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April 5, 2010 Dear Friend,
Nonferrous metals prices
rose 2% to 8% last week due to an array of the best economic
news in several years. Visibility of an 80% U.S. and 85%
global steel industry operating rate perhaps by the end of
May illustrates a return to more normal global economic
conditions. The attached "Spot Markets" report dedicates a
couple pages to each major commodity, contains 9 tables and
a 32 page total analysis of relevant sectors.
We are trying to
undertake our securities analyses much more rigorously as
the stock market rallies, metals commodities prices approach
records and metals shares soar.
We cut our investment
rating for AngloGold Ashanti to Underweight from Overweight
and our price target to $30 from $50 partly because of the
poor terms of the African Barrick Gold IPO, which undermine
the valuation of the Ghana, Tanzania and DRC gold assets of
AngloGold Ashanti. Further, reserve declines and cost
increases further erode value.
One week ago we cut our
investment rating for Rio Tinto to Neutral from Overweight
due to price appreciation, strategy confusions and a lack of
enthusiasm towards its project queue outside of Mongolia and
the Pilbara iron ore.
We also dropped coverage,
withdrawing our Overweight rating, for FNX Mining owing to
its acquisition by Quadra Mining. We have visited the
Sudbury, Nevada and Arizona mines of the merged concern, for
which we may initiate coverage upon after modelling the new
company. Quadra is slated to speak at our November 9-10,
2010 investor conference.
Faithfully,
John C. Tumazos
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Copyright © 2008 John Tumazos Very Independent Research,
LLC
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