News

October 08, 2009

Sunkar Resources Obtains Positive Results From First Tests On Pilot Plant

By John Taylor

Sunkar Resources has been one of the best performing stocks in the London market in recent weeks - a fact which must have come as a great relief to all involved as it has had a torrid time since its IPO at the end of June last year. The stock is currently trading at around 40p which, though it is still a long way below the IPO price of 120p, needs to be seen in the context of the low of only 5.25p which was reached in November last year - a fall of almost 96 per cent in less than five months. At that point, the company's cash position covered its market capitalisation by around four times; an extraordinary state of affairs even in those extraordinary times. For those few lucky investors that bought at the bottom, a return of nearly 800 percent since then is certainly something to smile about. But there are unlikely to be many as at the time the market was pricing in economic Armageddon and cash was seen as the only place to be. For those that bought in at the IPO it has been a grim experience and it resulted in the door to the mining IPO market being firmly closed - a situation which still prevails.

The reason for the recent strength lies in the release of results from pilot plant testwork which, says chief executive Serikjan Utegen, confirmed that Sunkar's project is capable of producing phosphate fertilisers of a suitable quality. At the time of the IPO, it was recognised that the phosphate rock resource at its Chilisai project in Kazakhstan was of much lower grade than almost all of the other deposits currently used as feedstock in the global phosphate fertiliser industry. As such, it...