BWR+ Hudbay= Top Picks

UBS has a "neutral" rating on Inmet with a share price target of $86 (Canadian). Among the copper and zinc producers, it rates HudBay Minerals Inc. and Breakwater Resources Ltd. as "top picks." Both are projected to have cash balances in excess of 30 per cent of their current market capitalization by the end of 2008, UBS said.

Inmet profit expected to dip

RTGAM



Here's Allan Robinson's At The Bell which you'll find in tomorrow's newspaper:

The share price of Inmet Mining Corp. has slumped as investors worry about the prospects of a global slowdown, although base metal prices remain healthy and cash balances in the sector continue to build.
Inmet, which mines copper, zinc and gold, is scheduled to release its fourth-quarter results today.

Analysts forecast that it earned $1.92 a share, down from $2.02 a year earlier, according to Thomson First Call. The company's 2007 profit is estimated at $9.23 a share.

Inmet's shares closed yesterday at $66.29 on the S&P/TSX. Its market capitalization is $3.25-billion and at last report it had $815-million in cash, or $16.88 a share.

What to keep an eye on

Inmet's results are expected to be adversely affected by the strong Canadian dollar and a steep drop in the price of zinc, which traded yesterday at $1.11 (U.S.) a pound, down from $1.40 in October.

"Beyond the financial results, analysts will continue to focus on the ramp-up schedule for the Cayeli mill expansion [in Turkey] and the status of construction at Cobre Las Cruces [in Spain]," said UBS Securities Canada Inc. analyst Tony Lesiak.

Inmet and its partners are also reviewing the Petaquilla copper project in Panama after the latest budget forecast the capital cost had doubled to $3.5-billion. Inmet mines gold at the Troilus mine in Quebec and owns 18 per cent of the Ok Tedi copper mine in Papua New Guinea, and operates the Pyhasalmi copper and zinc mine in Finland.

UBS has a "neutral" rating on Inmet with a share price target of $86 (Canadian). Among the copper and zinc producers, it rates HudBay Minerals Inc. and Breakwater Resources Ltd. as "top picks." Both are projected to have cash balances in excess of 30 per cent of their current market capitalization by the end of 2008, UBS said.

The average share price target among 12 of the 14 analysts following Inmet is $90.89 a share, according to Bloomberg.

The big picture

World demand for metals remains strong and that is resulting in high metal prices, which are needed to justify new projects, said Martin Murenbeeld, chief economist for Dundee Wealth Management Inc.

"Accordingly, central banks run serious risks by tightening monetary policy in hopes of suppressing the rise in commodity prices," he said.



Copyright 2001 The Globe and Mail