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Research Alert

Thursday 22 December 2005

Stocks covered in this note

Stock/sector

AIM Resources 3,5

Analyst

Charles Kernot

FTSE All Share – recent performance

Mkt cap (£m)

13.4

Recommendation

Buy

Page

2

2850 2800 2750 2700 2650 2600 2550 26 3 10 17 24 31 7 14
2850
2800
2750
2700
2650
2600
2550
26
3
10
17
24
31
7
14
21
28
5
12
19
SEP
OCT
N OV
DEC
FTSE ALL SHAR E - PR IC E IND EX

Source: D ATASTREAM

Source: Datastream

Key Indices

Close

Daily % chge

UK

FTSE 100

5587.38

0.71

FTSE All Share

2827.11

0.71

FTSE Mid 250

8663.96

0.79

FTSE AIM

1022.61

0.11

Forthcoming In-House events

2005

Company

Event

Analyst

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

Please see regulatory disclosure notes at the end of this document

see regulatory disclosure notes at the end of this document Contacts Research Team Head of Equities

Contacts

Research Team

Head of Equities

Richard Ratner

richardratner@seymourpierce.com

020 7107 8037

Head of Research

Jim McCafferty

020 7107 8070

jimmccafferty@seymourpierce.com

Deputy Head of Research

Alan Matthews

alanmatthews@seymourpierce.com

020 7107 8021

Research Analysts

Gerald Farr

geraldfarr@seymourpierce.com

020 7107 8332

Tessa Guy

tessaguy@seymourpierce.com

020 7107 8043

Charles Kernot

charleskernot@seymourpierce.com

020 7107 8069

Kevin Lapwood

kevinlapwood@seymourpierce.com

020 7107 8337

Paul Leyland

paulleyland@seymourpierce.com

020 7107 8059

Stuart Lunn

stuartlunn@seymourpierce.com

020 7107 8068

Sav I. Neophytou

savneophytou@seymourpierce.com

020 7107 8034

Charles Peacock

charlespeacock@seymourpierce.com

020 7107 8001

Richard Slape

richardslape@seymourpierce.com

020 7107 8042

Amit Thakar

amitthakar@seymourpierce.com

020 7107 8022

Rhys Williams

rhyswilliams@seymourpierce.com

020 7107 8049

Research Alert Thursday 22 December 2005

AIM Resources 3,5

Metals and Mining

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.

BUY

2.75p

AIM AIMR

No of shares (m)

510.8

Market cap (£m)

13.4

Net cash (£m)

2.2

Enterprise value (£m)

 

11.2

(%)

1m

3m

12m

FTA relative

+17.6

+20.5

na

12 month high/low (p)

 

3.00/1.62

Next news December quarterly – end January

Business Development of the Perkoa zinc project in Burkina Faso and other assets in Africa

www.aimresources.com.au

AIM Resources rel. price performance

AIM RESOURCES (I SE) 22/12/05 3.00 2.80 2.60 2.40 2.20 2.00 1.80 JUL AUG SEP
AIM RESOURCES (I SE)
22/12/05
3.00
2.80
2.60
2.40
2.20
2.00
1.80
JUL
AUG
SEP
OCT
NOV
DEC
PRICE
PRICE REL. TO FTSE ALL SHARE - PRICE INDEX

Sourc e: D ATASTR EAM

Source : Datastream

Contact

Charles Kernot 020 7107 8069 charleskernot@seymourpierce.com

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.

Research Alert Thursday 22 December 2005

Long term zinc price (US$/lb) 0.90 0.80 0.70 0.60 0.50 0.40 0.30 89 90 91
Long term zinc price (US$/lb)
0.90
0.80
0.70
0.60
0.50
0.40
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 1200 1000 800 600 400 200 0 89 90 91 92 93 94
000'S
1400
1200
1000
800
600
400
200
0
89 90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05

Source: Datastream

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

Definition

Buy

Absolute return expected to increase by more than 10%

Outperform

Absolute return expected to increase by between 5% and 10%

Hold

Absolute return expected to change by between -5% and +5%

Underperform

Absolute return expected to decrease by between 5% and 10%

Sell

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

Proportion of these provided with investment banking services

Rating

recommendations

Buy

28%

57%

Outperform

25%

34%

Hold

30%

18%

Underperform

9%

4%

Sell

5%

0%

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 www.seymourpierce.com. 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 www.seymourpierce.com, 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.

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