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October 19, 2009 Dear Friend,
We initiated coverage on
Xstrata at $17 with a $28 price target based on the
attractiveness of its core copper, coal and nickel product lines
that account for almost 90% of revenues.
We have attached a speech we
will present to an exploration roundtable panel at our November
18-19 Metals Conference in New York. Many academic geologists
argue that "the big ones already have been found," and that
satellite imagery, air magnetic surveys, ground magnetics,
electric induced polarization surveys, ground prospecting,
geochemistry and related techniques have done a reasonably good
job of identifying large surface deposits. These proponents
argue that future discoveries will be deeper, medium-sized or
smaller and often more metallurgically complex.
The "diminishing returns"
theory dovetails with "Malthusian shortage" demand theories, and
commodities supercycle Bulls.
Tomorrow the World Steel
Assn. and Int'l Aluminum Institute each should report production
for September, and Wednesday the World Bureau of Metals
Statistics will report August demand and supply data for
nonferrous metals.
Faithfully,
John C. Tumazos
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Copyright © 2008 John Tumazos Very Independent Research,
LLC
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