Merrill lynch has about 6% of the stockthey are very bullish on...

Merrill lynch has about 6% of the stock

they are very bullish on commodities

they have a big buy on the stock

Merrill Lynch 08/09/2008 1 Buy, High Risk $2.90 104.2%

here is what they say about copper and gold
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Merrill Lynch likes Copper, Gold, But Above All Coal
FN Arena News - September 08 2008

By Rudi Filapek-Vandyck


The team of resources analysts at Merrill Lynch is of the view that those with exposure to the sector should not be exiting their positions, even though a sustainable uptrend for share prices of miners and developers of mining projects may still be a while away. The recent correction has pushed many share prices below their Net Present Value argues the team and this arguably makes these stocks too cheaply priced.


Having said all of the above, Merrill Lynch's update on the sector has seen the team cut price projections for base metals prices, nickel and zinc in particular. The team has also cut price projections for precious metals such as gold and platinum (the former only by 2% this year only, the latter has received double digit price cuts for the next years).


The good news is the broker's forecasts for copper and aluminium have remained essentially unchanged. Even better news is its price forecasts remain above current spot prices, suggesting the risks are now squeezed to the upside.


Gold is now expected to average US$910/oz this calendar year, rising to an average of US$1025/oz next year. Copper is anticipated to peak in 2009, averaging US$3.79/lb, while net price gains for uranium should be rather minimal from current spot price levels of US$64.50/lb (next year's projected average is US$72/lb after which prices are projected to decline).


Absolute stand outs are the bulk commodities, however, with the team further increasing price projections for the coming years. Iron ore fines are now expected to rise another 15% in contract price at the upcoming annual negotiations (up 1% versus previous estimates), with room for another rise of 10% in the year thereafter. Current projections assume one year of price rollover and then a decline by 25% (JFY12).


Semi-soft metallurgical coal prices as well as prices for thermal coal are still expected to experience increases in the order of 20-26% next year. In fact, Merrill Lynch anticipates a much tighter market for all sorts and varieties of coal, projecting big jumps in prices from Japanese fiscal year 2010 onwards. At that point in time prices are expected to jump between 11% (LV-PCI) and 50% (thermal).


The message is clear: at a time when prices for all other commodities will be running out of steam (Merrill Lynch's projections for price declines are matched by expectations by other stockbrokers and experts) iron ore may be peaking, but coal prices should still have a few very buoyant years ahead of them.


And that last paragraph is what Merrill Lynch analysts want investors to focus on, because the broker is of the view that this scenario is currently either not well understood by investors, or not fully taken into account yet. Next year should see a strong bounce in the copper price, the team suggests.


Investors with a horizon of up to five years should be richly rewarded for today's patience, say the analysts.