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Shares Magazine’s Investor Evening in London allowed companies to present to potential investors.
Daniel Betts, CEO of Hummingbird Resources, a West African gold exploration company, founded his company to fulfill his ambition to be the first to explore the Eastern part of Liberia for gold. Betts said he plans to exploit the downturn in the gold market to make acquisitions, with his principal challenge being to find good acquisition targets.
The company was founded in 2006 and listed on AIM in December 2010, raising $40m. Hummingbird is currently building a team capable of delivering on this expansionary vision, said Betts. He conceded the falling gold price would adversely affect the business, but said it was somewhat insulated by cheap extraction costs. But he argued global quantitative easing measures would ultimately push up the price of gold. The company has grown from an initial 0.8m oz to 4.2m oz in Liberia, while at the Yanfolila gold project in Mali it has 5000 km of exploration ground and 6m oz of gold, enough to see it make a profit. But he admitted the mining business has been easier in Mali, where 20% of the economy is in mining, than in Liberia where “they don’t understand mining as well.”
Ian Gowrie-Smith, chairman of Kea Petroleum wants to raise £3m which could take production to 1000 barrels per day, he said. But he said covenants prevent him putting his own money into the company, and he does not want to go private, as delisting is expensive. Kea has a number of joint venture partners, a strong supply network and an experienced exploration team, said Gowrie-Smith. Its exploration permits are in key areas and provide a range of shallow to medium depth targets. Through the use of new technologies and efficient management, Kea plans to bring new discoveries onstream faster and more cost effectively.
Dennis Melka, chairman & CEO of United Cacao, said his company is the only publicly listed pure-play cacao producer in Latin America. Trading on AIM, Melka said UC, which has a market capitalisation of $60m, has performed well since its IPO. UC had the advantage of a very competitive labour force, despite all its estate staff being employed under Peruvian labor contracts and paid above national standards, said Melka. He argued Peruvian labour standards are higher than in West Africa, source of 80% of cacao beans.
UC owns the land it cultivates and although it is only one seventh of the size of Asian plantations, its crops yield more due to the environment, Melka said. While production in West Africa and Indonesia has fallen, in Peru and the equator it is is growing, he said.
Peru is also more cost efficient than its rivals because it has no export tax on the beans, while West African governments control their markets and add a 50% export tax, he added.