strong buyEastern Platinum, First Uranium 'favourites'
Raymond James uranium and junior mining analyst Bart Jaworski was picking favourites Tuesday with First Uranium Corp. and Eastern Platinum Ltd. topping the list.
"Werecommend buying First Uranium and Eastern Platinum ahead of thequarter based on attractive valuation and expected positive quarterlyresults," he wrote in a Q2 quarterly preview note.
RegardingFirst Uranium, the analyst said the company is starting to show arelatively solid track record of achieving milestones at itswholly-owned MWS and Ezulwini operations in South Africa.
"Somemay be surprised to learn that the company already produces at anannualized rate of 34,000 ounces of gold per year at the MWS tailingsretreatment facility and has just begun producing gold (from its ownplant) at its Ezulwini underground operation," the analyst toldclients.
He said First Uranium's share price, which isdown more than 40% year-to-date, reflects in part a discount related toits South African peer Uranium One Inc.But unlike Uranium One's Dominion uranium-gold mine, Mr. Jaworski saidEzulwini has wider minable reefs, higher gold grade, decades ofhistoric production and mineralogy which is non-refractory.
He upgraded First Uranium to a "strong buy" and maintained his $9.50 price target.
TheRaymond James analyst also upgraded his rating on Eastern Platinum from"outperform" to "strong buy" but lowered his target price on the stockfrom $4.20 to $3.80 to reflect a more conservative stance at Eastern'sCrocodile River project in South Africa.
"Despite the lowertarget, we believe the current sell-off in the share price is a buyingopportunity," he told clients. "We believe the market has over-reactedon demand erosion fears while losing sight of the fact that producersare falling short of production."
Shares in Eastern Platinum,which hasbeen hit hard the past few months, falling more than 60% since hittinga 52-week high of $4.18 in early March, are currently trading atroughly US$1,170 per ounce platinum, representing a 43% discount toRaymond James' 2008 platinum price forecast of $2,051 price target.
Mr. Jaworski cautioned investors on Paladin Energy Ltd., due to its "rich valuation" and Uranium One and Denison Mines Ltd. on recent production downgrades and sovereign risk concerns combined with prospects for negative quarterly surprises.
David Pett