copper prices
CHILE FUND $15.63 (New York symbol CH) (CWA Rating: Aggressive) is a closed-end fund that invests primarily in Chilean stocks. Prices for copper, a key commodity for Chile, are now at $2.31 U.S. a pound, down from the all-time highs of over $4 U.S. they reached in June, 2008. Chile is a major exporter of copper, particularly to Asia. In fact, it’s the world’s biggest supplier of copper. Chile’s President Michelle Bachelet prudently used high copper prices from 2006 to 2008 to pay off the country’s foreign debt and to save for an economic downturn. As a result, Chile is now able to implement a big economic stimulus plan without taking on debt. This includes public-works projects, tax breaks for businesses and distributing money to its poorest citizens....
Goldcorp Inc., $34.33, symbol G on Toronto (Shares outstanding: 730.2 million; Market cap: $25.1 billion), is a major gold producer, with 10 operating mines and several major projects under development. Goldcorp owns the Red Lake, Porcupine and Musselwhite gold mines in Canada; a 37.5% interest in the Alumbrera gold/copper mine in Argentina; the El Sauzal, Los Filos and San Dimas gold/silver mines in Mexico; the Marlin gold/silver mine in Guatemala; the Wharf gold mine, and a 67% interest in the Marigold mine in the United States. Aside from its operating mines, the company has a number of major projects under development, including the expansion of the Red Lake mine; the Eleonore gold project in Canada; the Penasquito gold/silver/zinc mine in Mexico; the Cerro Blanco gold project in Guatemala; and the Pueblo Viejo gold project in the Dominican Republic. (Goldcorp has a 40% interest in Pueblo Viejo.)...
Equinox Minerals, $1.88, symbol EQN on Toronto (Shares outstanding 685.8 million; Market cap: $1.3 billion), is focused on mining and exploration in Zambia. Equinox first sold shares to the public at $0.71 each, and began trading on Toronto in June 2004. The Perth, Australia-based company is also listed on the Australian Stock Exchange. Equinox operates its 100%-owned Lumwana copper mine in Zambia, West Africa. Lumwana began production last December after a fire delayed its start-up for four and a half months....
TECK COMINCO LTD., $9.94, Toronto symbol TCK.B, has agreed to sell most of the gold from its Andacollo gold/copper mine in Chile to Royal Gold Inc. (Toronto symbol RGL). Teck owns 90% of Andacollo, and the Chilean government owns the remaining 10%. The mine should begin operating by the end of this year, and reach full production in mid-2010. Teck and the Chilean government will continue to own and operate the mine. Royal Gold is just buying the output. Royal Gold will pay a total of $300 million, consisting of $100 million in cash and $200 million in Royal Gold shares (all amounts except share price in U.S. dollars). Teck’s 90% share is equal to $270 million. To put this amount in context, Teck earned $1.7 billion (Canadian), in 2008. This is equal to $3.76 a share before writedowns and other one-time items....
Mercator Minerals, $0.56, symbol ML on Toronto (Shares outstanding: 108.2 million, Market cap: $60.6 million), is a mining company. Mercator owns one producing mine: the Mineral Park mine near Kingman, Arizona. Mineral Park produces about 5 million pounds of copper per year. Mercator also has interests in two other exploration projects: It owns 49% of the Minera Serrana zinc/silver/lead property in Mexico and 49% of the Pabellon/Porvenir silver project in Chile. Mercator is in the process of expanding Mineral Park’s production capacity. Phase one of the expansion, completed in December 2008, will raise the mine’s copper production by roughly 20%, to 15 million pounds a year from about 12 million. The company has also added a mill that will let it produce molybdenum at the mine. Phase two of the expansion, now underway, should take the mine’s copper production to 30 million pounds, or double the amount expected at the end of phase one....
NORTHGATE MINERALS CORP. $1.24 (Toronto symbol NGX; SI Rating: Speculative) (604-681-4004; www.northgateminerals.ca; Shares outstanding: 255.7 million; Market cap: $317.0 million) owns and operates the Kemess South open-pit mine in north-central B.C. However, Northgate expects to exhaust the ore at Kemess South in late 2010. To replace production from Kemess South, Northgate bought Australian gold miner Perseverance Corp. last year for $257 million U.S. Perseverance produces approximately 225,000 ounces of gold a year from two mines. Northgate aims to continue increasing output and cutting costs at Perserverance’s mines. Northgate now forecasts total gold production from all of its mines in 2009 of 392,000 ounces at a cash cost of $461 U.S. per ounce. Cash flow for 2009 is forecast at $0.45 U.S. a share....
OILEXCO INC., $0.19, symbol OIL on Toronto, announced last week that its UK subsidiary Oilexco North Sea Ltd. intends to file for bankruptcy protection. The UK subsidiary holds almost all of Oilexco’s assets. In December, 2008, The Royal Bank of Scotland, Oilexco’s main lender, provided $47.5 million U.S. in bridge-financing due January 31, 2009. That provided Oilexco with just over a month to restructure. However, Oilexco said that it needed incremental short-term financing in addition to the bridge loan. In late December, 2008, the Royal Bank of Scotland informed Oilexco that lenders were not prepared to provide any further financing, prompting the bankruptcy petition. Petro-Canada, BG Group plc and Talisman Energy have reportedly expressed interest in some of Oilexco’s assets. However, after seeking bankruptcy protection, Oilexco’s assets are likely to be sold at discount prices, leaving little for shareholders....
AMERIGO RESOURCES $0.36 (Toronto symbol ARG; SI Rating: Speculative) (604-681-2802; www.amerigoresources.com; Shares outstanding: 93.4 million; Market cap: $33.1 million) processes copper from the tailings (waste rock) from Chile’s El Teniente, the world’s largest underground copper mine. In the three months ended September 30, 2008, Amerigo’s revenues rose 4.8%, to $29.9 million from $28.5 million a year earlier on record production. (All figures except share price in U.S. dollars.) However, cash flow per share fell 66.7%, to $0.03 a share from $0.09. That was largely due to higher costs, as well as lower copper prices, Copper prices have dropped over 67% from a high of $4.10 in June, to $1.31 today. Still, the long-term production outlook for the company is positive, and copper prices should recover with the economy. Amerigo has positive cash flow. It also holds cash of $4.3 million and has low debt....
Junior resources stocks have been particularly hard hit lately, not just by falling commodity prices, but also by investor fears that they won’t be able to continue to raise financing for exploration and development. Here are four penny stocks that all have promising prospects, as well as cash to sustain their operations. We think they have a better-than-average chance of long-term success. MIRANDA GOLD $0.23 (Toronto symbol MAD; SI Rating: Start up) (604-689-1659; www.mirandagold.com; Shares outstanding: 44.9 million; Market cap: $10.1 million) is a gold exploration company focused mostly in Nevada....
ALGONQUIN POWER INCOME FUND $2.88 (Toronto symbol APF.UN; Shares outstanding: 77.4 million; Market cap: $222.8 million; SI Rating: Extra Risk) dropped sharply in price recently after the fund cut its monthly distribution by 73.9%, to $0.02 from $0.0766. The units now yield 8.3%. Prior to the cut, the fund paid out around 100% of its cash flow in distributions. That payout ratio now drops to an estimated 30% for 2009. We advised against buying Algonquin last month on the possibility of a distribution cut. But while the fund’s expansion into alternative fuels such as landfill gas and wind power continues to add risk, it now looks more attractive....