Compass Resources (CMR) – We maintain our Buy recommendation on this undervalued company. A recent sell-down by JV partner, Hunan Nonferrous, of half its 12m share stake in CMR spooked the market but has provided a buying opportunity. CMR is focused on development of its Browns project near Batchelor NT. First production from the base metal Oxides project is set for October. Exploration has restarted post end of the NT wet season. The record 2007 field season is a 50% increase on the 2006 effort and includes 35,000m of drilling. Our upgraded $7.40ps valuation is marginally higher thanks to higher near term commodity price forecasts. Plans to split the company into three via an in-specie distribution to shareholders could liberate additional value, particularly via the spin-out of uranium interests.
CMR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held