RE: Drop in Price/New TargetMercator is a well run company and they have done everything right but it is held by very weak hands now. Funds that have suffered huge loses on bad companies are selling everything and price does not matter, they just have to liquidate.
There is no way ML is fairly valued here rather, it is massively undervalued by no fault of its own. Management is doing the only thing they can, finish phase one bring production on and begin to generate new cash flow. They will manage their costs carefully and make a determination on phase 2. When economies begin to recover ML is going to be in a sweet spot with all of those marginal producers gone and no new mines for years to come.
How is it possible that GMO is worth the same as ML??? ML at $100 million CND market cap is INSANE!!!
Read new Target from Blackmont
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Mercator jumps 5%, price target cut
Mercator Minerals Ltd. got off on the right foot Monday morning, rising more than 5% through the first hour of trading in Toronto.
Last week, shares in the copper and molybdenum miner fell like a rock, dropping 42% from Tuesday's close of $2.56 to $1.47 on Friday. as moly prices have come under major pressure of late forcing analysts like Blackmont Capital's George Topping do reduce his price estimates for the next couple fo years.
Mr. Topping now predicts moly prices to hit US$17 per pound in 2009, down from US$25, and US$20 per pound from US$25 in 2010. His new price forecast reduces Mercator's cash flow per share to 98¢ per share in 2009 and $1.64 in 2010 from $1.38 per share and a $1.83 per share previously.
"While the moly market is currently in disarray, we believe it will stabilize in 2009," the analyst wrote in a note to clients. "Consequently, we maintain our Buy recommendation but lower our target price from $7.90 per share to $7.30 per share."