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| Mining companies rise ahead of follow-on offer |
| Palak Shah / Mumbai Mar 05, 2010, 00:25 IST |
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The share prices of top mining companies like Sesa Goa and Gujarat Mineral Development Corporation gained between 2 and 7 per cent in Thursday’s trading, on the back of buoyancy in the sector created by the follow-on public offer (FPO) of the country's largest miner, NMDC.
Among other shares which rose were Ashapura Minechem, Resurgere Mines, Mineral India and Sandur Manganese & Iron Ores. These shares gained 5-14 per cent in the past four trading sessions, when NMDC was conducting a road show for the FPO. The FPO would open for subscription on March 10 and close on March 12. The price band would be declared on March 9. The share price of NMDC was ruling at Rs 435 on the Bombay Stock Exchange.
According to market players, the FPO had drawn attention towards mining stocks. “Going by the current market price of Rs 435 for NMDC, the valuations appear a bit stretched and, hence, large institutions are trying to buy into other companies which are comparatively cheap,” said Deven Choksey, managing director of Mumbai based K R Choksey Shares and Securities.
| TRACKING GAINS |
| Company |
Price (in Rs) |
% Gain |
| Sesa Goa |
454 |
6.80 |
| GMDC |
149 |
4.60 |
| Sandur Manganese |
571 |
5.00 |
| Resurgere Mines |
94 |
2.90 |
| Ashapura Minechem |
73 |
1.10 |
He felt that globally, iron ore mining companies were valued at around $20 per-tonne of reserves, while NMDC was being valued at around $27 per-tonne. Its iron ore reserves are 1.27 billion tonnes.
NMDC chairman and managing director Rana Som told Business Standard: “The quality of NMDC’s iron ore reserve justifies the valuations that the company commands. The quality of our reserves is the best in the world and cannot be compared with other companies.”
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