Combined market cap of JSE-listed juniors rises to R63bn, By: Terence Creamer 15th December 2006

A junior mining and exploration index, set up on September 28 to track 35 independent junior mining and exploration companies listed on the JSE, excluding mining companies included in the Top40 index, has reportedly reached a free-float weighted market capitalisation of R63,1-billion – an increase of R14,3-billion since its launch.

Nedcor Securities quantitative strategist Nerina Visser said that the index, dubbed the NedSec Junior Mining and Exploration Index (NSJME), now included two more recent listings, Great Basin Gold, with a market capitalisation of R1,6-billion and GVM Metals, with a market capitalisation of R191-million. She added that the index had returned a performance of 24,9% (248,1% annualised) since its launch and had reached an all-time high of 2 388. “Of the R14,3-billion in growth, R12,5-billion has been growth in the underlying companies’ share prices,” Visser added.

Mining and resources investment banker at Nedbank Capital Paul Miller said that there had been a number of enquiries from potential investors wishing to get exposure to the basket of shares underlying the index. However, this was not possible as the basket of shares included five inward dual-listed companies and exchange-control regulations prohibited the trading of derivative instruments in inward dual-listed shares.

A second index of South African junior listed mining companies had, therefore, been created, excluding the inward dual-listed shares of Aquarius Platinum, sxr Uranium One, Tawana Resources, Great Basin Gold and GVM Metals.

This index, dubbed the ‘NSJME-X index’, had a 95% correlation to the NSJME index over the last two years, and Nedbank Capital’s equity capital markets futures desk was offering investors the opportunity to trade on the NSJME-X index through a futures contract listed on the JSE. “The recent returns provided by junior miners and explorers have been exceptional,” Arthur Buchner, head of derivatives in Nedbank Capital’s equity capital markets division said, adding that the index also provided investors with a mechanism to diversify their portfolios and receive exposure to a new sector.

The full index includes Aquarius Platinum, sxr Uranium One, Northam, African Rain-bow Minerals, Metorex, Mvela Resources, DRDGold, Scharrig-huisen, Eland, Great Basin Gold, Wits Gold, Wesizwe, ZCI, Trans Hex, Palamin, Merafe, Sallies, Barplats, Simmer & Jack, Diamond Core, Assore, Petmin, GVM, Miranda, Hwange, Tawana, Chro-metco, Afgem, Wescoal, Thabex, Halogen, Kelgran, Village Main, and Samroc.

Posted in Market commentary

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