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Mining a Richer Seamas Metal Prices Strengthen

Posted on: Tuesday, 23 August 2005, 18:00 CDT

FOLLOWING the death of its inspirational founder last week, you might have expected Chilean copper miner Antofagasta to be in the doldrums.

Anything but. The market rarely pauses for reflection or mourning, and yesterday the talk was all about a potential takeover of Fags, as traders call it.

The late Andronico Luksic was famously possessive of the company he built up from virtually nothing. He maintained a 65pc family stake and insisted he would never sell the company.

Analysts have for years thought it could make a decent acquisition for a diversified miner like BHP Billiton or Anglo American. Both already have assets in Chile, and the copper mining sector is ripe for some consolidation.

Andronico's son and successor Jean-Paul may be more open to discussions of a sale, although he has said the family would need a decent reason to sell its stake. Whether or not this transpires, the shares were 43p higher yesterday at Pounds 14.69.

Traders were also digging into other mining stocks partly encouraged by strong metals prices. BHP Billiton rose 251/2p to 8441/ 2p, Rio Tinto was 58p higher at Pounds 20.49 and Xstrata jumped 34p to Pounds 13.24.

This gilt-edged performance helped keep the Footsie index in positive territory. It ended the day up 5.8 points at 5318.4 points. It was a pretty quiet summer day, with trading thin with only 1.9bn shares changing hands.

At close of play in London, Wall Street was up 55 points to to 10,614, with the recent pickup in MA activity helping keep the market alive.

One of the rumours circulating in London is simply chilling. In short, consumer goods group Unilever could soon sell off its frozen foods wing. The Anglo-Dutch group (up 91/2p to 5631/2p) has reportedly hired Goldman Sachs to conduct a review of the unit, whose brands include Birds Eye meals and Walls ice creams. Frozen foods has been the company's worst-performing part after SlimFast for a number of years, and analysts said they would welcome a sale.

Food and drinks giant Cadbury Schweppes was rather tasty up 91/ 2p to 5531/3p. Private equity company Carlyle Group is thought to be considering making a bid for Cadbury's European soft drinks business.

Reports claim Carlyle has hired former Pepsi director Nish Kankiwala from rival KKR to head up the bid.

Drinks can-maker Rexam was also sparkling ahead of its interim results on Thursday. Experts expect it to be lifted by an increase in soft drinks sales earlier in the summer. The group jumped 9p to 503p, with traders expecting interim profits to rise from Pounds 184m to Pounds 191m, along with an improved dividend.

Elsewhere, it wasn't just metalminers who were counting their blessings. Oil explorer Soco was one of the steepest risers on the main list, following news of an 'excellent' strike off the coast of Vietnam. The company jumped 81p to 781p.

The shares are now up over 160pc on last year, although analysts at KBC Peel Hunt were warning that there is a pretty hefty chunk of speculation already included in the price. 'While we have long been positive about the company and its assets, our recommendation is based on a view that the shares have risen well about fundamental value,' said expert Tony Alves.

Soco's success pulled other smaller oil explorers up as well. Tullow Oil rose 5p to 2101/2p, Dana Petroleum bubbled 26p higher to 831p, Premier Oil rose 18p to 793p and Paladin Resources was up 51/ 4p to 2901/4p.

But Aim-listed explorer Victoria Oil, which announced decent drilling results from its gas field in Siberia, remained unchanged at 50p.

Pearson was the sharpest of the Footsie's fallers, although it was still only down 7p to 6871/2p. The company is still waiting on a big textbook order from the State of Texas, causing some jitters among analysts.

Small-cap communications firm Legend plunged 191/4p to 371/4p. It said full-year results would miss market expectations.

ONE to keep an eye on is Telephone Maintenance Group. Despite the unprepossessing name and the tiny market cap of Pounds 1.6m, the company boasts a disproportionally powerful board. Corporate financier Lord (Tim) Razzall, the LibDem Lords trade spokesman, is chairman, City figure John Mitchell is on the board, and the company has just taken over a shell company Cassydora, controlled by Ed Smyth, an experienced hand in the business services league.

The company (up 0.69p to 2.94p) seems primed for expansion albeit from a very small base.

Source: Daily Mail; London (UK)

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