(Changes paragraph 13-15 to clarify the CEO but not the company is a client of Beaufort)
* Costs cut to 55 mln stg over 2 yrs vs 100 mln over 4 yrs
* Miners say up to 40 pct of their assets frozen
* PwC aims to release assets in September
By Barbara Lewis and Carolyn Cohn
LONDON, May 23 (Reuters) - PwC halved the estimated costs of winding up British brokerage Beaufort Securities on Wednesday, potentially boosting funds for hard-pressed mining companies and other clients that are expected to shoulder the costs.
Beaufort, which specialised in helping to raise money for the junior mining sector, was declared insolvent in March after the U.S. Department of Justice alleged it had a role in a more than $50 million stock fraud and a laundering scheme involving a work by Pablo Picasso.
The insolvency has frozen up to 40 percent of the assets of some of Beaufort's estimated 16,000 clients, comprising retail investors and small companies, which included dozens of junior miners.
"It's a complex, evolving situation," PwC partner and joint administrator Russell Downs told Reuters by phone. "We feel it's the right time to publish a refined cost estimate."
PwC cut its estimate for the administration costs to 55 million pounds ($73 million) over two years from 100 million pounds over four years.
That followed a meeting between PwC and a creditors' committee for the broker.
Institutional investors have eschewed risk and favoured more liquid major miners, which analysts and CEOs say will eventually lead to commodity price spikes because not enough companies have the funding to hunt out new projects.
The assets will remain frozen until PwC has a new broker in place to take them on, which it said should be in September.
Meanwhile, their removal from the market adds to a lack of liquidity in the junior sector.
"If you are on the executive team and your own assets in the company are tied up in Beaufort, that compounds things," Downs said.
PwC says they have frozen around 500 million pounds ($667 million) in client assets and a further 50 million pounds in cash.
Downs said there was only a small shortfall in cash and assets, but administration costs would be passed to the creditors, something the clients are contesting.
One Beaufort client, the CEO of Bluejay Roderick McIllree estimated 30-40 percent of his total assets were tied up until PwC appoints another broker and releases them.
Bluejay, which is mining in Greenland for ilmenite, used in paint and toothpaste, is not a client.
McIllree said he thought some small firms caught up in the upheaval could struggle.
"(Beaufort's collapse) is a severe blow to the small end of the market," he said.
$1 = 0.7496 pounds Reporting by Carolyn Cohn and Barbara Lewis; Editing by Mark Potter and Elaine Hardcastle