Bullish updates from Finland's Talvivaara, and African miner Impala Platinum.
The whole mining industry has been doing pretty well of late, driven by China's insatiable appetite for just about anything that can be dug out of the ground.
This week, we saw cracking results from BHP Billiton (LSE: BLT), the world's biggest mining company. But the smaller specialist miners are doing well, too, and perhaps offer better opportunities for growth investors who aren't engaged in the tricky search for galloping elephants.
Nickel and zinc
Thursday saw full year results from Finnish miner Talvivaara (LSE: TALV), which specialises in the production of nickel and zinc.
With its main resource being one of the world's largest nickel sulphide deposits -- the Talvivaara mine in eastern Finland -- Talvivaara hit an important milestone as it recorded its maiden full year operating profit of €26m, from a €55m operating loss the year before.
The company's bottom line loss narrowed from €55m to €13m, as production started to ramp up. Although production targets for the two key metals were not quite met, 10,400 tonnes of nickel and 25,500 tonnes of zinc were successfully unearthed during the year.
That led to healthy sales of €152m, from a very low base of just €7.6m last year.
The build up to full production capacity will be the key feature of next year's operations, with chief executive Pekka Pera saying:
"In 2011 our full focus remains on the ramp up of our operations as we complete the final phase of Talvivaara's development and proceed into full production. For the current year, we reiterate the 30,000-35,000t nickel production guidance."
On the same day we had mid-term results from the Johannesburg listed Impala Platinum Holdings, the world's second largest producer of platinum behind Anglo Platinum, a subsidiary of Anglo American (LSE: AAL).
And very good they looked, too.
Impala Platinum, apparently known as 'Implats' to its friends, extracts the shiny white stuff, together with other platinum group metals, from mines in South Africa and Zimbabwe.
Platinum, like other precious metals, is in high demand these days. But unlike gold, platinum actually has some real world uses other than just sitting there looking shiny, and that will hopefully make its price less liable to fluctuations due to investment fads.
Still, the price of platinum has been on a rise of late – it's up by about 20% in 2010. That's helped Implats' bottom line no end.
The company reported a 6% increase in platinum production to 952,000 ounces. Coupled with the rising metal price, that brought in revenues 38% higher than last time and provided a 63% boost to first half earnings. Total production of platinum group metals came in at 3.7 million ounces.
Headline earnings per share, which excludes some of the one-off items that are common in the business, grew to 345 cents, up from 212 cents for the same period last year, and an interim dividend of 150 cents is to be paid.
Worth an investment?
So what do these companies look like from investment perspective?
Talvivaara looks like an interesting prospect. Even though its share price has risen quite strongly over the past year, soundly beating the FTSE All-share, production is nowhere near at full capacity yet. When it gets going properly over the next 12 months, we could see a further boost to the shares on the back of demand that seems very unlikely to falter any time soon.
Implats has actually seen its share price fall over the past year, which goes against the tide of mining shares. It's pretty much a play on the price of platinum, but if you think you know that market, it might be worth a look.
If you invest in any of these specialist miners, please do share your thoughts with us in the comments below.
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