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Research Alert

Contacts
Thursday 22 December 2005
Research Team
Stocks covered in this note
Head of Equities
Stock/sector Analyst Mkt cap (£m) Recommendation Page Richard Ratner 020 7107 8037
3,5 richardratner@seymourpierce.com
AIM Resources Charles Kernot 13.4 Buy 2
Head of Research
Jim McCafferty 020 7107 8070
jimmccafferty@seymourpierce.com

Deputy Head of Research


Alan Matthews 020 7107 8021
alanmatthews@seymourpierce.com
FTSE All Share – recent performance
Research Analysts
Key Indices Close Daily % chge
2850
Gerald Farr 020 7107 8332
geraldfarr@seymourpierce.com
2800
UK
2750 FTSE 100 5587.38 0.71 Tessa Guy 020 7107 8043
2700 tessaguy@seymourpierce.com
FTSE All Share 2827.11 0.71
Charles Kernot 020 7107 8069
2650

2600 FTSE Mid 250 8663.96 0.79 charleskernot@seymourpierce.com

Kevin Lapwood 020 7107 8337


2550
26
SEP
3 10 17
OCT
24 31 7 14
N OV
21 28 5 12
DEC
19 FTSE AIM 1022.61 0.11
FT SE ALL SHAR E - PR IC E IND EX
kevinlapwood@seymourpierce.com
Sourc e: D AT ASTREAM

Paul Leyland 020 7107 8059


Source: Datastream paulleyland@seymourpierce.com

Stuart Lunn 020 7107 8068


Forthcoming In-House events stuartlunn@seymourpierce.com

Sav I. Neophytou 020 7107 8034


2005 Company Event Analyst savneophytou@seymourpierce.com

Charles Peacock 020 7107 8001


charlespeacock@seymourpierce.com

Richard Slape 020 7107 8042


richardslape@seymourpierce.com

Amit Thakar 020 7107 8022


amitthakar@seymourpierce.com

All lunches 12.45 for 1.00 pm – unless otherwise stated. Rhys Williams 020 7107 8049
rhyswilliams@seymourpierce.com
If you wish to attend, please email the relevant analyst.

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
AIM AIMR

Perkoa delights No of shares (m) 510.8

Market cap (£m) 13.4


• AIM Resources has announced the results of the feasibility study at the
Net cash (£m) 2.2
Perkoa zinc project in Burkina Faso. The study has been undertaken by
Snowden to Australian standards and indicates total ore production from Enterprise value (£m) 11.2
the mine at some 6.3Mt at a diluted head grade of nearly 14.5% zinc.
(%) 1m 3m 12m
FTA relative +17.6 +20.5 na
• 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
12 month high/low (p) 3.00/1.62
the mine is expected to have an operating life of some 12.5 years.
Next news
• The high grade of the deposit is a key advantage and it is for this reason December quarterly – end January

that estimated operating costs of US$53.50/t equate to only US¢18/lb of Business


metal in concentrate, after allowing for all transport costs to port. There is Development of the Perkoa zinc project in
scope for the feasibility study to be tweaked in order to enhance returns Burkina Faso and other assets in Africa

further, and this may include the potential of reducing transport costs. www.aimresources.com.au

• 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
AIM Resources – rel. price performance
is keen to develop a local mining industry. Indeed, the government
AIM RE S OURCE S (I S E)

organised the construction of a dam which will be able to supply water to


22/12/05
3.00

the process plant as well as providing water to local farming communities. 2.80

2.60

• The vicinity of the mine remains geologically interesting and there is 2.40

scope for the discovery of additional deposits. Indeed, this style of 2.20

mineralization generally occurs in multiple zones and so we believe that 2.00

there should be good prospectivity in the area.


1.80
J UL AUG SEP OCT NOV DE C
PRICE
PRICE REL. T O FT SE ALL SHA RE - PRICE INDEX

• Barclays Capital has been appointed as debt financing advisors for the
So u r c e : D ATASTR EAM

project and has been involved in the feasibility work for some time. We Source : Datastream

therefore anticipate that negotiations on the provision of debt should be


able to proceed at a good pace.
Contact
• AIM has a number of other projects across Africa, but this is by far the
Charles Kernot
most advanced. We expect the project to move up a gear over the next 020 7107 8069
few months as the company lines up plant and equipment and therefore charleskernot@seymourpierce.com
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.

Seymour Pierce Research 2


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 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 95 96 97 98 99 00 01 02 03 04 05

Source: Datastream

Seymour Pierce Research 3


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


Rating recommendations investment banking services
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
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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 Seymour Pierce Limited
th
ensure that it remains clear, fair and not misleading. 13 Floor
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