COLOSSUS MINERALS
(T-CSI)
MINERA ANDES
(T-MAI)
FORTUNA SILVER
(V-FVI)
Canaccord’s mining guys got together in the Junior Min-
ing Weekly issue and in a special issue called “What a Dif-
ference a Year Makes” (Amen brother!) they take a look at
the junior mining sector and as people are prone to do this
time of year, come up with their eight picks for the coming
year.
Some of our mining guys have been picking stocks red-
hot and while we are probably undergoing a gold correc-
tion here for a couple of weeks anyway (by our guess) it’s
always intriguing to look at their nominees as plays for the
coming year.
Colossus Minerals (CSI) which owns the Serra Pelada pro-
ject, an extremely high-grade gold/platinum/palladium pro-
ject in northern Brazil is the first selection, followed by
Copper Mountain (CUM) (given a $3.00 target), Detour Gold
(DGC), owner of the large project in the Abitibi Greenstone
Belt has a $22.50 target and Exeter Resources (XRC) in North-
ern Chile with their Caspiche gold/cooper/porphyry project
is given a target of $8.80.
Meanwhile, Minera Andes (MAI) is a top pick by Wendell
Zerb looking for $1.55 down the road and Premier Gold Mines
(PG) is given a $5.20 target as more than a few suspect the
company will be consolidated by Goldcorp in which they
have several joint ventures.
Then we get to Hathor Exploration (HAT) which some sug-
gest is the best uranium discovery in Canada in recent
years and then UR-Energy (URE) with its Lost Creek project
in Wyoming which has a target of $1.50. Hathor’s target is
$4.50. But those last two names have a wee bit of a prob-
lem. Just what do you think uranium prices are going to do
next folks?
There seems to be a majority out there that figure over
time, supply of uranium will decrease as all those spent
Russian weapons will run out and then uranium will have
quite a shortage. That view however, is not universal. For
instance, Edward Sterck, who follows uranium for Bank of
Montreal is now suggesting that the uranium market is
forecast to enter a time of over-supply.
He writes, “Having conducted a detailed supply/demand
and cost analysis, BMO Research estimates that the ura-
nium market is about to enter a period of over-supply...and
views the uranium space more cautiously than previously
and is downgrading spot uranium share price forecast,
which impact the valuations and target prices of stocks
under coverage.”
Sterck continues, “Supply from outside the West is
proving more price elastic than previously forecast:
The high uranium prices of 2006/2007 have stimulated
a supply-side response with a greater amount of supply
coming on at a lower marginal cost.”
BMO is now lowering their 2010 spot price to $45.00 a
pound from $55.00 a pound and the long-term price fore-
cast to $50.00 a pound, from $60.00 a pound.
Because of that, BMO is downgrading Cameco to mar-
ket-performance with a reduced target of $33.50 and re-
ducing the targets of Denison to $1.35 and Paladin to
$3.80. So it’s a big question mark. We know that there’s
two commodities that have not done well in the last year
at all. Natural gas that looks like it’s going to be down and
out for some time and uranium that stirring up quite a de-
bate.
Needless to say, you have to be a believer that uranium
prices can get somewhere higher than they currently are
because very few make any money at this level, except for
the very rich producers.
There you go...the bulls on uranium versus the bears
and one of them might be right!
For sure, holding uranium stocks over the last year has
just been an attempt at hitting ones head against the wall.
If you are looking for something hopeful, there’s currently
52 nuclear plants being built around the world at this time,
an increase of about 12%. Sooner or later, all those new
plants are going to need to sign up secure supplies. But
will there still be too much supply around?
Meanwhile, whether you are bullish or bearish on ura-
nium, Cameco, the monster uranium player has just raised
over $800 million selling its interest in Centerra. Sooner
or later, we suspect that Cameco is going to make a pur-
chase in the uranium sector, don’t you? I wonder which
one?
Disclosure: Colossus Minerals, Copper Mountain Mining, Detour Gold, Exeter Resources, Minera Andes, Premier Gold Mines, Hathor
Exploration and UR-Energy: Canaccord Capital covers these stocks and has a Speculative Buy rating on them. (Speculative buy: Stocks
bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in the stock may result in material
loss.) Cameco Corporation: Canaccord Capital covers this stock and has a Hold rating on it. (Hold: The stock is expected to generate risk-
adjusted returns of 0-10% during the next 12 months.) Paladin Energy: Canaccord Capital covers this stock and has a Buy rating on it. (Buy:
The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.)
Canaccord has recently participated in financings for Colossus Minerals and Hathor Exploration.
Canaccord has recently led a financing for Exeter Resources.