Yamana Gold's improved outlook prompts upgrade to buy from neutral

Thursday, January 21, 2010

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Yamana Gold's improved outlook prompts upgrade to buy from neutral

David Pett, Financial Post

New and improved forecasts for gold, silver and copper will bolster upside in Yamana Gold Inc. shares over the next year, says Dundee Securities analyst Ron Stewart.

Mr. Stewart upgraded Yamana to "buy" from "neutral" this week, raising his price target on the miner 50¢ to $14.50.

"We recommend investors consider YRI as a relatively stable and liquid precious metal equity based on the current outlook," the analyst said.

The update comes in the wake of Dundee's revised metals forecast that now anticipates gold bullion to average US$1,200 per ounce in 2010 versus its previous estimate of US$1,065 and US$1,325/oz in 2011, up from US$1,000.

Silver prices are expected to hit US$20 this year and US$22 in 2011, up from prior forecasts of US$17.50 and US$16.50, while copper price expectations increased to US$3.25 per pound from US$3 in 2010 and to US$3 from US$2.75 in 2011.

Mr. Stewart also raised his recommendation on Goldcorp Inc. to "buy" from "neutral," and increased his price target to $50 from $49.

"Given the increase in our valuation and the recent dip in the share price, we now consider [Goldcorp] to be undervalued," Mr. Stewart said.

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YAMANA GOLD INC.

YRI/TSX, $11.74, down 30¢

China Tightens Interest Rates To Curb Lending-TSX Stalls!

The Toronto stock market closed lower Wednesday as word of tighter lending standards in China raised a fresh round of concern about the global economic revival.

The S&P/TSX composite index finished down 84.1 points at 11,679.32.

Investors also took in data showing Canada's annual inflation rate at a relatively tame 1.3 per cent in December.

The better-than-expected reading, along with strength in the U.S. dollar and weak oil and metal prices, depressed the loonie, which fell 1.51 cents (U.S.) to 95.51 cents.

Commodity prices backed off after the chairman of the Chinese Banking Regulatory Commission said that China will slow its massive lending spree and step up monitoring of banks. Liu Mingkang said the total amount of loans will grow by as much as 18 per cent in 2010 year over year, compared with nearly 32 per cent in 2009.

On the TSX, the gold sector fell 2.92 per cent, with the February bullion contract on the Nymex closing down $27.40 to $1,112.60. Barrick Gold declined $1.21 (Canadian) to $39.70 while Goldcorp Inc. fell $1.58 to $40.02.

The base metals sector was down 2.35 per cent as the March copper contract on the Nymex declined nine cents to $3.35 (U.S.) a pound. First Quantum Minerals lost $3.70 (Canadian) to $95.70 and Labrador Iron Mines Holdings fell 39 cents to $6.65.

The Toronto energy sector moved down 0.69 per cent as the February crude contract on the Nymex lost $1.40 (U.S.) to $77.62 a barrel. Imperial Oil lost 48 cents (Canadian) to $40.15.

The TSX Venture Exchange moved 22.17 points lower to 1,590.69.

Indexes also suffered in New York as the Dow Jones industrial average fell 122.28 points to 10,603.15, the Nasdaq composite index declined 29.15 points to 2,291.25 and the S&P 500 index lost 12.19 points to 1,138.04.

The TSX financial sector was down 0.35 per cent., with Sun Life Financial dipping 17 cents to $32.68.

In other Canadian economic news, declines in sales by Canada's aerospace and auto industries held back manufacturing sales gains in November, which logged a slim 0.1 per cent rise to $42.6 billion for the month

Calgary-based Superior Plus Corp. lost 68 cents to $14.15.

The Canadian Press