The Alternative Investment Market (Aim) deserves the attention of every serious investor. It's here that you'll find exciting investment opportunities with the potential for galloping growth, plus lots of sturdy small companies operating in a wide range of sectors. It's also a great way to watch companies and learn. But what should you buy? separating the winners from the losers isn't always an easy task so we've asked our Aim experts to select the best shares on the market. Here are my favourites:
Kirkland Lake Gold
With gold having set a new record high since the turn of the year, and looking set to stay resolutely above the $800 an ounce (oz) level for the foreseeable future, Kirkland Lake Gold looks well-positioned. Named after its key Canadian gold mining operation, Kirkland Lake is backed by Scottish mining entrepreneur and significant shareholder Harry Dobson. Mr Dobson came to prominence after making a significant profit on a shareholding in Manchester United when it was sold to the Glazer family, but he has made many millions more in the mining world, particularly in Canada. The Kirkland Lake prospect boasts a total resource of nearly 3m oz of gold and is already producing - albeit in modest amounts. The infrastructure is in place to dig out more. Mr Dobson is confident Kirkland Lake can double its resource base within a year as it proves up more of its prospect. Thus far, its average grades of around 30 grammes per tonne are among the best in the industry and have attracted the attention of the majors, but Mr Dobson will not let the company go for a song. Buy at 640p.
Platmin
Platmin completed an offering in December to raise C$80.75m (£41m). Most of the money is earmarked for its core platinum projects situated in South Africa's platinum-rich Bushveld region. With platinum rising to new highs on global metals markets in January, Platmin's timing could hardly be better.
One of its key projects, Pilanesberg, is estimated to hold 4.4m oz of platinum group metals and gold and should produce 250,000 oz a year for an initial period of 11 years once production is up and running in 2009. Elsewhere, Platmin's management is also keen to advance development of a second major project, M'Phatlele, which management believes would provide it with sufficient critical mass in terms of production to justify building its own smelter. And the company is accelerating its development plans at just the right time, with the platinum price supported by constraints on supply and continued soaring demand. We first recommended Platmin at 201p (29 September 2006) and even after soaring to 471p it remains a buy.
European Goldfields
European Goldfields operates in the relatively difficult mining environs of Greece and Romania, but its presence and work in Greece especially is aided by the presence of one of south-east Europe's largest construction companies, Aktor, as a shareholder. Aktor has a strong regional presence and can also help to push potential projects in the region in European's direction.
Having a strong regional player as a shareholder may also have helped European to progress its Greek mining interests with little opposition, especially when one considers that Greenwich Resources, now a part of Mineral Securities, has been struggling to get permits confirmed in the country for more than a decade. European has a working lead-zinc mine at Stratoni and 2.4m tonnes of mine waste nearby that contains 188,000 oz of gold, both of which are generating cash flow. A further prospect, at Skouries, could produce 43,000 tonnes of copper and 220,000 oz of gold annually for 20 years and, in Romania, the Certej gold and silver project could hold up to 3m oz of gold and 16m oz of silver. A feasibility study there is expected soon. European's local expertise has helped it to build up a very promising portfolio of prospects. Buy at 283.5p.
Peter Hambro Mining
Headed by one of the City's favourite mining personalities, Peter Hambro Mining has long been a punters' favourite, reflected in a 45 per cent rise in its share price in the past six months. The company has declared an exacting annual production target of 1m oz of gold for 2009, but the signs are that it is heading in the right direction. Production at its main Pokrovskiy mine rose by 25 per cent to 116,800 oz in the first half of 2007 and this should have risen further in the second half of the year. A second mine, the nearby Pioneer prospect, came on stream in September and once up to speed should be able to produce 400,000 oz a year, although this may take a couple of years to achieve. A technical audit published in December estimated that Hambro has 19m oz of gold across its various prospects in Eastern Russia. Peter Hambro's strong connections in Russia have allowed him to build up an enviable portfolio of assets which should enable him to build a large business in years to come. Buy at 1,316p.
ZincOx Resources
ZincOx specialises in low-cost recovery of Zinc ores and waste materials, which allows it to produce zinc at rock-bottom prices. The company has a diversified collection of assets stretching from the US to Turkey and Yemen and boasts Teck Cominco, the world's second largest zinc miner, as a significant shareholder (with 11.3 per cent of the company). However, ZincOx's shares have slipped by around 30 per cent to 255p in the last quarter as the Zinc price has drifted southwards.
But 2008 promises to be a big year as a zinc recycling project at Big River, Illinois and a zinc mine at Jabali in Yemen should come on stream. When added to the impending launch of recycling facilities at Aliaga in Turkey, the company should be producing more than 100,000 tonnes a year of zinc metal equivalent during 2008. Further deferred payments are also expected from the Shaimerden project in Kazakhstan. ZincOx sold the majority of its interest in Shaimerden back in 2003.
With several projects scheduled to come to fruition in the coming months ZincOx is well-positioned for a strong 2008 operationally, but a recovery in its share price will also depend on stability in the zinc price. Buy.
Avocet Mining
Avocet is a cash-rich south-east Asia focused gold miner with several promising assets in its portfolio and plans to ramp up production from the current 180,000 oz to 300,000 oz by 2010 and 500,000 oz by 2012. The sale of non-core assets and bumper profits being realised due to the soaring gold price left Avocet with a cash pile of $112m (£56m) at the end of September 2007. This cash will be used to further develop existing mines such as its Malaysian operation, Penjom, where expansion of the mine and processing facilities are planned. Cash is also earmarked for improving production at the North Lanut mine in Indonesia, where the resource estimate was recently upgraded, and plans are afoot to start production at nearby Bakan before the end of 2008. Expansion and improvements will confirm Avocet as one of the lowest-cost miners around.
Management recently did a deal over 10,000 oz of production. It includes a floor of $600 an oz, but gives full exposure to the upside in the gold price. With production growing and the gold price showing no sign of falling, Avocet is very well-placed. Buy at 181p.
IC Advantage subscribers can read the contributions of our other four smaller company experts by clicking on the links below. If you are sent to a 'Free tips' page, it's because you're not logged in.
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