News

October 07, 2008

Sunkar Resources Has The Right Deposit In The Right Place For Shrewd Bottom Fishers

By Charles Wyatt

The sheer brutality of a bear market is writ large in the performance of Sunkar Resources which raised £36 million in June prior to listing on AIM. The price paid then was 120p per share: now the shares cost 24p. And nothing has changed. The company still has a phosphorous rock deposit in Kazakhstan totalling 800 million tonnes capable of producing fertilisers for the next 56 years. The deposit lies in a flat lying position on the Kazakh steppes close to surface so will be cheap to mine and the world still needs fertilisers. Even so investors have decided in a matter of weeks that the company is not worth £191.8 million, but £40 million which is only a fraction more than the money actually raised. That is the measure of this bear market at the moment, but Donald Sinclair, the Scottish finance director, is determined to maintain the company’s presence in the market until the turn comes and sensible valuations return.

In this case it was the first interim results that were being discussed, but there was not a lot of real news over such a short time. The terms of the Sub Soil Use clause have been amended so that the Kazakh subsidiary is in full compliance, but you would have to have read the original terms to understand the changes. Apart from that, most of the mining equipment has been moved onto the site and stripping and ore extraction operations have started.operations. There is more machinery...