eureka report - out last night !!

Base metals to shine
Tim Treadgold13 January 2014


Summary: An expected pick-up in industrial production this year, particularly across Asia, will increase demand for the base metals needed as the core feeder fuels for manufacturing. Don’t expect a boom, but there will be steady upward momentum over time.
Key take-out: Getting exposure can be as easy as investing in the major mining stocks with the largest base metals operations, but other entry points with potentially bigger upside are small mining stocks with operations focused on copper, nickel, aluminium, lead and zinc.


Recommendations:

Hot Chili: Outperform
Rex Minerals: Outperform
Sirius Resources: Outperform
Ironbark Zinc: Outperform


Zinc: As was mentioned several times last year, zinc is a metal overdue for a big recovery thanks to the planned closure of several world class mines over the next few years (Stirring in the zinc pot, November 22). Entry points for Australian investors interested in producers rather than explorers have largely dried up, but there are a number of quality exploration stocks worth following. These include Ironbark (IBG), which has its foot on the world-class Citronen zinc deposit in Greenland, and Triausmin (TRO), which is redeveloping the Woodlawn project in New South Wales.

On balance, Ironbark is the stock to follow because it is a plum takeover target with a project that is far too big for its balance sheet, and with two big zinc specialists (Glencore and Nyrstar) dominating its share register. At some point one of the major zinc producers will make a move on Ironbark, or help fund development of the Citronen project.