Globe says aggressive players should buy Breakwater
2007-11-23 06:28 ET - In the News
The Globe and Mail reports in its Friday, Nov. 23, edition that Breakwater Resources shed a penny to finish Thursday on the Toronto Stock Exchange at $1.65.
The Globe's Allan Robinson writes in the Eye On Equities column that the stock has a one-year trading range of $1.57 to $3.69. The shares of zinc producer Breakwater Resources have plunged since the mid October, and its third quarter revenue and earnings fell, in part, because of a 25-per-cent drop in output from Myra Falls in British Columbia, and lower production at El Mochito in Honduras. "Breakwater is still a buy for aggressive investors," said The Successful Investor, a monthly newsletter. AIM Canadian Premier Fund portfolio manager Richard Nield said buy Breakwater in The Globe on Oct. 11 when it was trading at $3.33.
It must have hurt to follow that advice. An investment of $1,000 on Oct. 11 is now worth $495.49. Mr. Nield said he expected strong growth in output over the next two years.
Canaccord Capital recommended buying Breakwater in The Globe on July 18 when it was trading at $3.43. CIBC analyst Cliff Hale-Sanders and Terry Tsui recommended buying Breakwater in The Globe on Oct. 27, 2006, when it was trading at $1.49.
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NP says Breakwater, Lundin hate that zincing feeling
2007-11-23 09:01 ET - In the News
Also In the News (C-LUN) Lundin Mining Corp
The National Post reports in its Friday, Nov. 23, edition that a crumbling zinc market is bad news for Breakwater Resources.
The Post's Peter Koven writes that Breakwater CEO George Pirie, however, believes the bad time will not last.
Breakwater has been hit hard by the sinking zinc price which has plunged more than 20 per cent in the past 30 days, and 50 per cent this year. Breakwater shares closed at $1.65 Thursday, and are down by more than half since mid-October because of falling prices and operational problems.
"Because zinc is ubiquitous and used everywhere, it's a bit of the 'canary in the gold mine' type of vehicle," says Mr. Pirie. "It'll be the first to suffer the consequences of a nervous market." Zinc prices are falling because the global supply picture is improving. Institutions have forecast surpluses of hundreds of thousands of tons of refined zinc in the next three years.
Lundin Mining vice-chairman Colin Brenner says: "We're going through a bit of a weak period here because there are overlays on oncoming production over the next year or two. But at the end of the day I think zinc prices will strengthen over the next three to four months."
Base metals woes raise questions over world economy
Gloom and doom is hitting Canada's base metal mining companies as they react to the recent plunge in commodity prices, but is it a signal that the global growth story is over or just part of a general stock market correction?
Although Michael Smedley, chief portfolio officer for Canadian General Investments Ltd., is contemplating lightening up on the metal sector, he says when it comes to raising cash it will most likely come from selling financials.
He describes the recent malaise as
"a pause that relates to the entire market working its way through the various financial crises."
As for the metals sector, investors are preoccupied with takeover jousting between BHP Billiton Ltd. and Rio Tinto PLC, the world's two natural resource titans, he said.
"I'm not rebalancing," Mr. Smedley said. "I'm not giving up on Canada as being one of the best resource rich countries in the world."
And exploration is the key.
"My core holdings are producers, but also producers-slash-exploration plays," Mr. Smedley said. He cites FNX Mining Co. Ltd., which has gone from non-producer to a company that is expected to provide almost 20 per cent of Companhia Vale do Rio Doce (CVRD) tonnage for processing in the Sudbury basin, he said.
But the shares of some of Canada's largest publicly traded companies such as Teck Cominco Ltd., Sherritt International Corp., Fording Canadian Coal Trust, Lundin Mining Corp. and Breakwater Resources Ltd. have been in a freefall during the past few weeks.
Base metals prices have slumped as worries grow that the credit crisis will slow global growth. Yesterday, copper prices rose to $2.96 (U.S.) a pound, up 2 cents, after hitting an eight-month low and dropping 20 per cent since the beginning of the month. Likewise, zinc prices have plunged 26 per cent this month and lead is down 15 per cent. Aluminum and nickel were little changed.
"I wouldn't be quick to say to dump these commodities," Frank Holmes, chief investment officer at U.S. Global Investors Inc., told Bloomberg News. "We are dealing with a global economic boom."
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