30 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

Source: Datastream

LME zinc stocks (000t)
000'S 1400







0 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

Source: Datastream

Seymour Pierce Research


Research Alert Thursday 22 December 2005

Key to material interests 1. The analyst has a personal holding of the securities issued by the company, or of derivatives related to such securities. 2. Seymour Pierce Limited or an affiliate owns more than 5% of the issued share capital of the company. 3. Seymour Pierce Limited or an affiliate is party to an agreement with the company relating to the provision of investment banking services, or has been party to such an agreement within the past 12 months. Our corporate broking agreements include a provision that we will prepare and publish research at such times as we consider appropriate. 4. Seymour Pierce or an affiliate has been lead manager or co-lead manager of a publicly disclosed offer of securities for the company within the past 12 months. 5. Seymour Pierce is a market maker or liquidity provider in the securities issued by the company.

Distribution of ratings Our research ratings are defined with reference to the amount by which we expect the absolute return to change over the next 12 months: Rating Buy Outperform Hold Underperform Sell Definition Absolute return expected to increase by more than 10% Absolute return expected to increase by between 5% and 10% Absolute return expected to change by between -5% and +5% Absolute return expected to decrease by between 5% and 10% Absolute return expected to decrease by more than 10%

As at 30 September 2005 the distribution of all our published recommendations is as follows: Proportion of recommendations 28% 25% 30% 9% 5% Proportion of these provided with investment banking services 57% 34% 18% 4% 0%

Rating Buy Outperform Hold Underperform Sell

Important Notes Our research recommendations are issued and approved for distribution within the United Kingdom by Seymour Pierce Limited only to market counterparties and intermediate customers as defined under the FSA rules. Our research is not directed at, may not be suitable for and should not be relied upon by any other person. The information contained in our research is compiled from a number of sources and is believed to be correct, but cannot be guaranteed. It is not to be construed as an offer, invitation or solicitation to buy or sell any securities of any of the companies referred to within it. All statements made and opinions expressed are made as at the date on the face of the material and are subject to change without notice. Where prices of securities are mentioned, these are the mid-market prices as at the close-of-business on the business day immediately preceding the date of the research. The meanings of our research ratings, together with the proportion of our recommendations issued during the previous quarter carrying each rating, is set out on our website at Seymour Pierce Limited and/or its associated companies and ultimate holding company may from time-to-time provide investment or other services to, or solicit such business from, any of the companies referred to in research material. In addition, they and/or their directors and employees and/or any connected persons may have an interest in the securities of any of the companies in the report and may from time-to-time add to or dispose of such interests. Details of the significant conflicts relating to the companies that we research are set out on our website, together with a summary of our policies for managing conflicts of interest. Seymour Pierce does not meet all of the FSA standards for managing conflicts of interest, as a result our research should not be regarded as an impartial or objective assessment of the value or prospects of its subject matter, though of course we will always ensure that it remains clear, fair and not misleading. Seymour Pierce Limited is authorised and regulated by the Financial Services Authority, and is a member of the London Stock Exchange.

Seymour Pierce Limited th 13 Floor Bucklersbury House No. 3 Queen Victoria Street EC4N 8EL Switchboard: 020 7107 8000 Fax: 020 7107 8102

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.