copper roars back -mnc mentioned

Copper roars back

* Robin Bromby
* From: The Australian
* February 15, 2011 11:36AM


MOST stocks with exposure to the red metal should enjoy healthy share price gains throughout 2011 - that's the take-home message from Foster Stockbroking's latest copper sector overview.

This comes as copper roared back over the $US10,000 a tonne level last night, up 2 per cent on the session to $US10,160/tonne. In fact, it was gains all around on the London Metal Exchange. Tin staged a new record at $US32,460/tonne in intraday trading while lead was the top performer, up 3.1 per cent to $US2640/tonne.

Foster Stockbroking says copper remains its preferred pick of the base metals on a two-year view given the robust economic prospects combined with the looming supply-demand imbalance. It now considers $US11,000/tonne a realistic target to be achieved in 2011. The key theme of the year, says the report, will be an increased level of merger and acquisition across the mid-tier copper sector as the large producers look to increase scale through buying assets with the potential to produce between 50,000 and 100,000 tonnes of copper a year.


So what stocks do they like?

The two preferred producers are Equinox Minerals and PanAust. Of the ?Big 3? producers, EQN is considered the most leveraged to the copper price given a mine life of about 35 years, while PNA expects to be producing 100,000 tonnes a year of copper, 200,000 ounces of gold and 1 million ounces of silver a year by 2014.

The preferred developers are:

* Altona Mining as its Roseby project in Queensland is one of Australia?s largest undeveloped copper deposits (about 900,000 contained tonnes).

* Anvil Mining which is about to commission Kinsevere II in the Democratic Republic of Congo.

* Avalon Minerals whose Viscaria copper-iron ore project in Sweden is located adjacent to the large Kiruna iron ore mine - and with all the infrastructure next door, too.

* Sandfire Resources which is expected to begin production by late 2012 and will spend $30m on exploration to increase the existing high grade resource.

* Tiger Resources from which plenty of news-flow is expected in early 2011 as Kipoi Stage I in the DR Congo is commissioned and a scoping study on Stage II is released.

The preferred explorers are Avanco Resources and its Brazil project, Encounter Resources with high grade intercepts in Western Australia, Horseshoe Metals which is exploring 75km from Sandfire?s discovery, Metminco and its Peru project along with Rex Minerals which has a target resource of 2.8 million contained tonnes of copper in South Australia.

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