copper prices

TECK RESOURCES LTD. $41 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 588.7 million; Market cap: $24.1 billion; Price-to-sales ratio: 2.8; No dividends paid since July 2008; SI Rating: Extra Risk) owns 22.5% of the Antamina copper and zinc mine in Peru. The other partners are BHP Billiton (33.75%), Xstrata (33.75%) and Mitsubishi Corp. (10%). In light of rising copper prices, the partners plan to increase Antamina’s production by 30%. Teck’s share of the expansion cost is $290 million U.S. To put this in context, Teck earned $337 million (Canadian), or $0.59 a share, in the third quarter of 2009. This project should be finished in late 2011. The partners recently increased their estimates of Antamina’s reserves by 75%. That means its reserves should last until 2029....

ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $51.79 (New York Exchange symbol ECH; buy or sell through brokers), is an ETF that aims to track the MSCI Chile Investable Market Index. This index consists of stocks that are mainly traded on the Santiago Stock Exchange. The fund’s top holdings are Empresas Copec SA (conglomerate), 12.9%; Empresa Nacional de Electricidad (electric power), 10.6%; Sociedad Quimiday Minera de Chile (mining), 7.3%; Empresas CMPC (pulp and paper), 7.2%; Cencosud SA (retailer), 5.2%; Banco Santander Chile (banking), 4.7%; CAP SA (iron-ore mining and steel), 4.3%; Lan Airlines SA (Chilean national airline), 4.2%; and Colbun SA (electric power), 3.9%. The fund’s industry breakdown is as follows: Utilities, 28.4%; Materials, 20.1%; Industrials, 19.3%; Consumer Staples, 9.9%; Financials, 8.9%; Consumer Discretionary, 7.8%; Telecommunication Services, 4.3%; Information Technology, 1.0%; and Health Care, 0.3%....

ETFs have added to their advantages over closed-end funds over the last few years. That’s because ETFs have evolved, and competition has increased. Still, there are a lot of ETFs that have been created to tap into popular, but risky, themes and fads, so you need to be very selective with your ETF holdings. But the best ETFs offer a great combination of low fees and top-quality stocks. Below are five foreign ETFs we like. All have recovered from their lows earlier this year, but we think they still have room to rise. ISHARES MSCI EMERGING MARKETS INDEX FUND $41.85 (New York Exchange symbol EEM; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Index....

Exchange-traded funds (ETFs) hold baskets of stocks that represent stock indexes. They trade on stock exchanges, just like stocks. Unlike many other innovations, including many mutual funds, ETFs don’t load you up with high management fees, or tie you down with heavy redemption charges if you decide to take your money out. Instead, they give you a low-cost and more flexible and convenient alternative. ETFs also have advantages over closed-end mutual funds. They are more liquid than most closed-end funds, and have lower management fees. Moreover, ETFs consistently trade at or very close to net asset value, unlike closed-end funds, which often go through wide swings in their discounts or premiums to the value of their assets....

NEWMONT MINING CORP. $55 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 490.2 million; Market cap: $27.0 billion; Price-to-sales ratio: 4.0; WSSF Rating: Average) is one of the world’s largest gold-mining companies. Newmont has major mines in the U.S., Canada, Australia, New Zealand, Peru and Ghana. It gets about 80% of its revenue from gold. The remaining 20% comes from copper, zinc and other metals. Most of Newmont’s copper comes from the large Batu Hijau gold/copper mining complex in Indonesia. As part of its original 1986 deal to develop Batu Hijau, Newmont and its partners agreed to lower their stakes in the mine, in stages, by selling them to the Indonesian government. As a result, the company recently reduced its stake in Batu Hijau to 31.5% from 45%. In exchange, Newmont received roughly $669 million. The company expects to sell more of its stake in Batu Hijau over the next few months. Meanwhile, Newmont earned $388 million in the three months ended September 30, 2009. That’s 113.2% higher than the $182 million it earned a year earlier. Per-share earnings jumped 97.5%, to $0.79 from $0.40, on more shares outstanding. Cash flow per share gained 94.8%, to $1.85 from $0.95. Revenue climbed 49.5%, to $2.05 billion from $1.4 billion. The gains were mainly caused by higher average gold prices (up 11%), and higher gold sales (up 16%). Newmont also cut its operating costs and benefited from higher copper prices and production....

Resource prices have climbed sharply since early 2009, as the global recession began to ease and some countries’ economies returned to growth. Despite their recent gains, prices for oil, gold and other commodities will likely keep rising. That’s partly because resources act as a hedge against inflation. We feel the best way to profit from rising resource prices is with high-quality companies, such as these four. They are all leaders in their fields, and are doing a good job of keeping their costs down. However, only three are buys right now. ENCANA CORP. $55 (New York symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 751.2 million; Market cap: $41.3 billion; Price-to-sales ratio: 2.1: WSSF Rating: Average) will split itself into two separate companies in December, now that shareholders have approved the plan. Break-ups like this help unlock hidden value, and generally lead to above-average results for a period of years....

Candente Resource Corp., $0.45, symbol DNT on Toronto (Shares outstanding: 80.9 million; Market cap: $36.0 million), explores for copper, gold and silver in Peru and Mexico. The company is based in Vancouver. Candente’s main interest is its 100%-owned Canariaco Norte copper/gold project in northern Peru. So far, the company estimates that the deposit contains 6.5 billion pounds of copper, 1.4 million ounces of gold and 36.5 million ounces of silver. Moreover, the company’s preliminary economic assessment, which it carried out in December 2008, showed that a mine would be profitable. The mine is projected to produce 200 million pounds of copper per year over its 19-year life. Candente has also discovered a second mineralized zone next to the Norte deposit, and believes that drilling will unveil a third deposit....

AMERIGO RESOURCES $0.79 (Toronto symbol ARG; SI Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 132.6 million; Market cap: $104.8 million) has jumped 173.3% since May on higher copper prices. Copper is up 49.0% during that period, to $2.98 U.S. a pound. Amerigo processes copper and molybdenum from the waste rock, or “tailings,” from Chile’s El Teniente, the world’s largest copper mine. In the three months ended June 30, 2009, Amerigo’s revenue fell 42.0%, to $18.1 million from $31.2 million a year earlier. (All figures except share price in U.S. dollars.) Metal prices rose during the quarter, but copper prices were still 45.8% below their 2008 highs of $3.80 a pound. Molybdenum prices were 73.4% off their 2008 highs. Amerigo’s cash flow was $0.013 a share in the latest quarter, compared to $0.065 a share a year earlier....

Capstone Mining, $3.02, symbol CS on Toronto (Shares outstanding: 195.9 million; Market cap: $591.7 million), owns two copper mines and one advanced-stage copper-gold development project. The company’s underground Cozamin mine in Zacatecas, Mexico, mainly produces copper, but its by-products include zinc, lead and silver. The open pit Minto mine in the Yukon produces copper and gold. Recently, Capstone has significantly increased production at both operations. The two mines are forecast to produce a total of 100 million pounds of copper this year at a cost of approximately $1.00 U.S. per pound (today’s copper price is $2.70 U.S. a pound)....

Inmet Mining, $38.49, symbol IMN on Toronto (Shares outstanding: 56.1 million; Market cap: $2.2 billion), is a Canadian-based mining company that produces copper, zinc and gold. Inmet operates five mines: Cayeli in Turkey, Pyhasalmi in Finland, Troilus in northern Quebec, Ok Tedi in Papua New Guinea and Las Cruces, a high-grade copper deposit in Spain. Inmet recently started up production on this last site. Inmet also has a 100% interest in the pre-development stage Petaquilla copper project in Panama. Last November, Teck Resources opted out of the project, and development is suspended because the mine’s projected operating costs are above current copper prices. In the three months ended March 31, 2009, Inmet’s revenue fell 13.4%, to $239.2 million from $276.3 million a year earlier. Earnings fell 51.9%, to $51.3 million, or $1.06 a share, from $106.7 million, or $2.21 a share. Cash flow per share fell 27.5%, to $1.71 from $2.36. In the latest quarter, lower copper and zinc prices hurt revenue, profits and cash flow....