4 Mining Stocks To Consider Now, 1 To Watch

Jun.14.12 | About: Rio Tinto (RIO)

By Morgan Smith

A few developments have put Rio Tinto (NYSE:RIO) in the spotlight lately, and these include new marketing strategies and the company's part in the making of Olympic medals. Recently, the mining company launched a new initiative called "Diamonds with a Story" - which is, quite obviously, aimed at the successful marketing of Rio Tinto's diamond reserves.

The main purpose of the advertising campaign is stated to be to inform "diamond buyers, manufactures and consumers about the unique provenance and personality of Rio Tinto's diamonds". If it is successful to even a small degree, it will make an impact on the company's revenue and thereby affect the stock.

Rio Tinto may have the right idea. Studies show that people actually care about the 'story' behind their diamonds. About 75% of people who are likely to purchase a diamond care about where it comes from and what makes it special.

The psychological makeup of your target market is a very important aspect to consider when developing a new marketing strategy as it is essential in determining how to make something appeal to the right group of people. And, because Rio has done it first, other diamond providers will find it difficult to follow suit without looking like copy-cats. As far as I am concerned, this may well be what makes Rio's diamond division take off. The new strategy is an important point of differentiation for the company's diamond business, which has a presence in five continents.

In a more negative light, a large number of people have written to protest the role of Rio Tinto in the upcoming Olympic Games. Rio Tinto supplied the metal that has been used to create the gold, silver and bronze medals that shall be awarded as prizes at the Olympic Games.

However, people feel that the company has no right to participate in the Games in such an important way as it "does not share the Olympics' values and has no place on the podium". The reason for this rather strong level of opposition to Rio Tinto is due to the lockout of 780 workers in Alma, Quebec. None of this looks very good for the mining stock.

The impression that this gives the general public about where the company's interests lie could negatively affect share prices. The story of the lockout, which could well have gone more or less unremarked, is now in the spotlight because of the fact that Rio Tinto is playing an important part in the Olympic Games.

The request that Rio Tinto's presence be removed from the Olympic Games comes from the Canadian Labor Congress, which says that Canadian athletes will be forced to wear medals that are 'tainted' by the actions of the company that provided the metal for them. This is a strong protest and we will have to wait and see if Olympic managers will do anything about it or if the situation will be left as it is.

Most recent reports show that the Olympic bosses are not inclined to get involved with the dispute. It is after all a local issue that should not have any bearing on an event at the international scale of the Olympics. However, the company now has to deal with scrutiny from a variety of different nations in the next few months.

A company that has adopted a different strategy to many others in the current economical climate is Barrick Gold (NYSE:ABX). The mining company has chosen to focus on its existing pipeline rather than on making new acquisitions. This seems like a sensible method to me, especially as its focus is on the Cortez gold mine in Nevada. Recently, the company announced its intention to expand its ownership of land surrounding the mine by purchasing around 7,000 acres from Victoria Gold. The purchase will cost Barrick something in the region of $24 million and could make a notable difference to its revenue stream.

Silver Wheaton (NYSE:SLW), a leading metals streaming company and therefore a significant competitor to Rio Tinto, is "well-positioned to add to its portfolio", which is why a number of analysts remain bullish about the stock. The potential for future growth is great and it seems likely that, despite the recent decline in shares, Silver Wheaton remains one of the best options available in terms of mining companies at the moment. It is a good option for investors looking to get into the silver market without running any development or operating risks.

Agnico-Eagle Mines (NYSE:AEM) has substantially reduced its interest in Rubicon Minerals (RBY), as it recently disposed of a significant portion of its shareholdings in Ontario's Red Lake gold camp. This is almost like a complete reversal in strategy and what makes the situation so mysterious is that Agnico has yet to inform on why it made this rather sudden decision. The information that the shares were sold comes from Rubicon, but no information is forthcoming from Agnico itself. This is a situation that needs close monitoring in order to determine its effects on stock holders.

BHP Billiton (NYSE:BHP) will go ahead with its Olympic Dam project. I believe this to be true, despite speculation. Let's have a look at the facts: the company reported that projects would not be approved because of a decline in iron demand in China. Olympic Dam, however, produces copper primarily. Despite the fact the company has backed away from $80 billion in spending, it will not stop spending altogether as its strategy is to always invest through good times and bad. It also plans to focus on "huge, long-life, low-cost projects", a category that Olympic Dam falls into perfectly.

Rio Tinto's status is up in the air right now. The Olympic controversy is best if it can be kept quiet, whereas the company would like a loud presence behind its new diamond campaign. Whichever story comes out the loudest may decide the short-term impact on Rio Tinto's stock, so it may be a good idea to pay attention to the news.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.