As a private investor myself, I have seen the dramatic rises that Aim shares can have as well as the dramatic fall that can also hit them. In 2010, Natural Resources investments were buoyant and captured the imagination of private investors who saw many a share rise exponentially. Move forward to today and these same sector companies are less rapid in their share price appreciation. With a number of exploration companies whose share price has moved significantly backwards as a result of not, for example, striking commercial oil, it begs the question today, ‘why are private investors still prepared to take such an investment risk?’

I recall how in 2010 and in the early part of 2011 traders moved funds around rapidly to ‘chase’ the next RNS in some companies in this sector and the share price would rise accordingly. Now it seems, less are prepared to do so if price action is anything to go by.

On the other side of the coin we have Aim Natural Resources companies with Competent Person audited assets and they trade way below their audited net asset value. A prime example of this would be Xcite Energy (XEL.L) www.xcite-energy.com . Other companies with proven assets are Strategic Natural Resources (SNRP.L) www.snrplc.co.uk and Berkeley Mineral Resources (BMR.L) www.bmrplc.co.uk . (All three of these companies I am invested in).

So why with such companies that are either in production or arguably close to production, certainly closer than exploration plays, are investors not investing more as they also offer significant share price appreciation, backed by assets and not fresh air? One could argue that uncertainty around funding is a reason and even government approvals too. But these assets are so much further advanced than exploration plays who frequently come back to the market via placing’s to attract funding to be able to continue to explore, hoping that their preparatory work eventually delivers the goods.

Private investors, me included, often bemoan the wide gaps that exist between share prices today and net asset values, but in essence it requires the market (investors) to buy the stock, sometimes in significant numbers to close that gap. Existing investors might be ‘tapped out’, but investors would also include a wider private investor base and institutions where their investment remit supports this. On the other hand, we all need reasons to invest and…

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