Tuesday, February 17, 2009

Follow the Money - Gold, Silver and Miners. AUY, SLW, GDX, CZX.v, MAI.to, TNR.v, CDNX

Miners don't need banks
In the past few months, mining companies have raised USD 30bn, directly from keen investors keen to lock in great value. Author: Barry SergeantPosted: Friday , 13 Feb 2009
While US Treasury Secretary Timothy Geithner continues to dither over details of the Financial Stability Plan, leaving markets in general to stumble on sideways, selected mining companies continue to raise fresh capital directly from investors. While bank bail outs have become commonplace in a number of countries, and all kinds of sectors have raised hands in appeals for non-bank bailouts, the mining sector has struggled on silently.
But the struggle tides may have turned, for miners at least. In the past few months, mining companies have raised at least USD 30bn by way of new equity issues (also known as rights or capital issues), bonds, loan notes, and, in some forced circumstances, sales of equity stakes in operating entities. Old fashioned bank lending is rare, if seen at all.
The single biggest raising, at USD 7.2bn, was announced this week, when mining major Rio Tinto sold bonds to Chinalco, a far smaller company, but a significant player in the global aluminium sector. If the bonds are subsequently converted into equity, Chinalco's stake in the Rio Tinto group will rise to 18%. Chinalco, however, is also to spend USD 12.3bn buying direct equity stakes in some of Rio Tinto's best operating assets, such as Hamersley Iron.
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