Alastair Clayton, Australian chairman of South China Resources, is negotiating expansion for the company's Danfeng iron, copper and molybdenum project.

AIM-quoted South China, which lost £34,000 in the 11 months to June, floated on AIM in April after a £3 million placing at 5p and afterwards completed the purchase of Aussie-listed Copper Developments. The deal was funded with a mixture of shares and options with strike prices several times South China's present 8.8p AIM quote.

The company, which ended its financial year with £2.9 million in the bank, began drilling at Danfeng and hopes this will yield data to sustain a formal resource estimate of six million tonnes. South China's consultants have identified six anomalies next to Danfeng within the company's licence area, showing 'similar geophysical properties' to Danfeng.

In addition, says Clayton, South China is evaluating 'a host of other opportunities that may have potential to add significant value to the Danfeng project and the company as a whole'. He argues South China intends to accelerate negotiations over these projects — without diluting its 'stringent investment risk criteria'.

At 8.88p, up 0.13p this morning and 70 per cent above their placing price, South China shares value the company at £10.6 million. They retain speculative appeal while market favour for molybdenum and China persists.