Table of Contents
Summary chgs - commodity prices, valuation, earning................. 3
Trimming forecasts 2009 & beyond..........................................................................................3
Valuation update - the P/NPV gap has started to close ….. ......................................................4
Investment opportunities ................................................................. 5
Balancing the portfolio - 5 Buys, 5 Sells, 9 Holds......................................................................5
Top picks – Commodity wise ........................................................... 6
6 ways to play the metals and mining names....... ....................................................................6
1) Uranium: Buy PDN vs. Hold ERA ..........................................................................................6
2) Gold: Buy LGL......................................................................................................................6
3) Diversified: Rio/BHP pairs trade …Buy RIO vs. Hold BHP ....................................................7
4) Coal and iron ore: Sell MCC................................................................................................10
5) Industrial metals: Avoid Copper - Sell EQN.........................................................................10
6) Bottom up “value” options: Buy MBN ...............................................................................11
Commodity Views........................................................................... 12
Gold - still has lustre................................................................................................................12
Coal and iron ore - prices sealed (almost), volumes still a risk .. .............................................12
Uranium - in deficit to 2011 due to faltering mine supply .......................................................16
Industrial Metals - copper expensive vs marginal cost of prodn.............................................16
Detailed review of commodity price changes.........................................................................19
Running the numbers … ................................................................. 20
Downgraded ratings for BHP, ILU and OZL; Others unchanged...Error! Bookmark not defined.
Bulks a little weaker than expected and copper set to decline ...............................................21
No currency respite this time around … .................................................................................22
BHP Billiton .............................................................................................................................23
Rio Tinto.................................................................................................................................25
Alumina..................................................................................................................................27
Iluka........................................................................................................................................29
OZ Minerals ............................................................................................................................31
ERA........................................................................................................................................33
Paladin Energy ........................................................................................................................35
Newcrest Mining ....................................................................................................................37
Lihir Gold................................................................................................................................39
SinoGold ................................................................................................................................41
St Barbara ...............................................................................................................................43
Western Areas ........................................................................................................................45
Minara....................................................................................................................................47
Mincor....................................................................................................................................49
Mirabela .................................................................................................................................51
Independence Group ..............................................................................................................53
Equinox ..................................................................................................................................55
Macarthur Coal........................................................................................................................57
Centennial Coal .......................................................................................................................59
Appendices....................................................................................... 61
DB - Metals & Mining valuation table as at 27 Mar 2009........................................................61
DB Commodity Price Deck .....................................................................................................61
CY Commodity price charts – DB new and previous vs Consensus .......................................61
Research Contribution ............................................................................................................67