Market minnows: Picking miners isn't easy, just ask AIM listed Starvest

For those who want to invest in early-stage mining companies but spread the risk, Starvest could be the answer.

The problem with listed miners is that retail investors take big punts on very little information. Sirius Minerals is a classic case. Small investors piled into the Yorkshire mine project, only for the company to admit last month that it had run out of finance. It is unknown what Sirius will do next but a lot of retail investors have been burnt.

Starvest lets investors spread the risk so that, if one miner fails, the pain is not so acute. The venture-capital company was started by Bruce Rowan, a well-known backer of Australian mining projects, in 2000. His strategy is to take stakes in good early-stage companies and support their IPOs on AIM and NEX. Rowan stepped down in 2015 and Callum Baxter has taken over the reins, in a dual role of chairman and chief executive.

“I’ve continued the same investment strategy as Bruce had,” says Baxter. “We look at good exploration. We like particular commodities, gold, copper and potash, but we’ll look at anything. We like oil and gas too. And we like the safer jurisdictions.”

Starvest has positions in Greatland, Oracle Coalfields, Ariana Resources and Salt Lake Potash on AIM. The firm seeks to invest about £300,000 in portfolio companies but does invest more in some cases. It does not take active part in management of the investee companies.

The company is also diversifying into other growth markets, including the agriculture and fertilisers sectors. Rowan is the top shareholder with 22.65%, while Baxter has 11%.

Let’s see what the company invests in next.