Tin price drives share price higher
By: Paul Miller
In 2017, in one of my last engagments as a banker, I helped Alphamin Resources (JSE:APH, CVE:AFM) get a secondary listing for its shares on the AltX junior exchange of the JSE. It had a wonderful back story of derring-do, high adventure, physical courage and a magnificently rich deposit deep in the rain forest of North-Kivu, DRC - the richest known tin deposit on earth, in fact.
I thought South African investors would like the charismatic CEO, the South African mining skills being brought to bear and the exotic nature of the project. It would, after all, be uncorrelated to our domestic troubles and perhaps be "worth-a-punt" for some investors. The investment thesis was also supported by a very plausible theory on what might be expected of the tin price in the medium term.
Well this blog post is a little bit of a "I-told-you-so." We did raise some money in SA, but despite our best efforts, Canadian investors got the lion's share of the offer.
What I grew to realise was that the FAIS Act has ripped the heart out of SA's traditional retail stockbrokers, making it almost impossible to reach smaller investors with a new share offer and that any stock outside the liquid top 80 is now basically unmarketable to institutional investors.
Small companies need to be able to reach a diversity of small investors - however it appears the policy maker, National Treasury, would rather have a highly concentrated asset management industry of mostly high-cost index huggers growing ever larger as they invest in an ever diminishing pool of large cap shares.
It is a long story, but National Treasure seems to abhor the idea that individuals might want to manage their own share portfolios - like, perhaps, a self-managed share portfolio within a tax-efficient Tax Free Savings Account or Retirement Annuity wrapper. Dare I say it, but it appears to me that the policy makers may have been captured by the big business interests represented by the Association of Savings and Investments South Africa (ASISA), as all policy interventions in recent times seem to benefit the large at the expense of the small; the concentrated at the expense of the diverse.
The recent kerfuffle about relaxing exchange controls on RAs and Pension Funds certainly suggests that the ASISA members have very significant lobbying heft - regardless of what dog you have in that particular fight.
And it is pretty wise to assume that ASISA's members will always act first in their own interests - that is the interests of the "savings industry" - and only then in the interests of their paying customers, the ordinary savers out there.
So here is a chart of what has happend to the tin price in the last year.
And what has happened to the Alphamin Resources share price since it listed on the JSE? - the issue was at R3.40 and the share price has finally started getting some life and closed today at R7.81.
I wasn't permitted, for compliance reasons, to participate in the primary offer, but I did buy a few in the market after the offer had closed. And I'm glad I did.