Thursday, February 02, 2006

Australian Investing + Rio Tinto 2005 Annual Report

Small cap floats top 2005 returns
by Darin Tyson-Chan
February 1, 2006

Small cap initial public offers (IPOs) generated outstanding returns for investors in 2005, eclipsing the performance of their larger company counterparts on average by 15 per cent, according to the 2005 HLB Mann Judd IPO Watch report.

The accounting firm’s information shows small cap IPOs, those companies with capital of $100 million or less on listing, produced average returns of 35.6 per cent over the previous calendar year compared with a 20.6 per cent return delivered by larger company IPOs and a 17.5 per cent return provided by the S&P/ASX200 index.

The main driver for the significantly high IPO returns for 2005 was the strength of commodity prices in the materials sector. However, when non-materials companies are examined in isolation, small cap IPOs still performed remarkably well.

“Even excluding materials the returns by the small cap companies were 25.4 per cent, so still significantly ahead of larger IPOs. This is interesting because a lot of people would attribute that stock performance to the booming resources sector,” HLB Mann Judd head of corporate finance Justin Audcent said.

Overall materials and energy continued to dominate the small cap listing activity as the two sectors accounted for 60 per cent of small cap IPOs in 2005 compared to 50 per cent in the previous 12 months. Within this category uranium exploring companies were noticeably active in 2005.

“There were six companies in that specific area, all of which listed in the second half of the year, and there were another six companies that had uranium as one of their areas of interest,” Audcent noted.

Note: no surprise here. with a new Canadian uranium juniors springing up daily, it was just a matter of time before Australians started noticing the rising price of uranium oxide, government regulations or not.

Rio unveils massive 58pc earnings jump
by Richard Owen
February 3, 2006

Global mining giant Rio Tinto unveiled a 58 per cent jump in 2005 earnings to a record $US5.22 billion ($6.94 billion) yesterday and remains bullish about the year ahead as China's booming demand for commodities shows no signs of weakening.

Revenue soared 42.75 per cent from $US14.5 billion to $US20.74 billion on the back of soaring prices for iron ore, copper, thermal and metallurgical coals and aluminium which collectively accounted for a $US2.37 billion jump in Rio's earnings.

Earnings from energy products such as uranium and thermal coal also rose 70 per cent from $US431 million to $US733.

Note: I took a quick peek at their 20-page annual report. Rio produced 6,582 tons of uranium, up 10% from last year. It also had this to say about uranium:

"The further reduction of excess inventory continued to push spot prices over $30 per pound. The lead time for significant new capacity from mines will be five to ten years which is expected to keep prices firm in the short to medium term. As attitudes towards nuclear generation of power begin to change and China commits to a nuclear generation investment programme, the longer term outlook for uranium demand looks better than it has been for several years."


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