From the Globe&MailTarnished copper prices create buying opportunities: UBS
ALLAN ROBINSON
Friday, January 05, 2007
The price of copper has taken its largest weekly drop in almost five months, but the weakness in the share prices of both Aur Resources Inc. and First Quantum Minerals Ltd. makes them a “buy,” said Tony Lesiak, an analyst with UBS Securities Canada Inc. Both were previously rated as “neutral.”
UBS also reiterated its “buy” rating on Inmet Mining Corp.
First Quantum shares were trading at $54.60, up $1.95 or 3.7 per cent. The shares closed at $62.75 at year-end.
Shares of Aur meanwhile were changing hands Friday morning on an ex-dividend basis, meaning that investors buying the shares from this point on are not eligible for the regular semi-annual regular dividend of 5 cents per share plus a special dividend of $1 a share payable on Jan. 31. Its stock was trading at $19.86, off $1.04 or almost 5 per cent, on the S&P/TSX. The stock closed at $24.26 at the end of 2006.
The price of copper has declined about 17 per cent during the past month. “Despite the decline in the spot copper price, the forward curve [in futures prices] remains robust and Aur remains highly profitable,” he said.
Copper recently traded at $2.60 (U.S.) a pound down from almost $3.50 a pound in early September.
UBS expects Chinese restocking of inventories will resume shortly, which could help reverse the climb in inventories.
UBS reduced its 12-month share price target on Aur to $27 (Canadian) from $29. The price target on First Quantum was reduced to $71 from $75.
© The Globe and Mail
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