Today’s Top Picks. Interest returning to the copper juniors;...

Today’s Top Picks.

Interest returning to the copper juniors; value in the producers.

TGS CONVICTION BUY, DML TRADING BUY
•Yesterday both Kidman Resources (KDR.ASX) and Peel Resources (PEX.ASX) announced impressive exploration results across their respective projects, resulting in a strong surge in their share prices.

•PEX reported the results from their first diamond drill hole at the Mallee Bull Project near Cobar, NSW. 53m @ 4.08% Cu from 470m was intersected, including a higher grade zone of 12m @ 9.13% Cu. The stock had run up strongly, up +60% since the beginning of the month, in anticipation of the drill results.

•KDM’s share price surged 144% (KDRO up 453%) after reporting impressive results from the Conductor 1 prospect, at the newly identified massive sulphide zone at the Home of Bullion Project in NT. The results included 36m @ 4.1% CuEq from 33m, including 10m @ 10.3% CuEq.

•The strong surge in share prices demonstrates that activity and interest is coming back into small cap resources and notably those with copper exposure. Other copper juniors that have also performed strongly recently on the back of exploration results include Azure Minerals (AZS.ASX) with an early exploration project in Mexico and Inca Minerals (ICG.ASX) with copper exposure to Peru.

•While it’s encouraging to see interest return to the junior explorers, we believe undervalued copper producers provide the best exposure for investors seeking leverage to the red metal with TGS and DML being our key picks.

•Our conviction pick in the sector is Tiger Resources (TGS), which commenced production at the Kipoi Copper Project in the DRC early last year at a rate of 35ktpa Cu and is expanding to 50ktpa Cu by mid 2014. The Company is fully funded with significant exploration upside and M&A appeal. BUY PT $0.55.

•Discovery Metals’ (DML.ASX) share price has been battered over the past month with the withdrawal of the Cathay Fortune bid and operational issues at the Boseto Project. The market had been concerned with DML encountering a greater amount of oxide than sulphide ore whilst mining and question marks arose concerning the reserve integrity and eventual mill performance. The company recently stated that recovery in January was 80% for copper, and that “ore quality continues to improve as the mine moves deeper into the sulphide zone.” We cannot help but note the similar issue of the oxide-sulfide problem that Equinox Minerals faced when it commissioned its Lumwana mine. Therefore, with improved weather conditions and the improvement in ore quality we expect to see a more positive production report in coming days which could serve as catalyst for the share price. TRADING BUY.



http://www.fostock.com.au/announcements/interest-returning-to-the-copper-juniors