Aussies take AIM on London

ANY company thinking of listing on the London Alternative Investment Market should first check the depth of its pockets.

For all its perceived rewards, the result does not come cheaply.

The largest single bill will be at least £50,000, from a nominated advisor (NOMAD), of whom there is a choice of 64, all in the United Kingdom.

You will also need to put aside £35,000 for a broker, £65,000 for UK, Australian and NOMAD lawyers, £35,000 for accountants, £10,000 for printing services. £15,000 for public relations fees, five per cent commission on fund-raising, and incidentals such as airfares, London accommodation and travel, and a UK mobile - not to mention an annual £5,000 fee to the London Stock Exchange.

And NOMAD WH Ireland Limited’s managing director David Youngman advises not to skimp on costs by using one of a multitude of “wrong professional advisors”.

“Admission to the AIM is not rocket science, but it is to be valued and not treated lightly,” he says.

Attractions of the AIM for small, developing Australian companies are the improved access to capital through a broader investor base, including institutional investors with dedicated AIM funds, and an international profile.

But the minuses are the obvious cost, the difficulties dealing with two legal and accounting frameworks and a European Union push for one European market.

Listing on hold

MANGANESE producer Consolidated Minerals has deferred its planned October AIM listing until next year, in light of present unfavourable market conditions.

Consolidated managing director Michael Kiernan nonetheless remains keen on the listing through which it hopes to achieve UK-investor ownership of at least 25 per cent of its stock and to raise at least $15 million for future projects.

Mr Kiernan describes the listing process costs as horrific, but says Consolidated allocated a budget of $750,000 for the process, believing it was the best investment the company could make.

The combination of access to international capital and Australian mining expertise will underpin Consolidated’s growth strategy, which includes the construction of a Pilbara chromite processing plant to complement the recent purchase of the Coobina chromite project.

This project is expected to produce by February 2002 and should increase annual company sales revenue by $20 million.

Mr Kiernan recommends a company contemplating an AIM listing should appoint a local broker to project-manage the process, as has Consolidated.

“Our business is exploring and mining manganese – we aren’t experts on legal documents,” he says.

He also believes a company cannot do without UK PR personnel.

Unlike the four major manganese producers, Consolidated has no down-stream processing plants, but does have long-term contracts and delivers five per cent of the world’s manganese exports to Korea, Japan, China, Taiwan and Europe.

The company has reported sales revenue of $19.55 million for the first quarter and an unaudited profit of $5.53 million.

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