Mining investment potential remains strong

Resources Corner

Mining investment potential isn’t a thing of the past, owing to China’s economic growth targets and ongoing US recovery, according to a leading global fund manager. The belief is supported by ratings agency Standard and Poor’s, who this week maintained BHP’s A credit rating outlook, as well as a steady stream of promising exploration results and funding agreements from junior miners. 

Australia dips its ‘bique in
 
Australia has signed an MOU and announced five research projects, with a total value of $2.4 million, focused on Mozambique. The two countries are formalising a burgeoning minerals alliance. Parliamentary secretary for Foreign Affairs, Richard Marles, says the federal government is working closely with the Government of Mozambique to support its efforts to maximise economic growth from its mineral reserves.
 
Glory days not over yet
 
Australian and UK listed fund manager Henderson Group (ASX:HGG, LON:HGG) says it is wrong to believe there is no good investment potential remaining in the mining sector. CEO Andrew Formica believes a mining recovery will get underway in the next couple of years, with China’s 7.5 per cent 2013 economic growth target and ongoing US economic recovery set to support mining companies, as long as they can remain disciplined in their capital expenditure.
 
Commentary
 
FNN asked Morgan Stanley’s chief economist Gerard Minack if the mining sector is a chance of seeing some upside in 2013:
 
“I think there’s two issues with mining, obviously we had a fantastic boom, and the boom was obviously the product of two things. Firstly, that extreme strength in China for ten years and they rebounded magnificently in 2009. But the second thing was, there was no spare capacity, and of course the mining boom we’re seeing now in Australia and in Latin America and in Canada and South Africa and parts of Asia is all about expanding supply.”

Funding and exploration
 
Gold producer Northern Star Resources Limited (ASX:NST) will make an initial $2 million cash payment to Fortescue Metals Group Limited (ASX:FMG) to acquire a 25 per cent interest in the non-iron ore rights to key tenements surrounding the Paulsen’s mine in Western Australia.
 
Blackthorn Resources Limited (ASX:BTR) reached an agreement with Glencore International regarding an additional JV based financing solution of up to $US80 million, for the commissioning of the Perkoa zinc project in Burkina Faso.
 
Golden Gate Petroleum Limited (ASX:GGP) has secured access to up to $7.5 million in funds to progress development of its Permian project in Texas.
 
Mixed week for mining giant
 
Standard & Poor's has affirmed its outlook for BHP Billiton Limited ASX:BHP), keeping the global miners outlook as stable with an A credit rating, citing the company’s strong flexibility to repair its metrics even if trading conditions remain flat.

Also this week, BHP Billton Limited ( ASX:BHP) responded to an ongoing investigation into its major sponsorship deal of the Beijing Olympics, saying it has nothing to fear from the bribery investigation, and all of its activities complied with applicable laws.

Digging deep for profits and development
 
Shares in Kidman Resources Limited (ASX:KDR) jumped after the exploration company revealed drilling results from its Home of Bullion project in the Northern Territory, identifying the best ever intersection from a new massive sulphide zone.
 
Mineral explorer Sandfire Resources (ASX:SFR) delivered a maiden interim profit of $79.1 million, thanks to a production ramp up at its flagship De Grussa copper mine. 

Charters Towers focused goldfield developer Citigold Corporation Limited ( ASX:CTO) has reported a first half net loss of $3.34 million following a decrease in production, saying its energies have been focused on project development.
 
US focused oil and gas developer Golden Gate Petroleum Limited (ASX:GGP) has secured access to up to $7.5 million in funds to progress development of its Permian project in Texas.
 

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