Base Metal Companies' Gold Exposure

Gold mania is upon us once again, with spot prices rising through $1,000 an ounce and Barrick Gold Corp. (ABX) launching a record-breaking equity offering.

With that as a backdrop, Canaccord Adams analysts Gary Lampard and Orest Wowkodaw figured this is a good time to look at which base metal companies in their coverage universe offer the most leverage to gold in fiscal 2010. The winner is HudBay Minerals Inc., which could have even more gold exposure in the future thanks to a discovery on its Lalor Lake project in Manitoba.

The analysts put together a list that lays out what percentage of revenue each company will derive from gold in fiscal 2010 (with minor adjustments).

HudBay Minerals Inc. (HBMFF.PK): 17%
Freeport-McMoran Copper & Gold Inc. (FCX): 13%
Quadra Mining Ltd. (QADMF.PK): 13%
Cameco Corp. (CCJ): 13% (from its stake in Centerra Gold Inc. (CAGDF.PK), which it plans to sell)
Inmet Mining Corp. (IEMMF.PK): 12% (but that will decrease once the Troilus project closes next year)
First Quantum Minerals Ltd. (FQVLF.PK): 10%
FNX Mining Company Inc. (FNXMF.PK): 2% (has a sales agreement with Gold Wheaton Gold Corp., and is a Gold Wheaton shareholder)
Capstone Mining Corp. (CSFFF.PK): 2%
Teck Resources Ltd. (TCK): 2% (sold gold assets to reduce its debt load)
Vale SA (VALE): barely above 0%.

Equinox Minerals Ltd. (EQXMF.PK), Lundin Mining Corp. (LUNCF.PK) and Thompson Creek Metals Company Inc. (TC) all have 0% exposure.

Comments

[gabe borens...:]

The key word is the " gold mania".On the one hand investors are being told that the market is ahead of the economy ,on the other hand we are being told that economy will expand and the injected liquidity will contribute to inflation.
It sounds to me as if these opinions are reflective of existing major positions and are not reflective of the fundamentals .
The injected liquidity had stabilized key economic sectors including the financial sectors .
At this time it appears that the "middle"class America is the primary beneficiary of various "economic stability" programs.
It should be noted that this working class had sustained a record liquidity/assets decimation.
As the economic momentum accelerates in the period ahead contributing to a dynamic employment expansion by 2010, the Americans will be spending predominantly on the necessities and will be attempting to restore a degree of liquidity.
The global slack on the supply side is almost at the record.
The potential for inflation as indicated by the gold prices,is not a reality..
The economic notions will have to be updated in this particular economic cycle .

Sep 11 04:40 PM

[jay brebner:]

North American Palladium (PAL) will have higher percentage of gold production in 2010. Info below taken from company
presentation at the Triple Gold Summer Conference, New York

www.napalladium.com/ir...

Aquired Cadiscor Resources inc May 26, 2009 and Sleeping Giant Mine In Prolific Abitibi Region Quebec, Canada
Contained mineralization of 153,000 oz. gold
58,000 oz average production over last 5 years
Drilling has identified new resources in existing stopes
Cumulative production of 1M ounces over 20 years at an average grade of 11.4 g/t Au.
50,000 oz. annual gold production expected commencing Q4 with cash costs in the range of US$450 per ounce

Sep 11 06:45 PM

[chuck2251:]

i wonder why gold corp of canada was not mentioned?they have a very little recovery cost so they should benefit.

Sep 13 06:37 PM

[chuck2251:]

i wonder why gold corp of canada was not mentioned?they have a very little recovery cost so they should benefit.

Sep 13 06:39 PM