This is from huntleys front page overview/preamble smallcompanies guide ---love his wrap up of management
Budget positives, Compass and uranium speculation! OVERVIEW The perception is that resource leaders have driven the Australian market to record levels over the past few months. The fact is the Small Ordinaries - +13.4% - has outperformed the All Ordinaries - +12.1% so far this year. The All Ordinaries, dominated by major resource counters BHP, RIO and Woodside and the banks, has been inched out in the 2006 performance stakes to May 5. Small can be beautiful! And it is not just the major resource stocks that have captured the imagination of investors world wide anxious to get a piece of the China/India action. The level of speculation in the small end of the resources sector is very high particularly when uranium or U3O8 is mentioned. Recently Bullion Minerals changed its name to Uranium Equities. On May 9 a company with the provocative name U3O8 Limited - a uranium exploration company - listed with its 20 cents shares peaking at 81½ cents and closing at 68 cents. Some 30% of the free capital changed hands on the first day of trading. This is definitely a sign of the madness surrounding uranium at present. Our update of Compass Resources provides an insight as to how some stocks can be overlooked for a period of time before the market recognises the potential. Subscribers may well query how such a gem slipped under the radar screen of the broader market during a mining boom? So much for the Efficient Market Hypothesis! There are several reasons, but perhaps the most important was the retiring nature of management who are based outside the Sydney CBD and well away from Perth, Australia’s “Mining Central”. Until recently their focus was creditably (but frustratingly) on the company’s assets not the share price. Compass is well funded and the Oxides project will proceed, delivering significant earnings in FY07. Our valuation of $4.50 exceeds the market price and is based on a long term copper price of US$1.25/lb, a third of the current spot price. There is no value placed on uranium interests and we anticipate an announcement on this resource in the near future. Perhaps Compass is one of the more conservative ways to play the uranium sector. But don’t forget it is resource stock and volatility is the order of the day.
Later in detail it sums up acknowledging that with therapid recognition (ignition lol) sp is around thier accumulate recomendation...... but they expect to upgrade that soon............hehe
An increase in Browns Sulphide scale from our assumed 2.0Mtpa to 4.0Mtpa as flagged by CMR would generate upside. It seems a logical step given the +80Mt of resources at Batchelor. Exploration is another potential value adder with a 35,000m drill program kicking off now – three drill rigs have been secured. Most resources are open along strike and at depth. We still add no uranium specific valuation to the total. This is an area that could surprise on the upside when CMR releases its first uranium resource estimate shortly. CMR is essentially now fully funded for any potential uranium developments and given the share price discount to valuation, remains a free call option on uranium. We retain our Buy recommendation and drop the Speculative qualification given the funding risk is substantially diminished and NT government approval of Oxides is in place. Recent share price strength has seen our recommendation enter our accumulate range. Forthcoming developments are likely to see our valuation upgraded.
it just keeps getting better dunit!
gotta ask oly - do you write for Huntleys ----if not; i dunno why they havent made you and offer
CMR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
