Midas Article Thanks IIATG4 Jun 2012 10:38
For those that couldn't open the link last week, here it is
Midweek MIDAS – 30 May 2012
Mining company taking advantage of improved refining techniques and top quality coal is on the up
By Joanne Hart
PUBLISHED: 17:11, 30 May 2012
The Eurozone crisis is becoming like a bad soap. The characters lurch from one disaster to another, there are endless discussions, nobody seems to listen to anyone else in the room – and the tension continues to rise.
Greece is still teetering on the brink of collapse. Now Spain’s situation is becoming perilous. Meanwhile big bad Germany refuses to give an inch and the European Central Bank shows little inclination to be helpful either.
All of which makes life rather difficult for Britain, given the EU is our most important trading partner. Not surprisingly therefore, shares in London have been volatile this week and economic data is mixed.
Strategic Natural Resources
Ticker symbol: SNRP (AIM market)
Contact: snrplc.co.uk or 020 3328 5668
For Strategic Natural Resources (SNR) however, the outlook is extremely positive and the shares should deliver strong growth. The company is listed on the Alternative Investment Market but it is based thousands of miles away in South Africa and it is involved in the production of something that the entire world needs – coal.
South Africa is well known for its natural resources but most mining efforts are concentrated in the north of the country, near Johannesburg. This puts huge pressure on local infrastructure, particularly the ports, which are both congested and expensive. Exports can be delayed, cost-overruns are frequent and the whole process is highly stressful.
SNR operates in the southern part of South Africa, where life is quieter and considerably cheaper. Fortunately however, the infrastructure is still there, making SNR the only coal miner in South Africa with access to two unused ports and a barely used railway line.
It may seem strange to have all these transport links in an area where so little is happening but there is a reason behind it. In the 19th century, the Eastern Cape, where SNR is based, was the centre of the South African coal industry. Activity continued until the early part of the 20th century so the infrastructure was put in place to support it.
As the Transvaal in the north became more established however, the Eastern Cape diminished in importance and very little has happened there for the past 70 years. Now though, improved mining and refining techniques, as well as higher prices for coal, mean that mining in the Eastern Cape has become increasingly viable.
SNR intends to take full advantage of the situation. The company owns the right to mine a huge area in the Eastern Cape, it already has 200 million tons of proven coal reserves and more than 90 per cent of its mine site has yet to be explored.
Observers are confident the company will end up with a resource of at least a b
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