Whatever about there being gold in them there hills, there's certainly an opportunity to make money from them there resource stocks,writes Colm Keena

Resource stocks are very much de rigueur after a long period when they were out of fashion. This is in part because it was their turn and in part because of rising prices and heavy demand from India and China.

This background, coupled with a number of positive developments that are peculiar to his companies, has seen the stock price of John Teeling's five AIM-listed resource companies soar over recent months.

Anyone who invested €1,000 in African Diamonds when it listed in July 2003, is now sitting on stock worth €9,571.428, or close to a tenfold increase in value after seven months. It's more than you get from your deposit with AIB.

The return on an investment made in African Gold, another company chaired by Mr Teeling, is similarly spectacular.

A share that would have cost you 1.5p in October 2003, will cost you 13.75p now. That is more than a ninefold increase in value - again a very respectable return.

The other resource companies chaired by Mr Teeling and listed on the Alternative Investment Market (AIM), Petrel Resources, Pan Andean and Minco, have also experienced sharp rises in share price over recent months.

Three of the companies have registered offices in London but they all have their operational headquarters in Clontarf, Dublin, Mr Teeling's home turf.

Mr Teeling's career as an entrepreneur has brought him into a number of business areas but, in more recent times, he has been concentrating on resources.

An energetic publicist, his companies have managed to set their share prices soaring, despite the fact that they have as yet been singularly unimpressive in terms of producing oil, gas, diamonds or gold, let alone profits. That is often the way, however, with small, high-risk resource firms.

Mr Teeling's most recent venture, African Diamonds, has been creating interest because it has actually come across a few diamonds in Botswana, and has on board a number of experienced operators from the African scene.

The company's origins lie in an agreement between Mr Teeling and Scotsman Jim McGregor, who has spent more than 30 years on resource projects in Africa. The two men looked at a project in Guinea. They later went to Botswana to look at a possible new gold venture there and met Leon Daniels, a third-generation diamond prospector.

Mr Daniels in turn was looking at a diamond project along with Mark Snowcroft, a mining geology graduate who had worked with De Beers in Botswana.

The four men decided to go into business together. They formed a new company, raised some money in Dublin and, in July 2003, launched the company on AIM. It managed to raise €800,000 at a time when the market was not as buoyant as it is now.

The quality of the people it has managed to get on board, combined with the fact that early work on its Botswana licences have actually turned up a few diamonds, has led to a sharp rise in the company's share price.

Profit takers have done well. Whether the company will ever make money remains to be seen.

African Gold actually runs a gold mine, although it is in highly unstable Zimbabwe and is only operating at break-even.

The company is of interest, however, because it was recently bought into by a group including Oliver Baring, of the famous banking family. Mr Baring and a group of associated investors bought 40 million shares in the company as well as 40 million warrants (similar to options).

Mr Baring is chairman of First Africa, a corporate finance boutique part-owned by Swiss bank UBS, as well as the Oppenheimer and Hambro families.

First Africa hopes to raise a $50 million (€39 million) fund to back African mining projects.

Mr Baring joined the African Gold board, along with John Anderson and Hank Slack, also associated with the new investors, who wish to use African Gold for a number of projects they have in mind. The directors are generally highly regarded.

Pan Andean calls itself a debt-free, cash-generating oil and gas producer operating in Bolivia and the Gulf of Mexico. When its interim results for the year to March 2003 were released in December 2003, Mr Teeling said the company had produced a "maiden profit" of £360,000 sterling (€535,870) and had had a turnover of £1.6 million.

The company was producing almost 1,000 barrels of oil equivalent per day, he said, and royalties were $100,000 per month.

As can often be the case with resource stocks, the fact that the company is actually producing something means its profitability can be measured against its share price and there is much less "hope value" and buoyancy involved. Pan Andean has experienced a mere threefold increase in price in recent times.

Petrel Resources, which describes itself as an oil explorer and oilfield developer, is focusing its hopes on Iraq, where it says it believes its status as a non-coalition, Irish company will help facilitate business.

"We have offended no key player," its website says.

The company's share price peaked at 37p last month, before dropping again into the 20s.

Yesterday the company issued a release saying it was "shortly due to submit tenders to develop three oil fields in Iraq".

The share price closed up 50 per cent, at 31p, with 3.8 million shares having traded. (The normal daily trade would be 450,000.) Again, it was a good day for profit takers. The stock has traded as low as 3p and as high as 43p during the past year.

Minco is a company with operations in Ireland but seeking to spread its activities to distant shores. It intends to transform into a "precious metals producer operating on the world stage by way of acquisition and development". It has four gold and silver projects under development in Mexico but is also seeking to develop contacts in Central Asia. It has six gold licences in Wicklow, Wexford and Kildare.

The company reported a loss of €12,000 for the six months to October 31st, 2003, which, in fairness, is a rather small loss. During the past year the stock has traded between 3p and 36.75p.

The price rises experienced by Mr Teeling's companies can be viewed in a context where their values dropped significantly during 2001 and 2002.

The most extraordinary and obvious point to be made about Mr Teeling's companies is one that can be made about many if not most small resource plcs: these companies are not making any money.

Resource stocks are high risk and often carry high hope values before plummeting so low they go below the ground entirely.

Mr Teeling has been known to advise people not to invest "the rent money or the school fees".