It has been a tough slog for Inmet Mining Corp. (IEMMF.PK) as it tried to develop its Las Cruces copper project in Spain. But after overcoming some major permitting challenges, the mine is up and running.

After visiting the site, Canaccord Adams analyst Orest Wowkodaw is very impressed with what he sees.

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.

Peter Campbell: Cheerful Prognosis for Dr. Copper
Source: The Gold Report 08/11/2009

http://www.theaureport.com/pub/na/2915

Analysts are not thrilled with the second-quarter earnings from Inmet Mining Corp. (IEMMF.PK) Adjusted earnings of C$1.09 a share were below consensus estimates, and the company also cut its production guidance for the year due to lower-than-expected output from its Cayeli and Ok Tedi mines.

"We view the [earnings] as slightly negative," TD Newcrest analyst Greg Barnes wrote in a note to clients.

The first quarter was not a great one for the mining sector, as companies suffered from low commodity prices and wrote some nonsense off their balance sheets that they didn't get to last year. But analysts are confident that the Q2 earnings season, which starts next week, will be an improvement.

The base metals sector should post a "significant" earnings improvement due to higher prices and positive provisional pricing adjustments, according to Genuity Capital Markets analysts Tony Lesiak, Nawojka Wachoviak, and Michael Gray. They also expect the precious metals companies to demonstrate positive earnings momentum due to higher prices and expected production growth.

Analysts continue to like copper miner Inmet Mining Corp. (IEMMF.PK) — they just think it's getting expensive.

Both John Redstone of Desjardins Securities and Tom Meyer of Raymond James downgraded the stock to "hold" (or "market perform") from "buy" (or "outperform") on Tuesday following a spectacular run-up in the stock price. Inmet bottomed out at C$12.15 a share last December, and is now back in the C$50 range.

Bring on the quants! Macquarie analysts Javed Jussa, Yin Luo and Rochester Cahan used quant factors to rank mining stocks based on a combination of their ability to perform well in a rebounding market, but still hold up if the market deteriorates again.

They studied all the Canadian metals and mining stocks over the past three weeks (when they had a major upswing) and over the past three years (when the market went from bull to bear). They figured out which quant factors had the most predictive power for the miners during both periods, and screened all the companies against the combined list.

Inmet Mining Corp. (IEMMF.PK) is one fine company but investors are paying too much to get a piece of it, says Scotia Capital analyst Lawrence Smith.

In a note to clients, Mr. Smith downgraded the stock from "sector perform" to "sector underperform" based on relative valuation. He also increased his price target from C$26.75 to C$33 after revising his net asset value for Inmet higher to better reflect the company's debt burden related to the Las Cruces project.

The fact that commodity prices were hit hard in the fourth quarter is no surprise to anyone. Molybdenum had it the worst, falling 53%. Oil followed with a 51% decline, copper was down 49%, nickel fell 43%, aluminum dipped 34% and zinc dropped 33%. However, some have recovered slightly since the end of 2008.

As a result of the slowing global economy, demand for materials has weakened, which is having a significant negative impact on earnings. UBS analyst Brian MacArthur noted that this has been especially tough on concentrate producers with prior period adjustments.

Katanga Mining Ltd. (KATFF.PK) shares were down as much as 25% on Monday morning after the company confirmed it is short on cash and desperate to raise capital, possibly through an equity raise or convertible debt offering, in order to continue as a going concern.

In its interim financial statements for the three and nine month periods ended September 30, 2008, Katanga said it does not have sufficient cash to fund planned capital expenditures needed to support the ramp up of ongoing operations.

Standard & Poor’s is expected to announce the companies that will be added and deleted from the S&P/TSX composite index on or before Friday, Dec. 12. However, the large number of names expected to go as a result of the market meltdown is raising some concern.

The unprecedented number of index deletions will surely put some pressure on the index committee to make special considerations to their methodology, said Yin Luo, managing director of quantitative research at Macquarie Capital.
Changes to the index are based on factors such as trading volume, float turnover, number of transactions, price and weighting in the index.

Deletions are expected to far outweigh additions, when the S&P/TSX Composite Index is rebalanced in December, says Scotia Capital analyst Darwin McGrath.

Mr. McGrath told clients that Ritchie Bros Auctioneers Ltd. (RBA) is the lone candidate poised to jump onto the country main Index, while more than 20 companies are expected to be kicked out.

Yet another effect of the messed up global markets is the increasing number of analysts cutting price targets dramatically, while upgrading to "buy," their recommendations on the very same stocks.

The latest to get this treatment is Inmet Mining Inc. (IEMMF.PK), which was upgraded from "sector perform" to "outperform" by RBC Capital Markets analyst H. Fraser Phillips even though Mr. Phillips lowered his price target from C$74 to C$33.

Inmet Mining Corp. (IEMMF.PK) is making the right move by buying out joint venture partner Petaquilla Copper Ltd. (PTQLF.PK), according to Raymond James analyst Tom Meyer.

By taking out Petaquilla for C$2.20 a share, Inmet will boost its ownership of the Petaquilla project in Panama from 48% to 74%. Mr. Meyer wrote that the move greatly enhances the value of the project for Inmet while reducing the risk.

One of the uglier mining disputes in recent memory is apparently over as junior company Petaquilla Copper Ltd. (PTQLF.PK) agreed to get taken over by Inmet Mining Corp. (IEMMF.PK) for a little over C$350-million. The shares jumped more than 15% Tuesday morning.

The two companies, along with Teck Cominco Ltd. (TCK), are joint venture partners on the Petaquilla copper project in Panama. But both Inmet and Teck were furious with Petaquilla. The junior company was doing its own work on the project outside their agreement, and it launched a legal action to try and reclaim Teck's interest for itself.

The U.S. dollar’s strength is being blamed for the recent weakness in base metals prices.

“The recent weakening of many currencies versus the U.S. dollar appears to be related more to a potential weakening of world economies and related less to any perceived renewed growth in the U.S. economy,” Desjardins Securities analysts John Redstone and John Hughes told clients, reminding them that most commodities trade in U.S. dollars.

Inmet Mining Corp.'s (IEMMF.PK) second-quarter results came in well below street estimates, and analysts were quick to cut their targets.

Toronto-based Inmet reported earnings per share of C$1.40 compared to C$2.86 in the same quarter last year. Desjardins Securities analyst John Redstone noted that much of the variance is related to foreign exchange losses.  But he also wrote that C$0.31 of it is a result of higher-than-expected operating costs as Inmet deals with many of the same problems plaguing the rest of the industry.

It's a good time to be an owner of shares of a company like Freeport-McMoRan (NYSE:FCX). Even though FCX didn't have the best quarter on record, they are in the right business at the right time

During a conference call last Tuesday to discuss second-quarter financial results, Freeport President and CEO Richard Adkerson spoke his mind about cost, production and global demand.

The performance of equities in the copper producer universe have underperformed the underlying commodity during the past few weeks, says Raymond James analyst Tom Meyer, pointing out in a research note the overall Price/Net Asset Value multiple of .7x was lower Wednesday than it was on May 30, when it stood at 0.78. Over the same period, the average copper price increased to $3.50 pound from $3.41 per pound.

The result, he says, is that, except for African Copper plc and Ivanhoe Mines Ltd. (IVN), almost all copper equities in his coverage universe are inexpensive. However, he highlights Quadra Mining Ltd. (QADMF.PK) and Inmet Mining Corp. (IEMMF.PK) as the “easier” names to own in the current environment of heightened uncertainty over deflation/inflation risks and concerns about global growth. “In our opinion, both companies offer value, longer dated project pipelines and favorable political risk profiles.”

There is no consensus among the analysts on Inmet Mining Corp.'s (IEMMF.PK) C$345-million hostile bid to take out its junior partner Petaquilla Copper Ltd. (PTQLF.PK).

On the positive side, Raymond James analyst Tom Meyer wrote that by moving its stake in the Petaquilla copper project from 48% to 74%, Inmet would gain "important strategic flexibility" and lower the risk profile on the project.