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

Pescod Talks Zinc And More

Stocks boosted by tech, energy

Rising energy prices and renewed interest in technology stocks propelled North American stocks higher Monday, shaking off some early doldrums and trumping continued credit-market worries.

The Toronto Stock Exchange's S&P/TSX composite index rose 141.58 points, or 1.1 per cent, to 13,130.92, closing above the 13,000 mark for the first time in a week. In New York, the Dow Jones industrial average moved into positive territory after a down morning to close up 57.88 points, or 0.5 per cent, at 12,240.01. The S&P 500 gained 7.84 points, or 0.6 per cent, to 1339.13, while the tech-heavy Nasdaq composite rose 15.21 points or 0.7 per cent to 2,320.06.


Technology stocks were the story of the day, as merger buzz drew investors to the sector, which looked ripe for some buying after dropping almost 15 per cent since the beginning of the year. The TSX information technology sub-index gained 2.3 per cent, led by big gains at Celestica (up 5.4 per cent) and Research in Motion (up 5.2 per cent).


Ironically, one of the companies that had helped fuel the interest in techs Monday - Nortel Networks Corp. - actually lost 1.1 per cent on the day. Before the market opened, the Wall Street Journal reported that Nortel and Motorola Inc. were in talks for a possible merger of their wireless infrastructure operations. But the story didn't develop further during the day, and some analysts suggested that such a deal might not be immediately beneficial to Nortel's stock price, as it could result in integration costs and possibly further restructuring charges. Motorola rose 2.8 per cent in New York.


Yahoo Inc. also drew interest to the tech sector, as its board rejected Microsoft Corp.'s hostile takeover bid. The move could leave the door open for a proxy battle or bidding war for the online giant, which sparked hopes among investors that a broader round of consolidation in the industry could be afoot.


Energy stocks rose 2 per cent in Toronto, while U.S. energy giant Exxon Mobil Corp. was the biggest contributor to the S&P 500's gains, as crude oil prices jumped $1.87 (U.S.) to $93.64 a barrel in New York. Venezuelan President Hugo Chavez threatened to stop oil shipments to the United States in retaliation for court orders freezing certain assets of the country's state-owned oil company, all part of an ongoing dispute over compensation to U.S. oil companies for the government's nationalization of a major oil project last year. Cold weather in the norhteast and a U.S. refinery outage also contributed to the rising price.


The markets largely shrugged off negative news on the credit front. Insurance giant American International Group Inc. said it may have understated some of its credit losses, raising the likelihood that the company faces further writedowns in the neighbourhood of $5-billion stemming from the U.S. subprime mortgage meltdown. AIG's stock plunged almost 12 per cent, wiping out more than $15-billion in market capitalization, but the market's negative reaction to the news remained largely confined to AIG and a few other insurers.

Copyright 2001 The Globe and Mail