A company looking to reopen a zinc mine in Montenegro is planning the first full stock-market float of a miner in London since 2013. Balkan Zinc intends to join London’s junior AIM market before Christmas with a view to raising £10m. It expects to have a free float of around 60% and a market cap of £25m, The Telegraph reported.
Although other mining companies have entered the London market in recent years, they have invariably already been listed in other jurisdictions. The last full mining float was that of Kodal Minerals in December 2013.
Managing director Tim Daffern, a former technical director at Amec Foster Wheeler, said the move was well timed to capitalise on the stellar rise in zinc prices this year. The metal, used to coat steel, is up 56% in 2016 on the back of steady demand in China and a contraction in global supply.
“Zinc mines are closing around the world and there is a supply deficit,” Mr Daffern said. “Zinc is the highest riser this year on the metal markets, and that trend is set to continue.”
Balkan Zinc believes it can keep its costs low because the deposit is close to the surface, so it is an open-pit mine, and infrastructure such as roads and rail already exist at the site.
The firm will spend the £10m on feasibility studies and environmental checks before entering a second fundraising round in 2018. It expects it will cost £80m to modernise and reopen the mine, which opened in the Seventies but closed 20 years later because of the Balkans war.
Balkan Zinc has around 25 shareholders, with executive director Milos Bosnjakovic owning a 40% stake. Mr Bosnjakovic acquired the mine, which was formerly state run, through his Australian company Balamara Resources.
Analysts suggest zinc’s recovery in price is due to Glencore, a major producer, suspending key mines while the market was depressed.