Please contact us to reserve one-on-meetings for our March 24-25 Metals Conference at the New York Helmsley, 212 East 42nd Street.  In addition to the 22 companies speaking, there will be three additional functions.  Knight Capital Group will host a "speakers dinner" at 7 pm on March 23rd at the 21 Club with about 10 seats available for the buy-side.   WJB Capital will sponsor "Exploration Cocktails" at 5 pm on the 24th and a "Core Shack" at 2:20 pm on the 25th both at the New York Helmsley, and an additional 25 to 30 companies will be present at those events.  We draw upon several organizations in addition to our own eight salespeople to improve attendance, which grew to 275 people at our prior November 18-19, 2009 conference.

 

We cut our price target for Domtar to $68 from $74 as we cut our earnings estimates to reflect just a $25 per ton second-quarter price hike and used a $10 per ton $60 rather than $70 per ton long-term margin estimate.  Please note our valuations are based on the current 43.3 mm diluted shares, and that if Domtar were to use $0.9 billion in 2013-16 to buy back common shares as we estimate its 2016 earnings would reach $8-$9 and our price target would rise to $117.

 

Our weekly review of spot markets is attached. There are indications that economic activity in China has been “too hot,” and the government policy there seeks to restrain its economy.  The U.S., EU and Japan have been too weak.  Taken together, the world economy exhibits a slow or gradual recovery.

 

It is possible that interest rates around the world rise from historic low levels.  Many countries have begun to increase rates, such as China, India, Australia and others.  This could reduce the stimulus to gold or various commodities prices.

 

We regard the difficulties of the euro currency as very bullish for gold, and regard the dollar appreciation against the euro as a “non-positive for the U.S.”  Economic declines in Greece, Italy, Portugal, Spain or Ireland do not make the U.S. financially strong.  We believe the failure of a currency is bullish for gold.  We believe the Chinese government might reduce its holdings or weightings of its holdings away from the dollar or euro and into gold to drive up gold prices.  We rate Greystar, Agnico-Eagle and AngloGold Ashanti Overweight and Newmont, Barrick and Goldcorp Neutral among gold shares.

 

Faithfully,

 

John C. Tumazos