Thursday, September 6, 2007

Industrial Metals & Minerals

Recently while reviewing some stocks in the Metals & Minerals sector a couple companies jumped out that are not part of the cast of usual household names. Below is a list of stocks in the Metals & Mineral group. When comparing Cashflow-to-Debt ratios and Cash-to-Debt ratios it became clear why some stocks trade at a premium and others trade in the doldrums. The list of stocks below is ranked by price as percentage of their 30day highs.

Besides some of the coal stocks starting to move closer to the top of the list, two companies that stick out are Lundin Mining Corp.(LMC) and Teck Cominco Limited (TCK). Both started trading in the middle of 2006 and have low debt levels compared to cashflow and cash levels. This does not necessarily mean they are great companies, but it does mean they do not have a leveraged business and should be able to survive tough times without outside financing.

Teck Cominco Limited (TCK)

Teck Cominco Limited operates as a diversified mining company in Canada and internationally. Its activities include exploration, development, processing, smelting, and refining of various natural resources. The company produces zinc, copper, and metallurgical coal, as well as precious metals, lead, molybdenum, electrical power, fertilizers, and various specialty metals. It also owns an interest in certain oil sands leases, and has a partnership interest in an oil sands development project. The company has interests in The Red Dog mine located in northwest Alaska; Highland Valley Copper mine located in south central British Columbia; Antamina mine located in Peru; and The Pend Oreille mine located in northeastern Washington. It also has interests in ELK Valley Coal partnership; and Pogo mine in Alaska; as well as has interests in the Fort Hills Energy Limited partnership, which is developing the oil sands projects in northern Alberta. The company has its operations in Canada, the United States, Latin America, Asia, Europe, and Australia. Teck Cominco Limited was founded in 1906 and is headquartered in Vancouver, Canada.

Lundin Mining Corp.(LMC)

Lundin Mining Corporation, through its subsidiaries, engages in the exploration, extraction, and processing of base metal, silver and gold mining, and mineral exploration properties in Sweden, Ireland, Portugal, Spain, Eritrea, Iran, and Canada. The company produces zinc, lead, and silver at the Zinkgruvan Mine located in the southwest of Stockholm, Sweden. It also owns the Galmoy Mine in Country Kilkenny, Ireland; the Neves-Corvo copper mine in Portugal; the Aljustrel mining license and operating permits and the assets of the Aljustrel mine; and Storliden zinc/copper mine and the Norrliden copper/zinc/silver deposit located in Sweden. In addition, the company has interests in the exploration permits located in Norrbotten County in northern Sweden covering an area of approximately 97,000 hectares; 20% back-in right with respect to certain claims in NP Project in northern Finland; 38% interest in the Mehdiabad zinc-lead deposit in Iran; and 100% of the Akie zinc-lead property in northeastern British Columbia. Further, the company has an option to acquire 100% interests in Rakkurijarvi discovery and other prospects in the Norrbotten district of Sweden. Lundin Mining has strategic partnerships with Sunridge Gold Corporation, Sanu Resources, Ltd., and Mantle Resources, Ltd. The company was incorporated in 1994 under the name South Atlantic Diamonds Corp. and changed its name to South Atlantic Resources, Ltd. in 1996. Further, it changed its name to South Atlantic Ventures, Ltd. in 2002 and to Lundin Mining Corporation in 2004. The company is headquartered in Vancouver, Canada.


The economic number of the week is out tomorrow at 8:30am eastern time. The Non-Farm payroll report is actually two separate reports which are the results of two separate surveys. The household survey is a survey of roughly 60,000 households. This survey produces the unemployment rate. The establishment survey is a survey of 375,000 businesses. This survey produces the nonfarm payrolls, average workweek, and average hourly earnings figures, to name a few. Both surveys cover the payroll period which includes the 12th of each month.

The reports both measure employment levels, just from different angles. Due to the vastly different size of the survey samples (the establishment survey not only surveys more businesses, but each business employs many individuals), the measures of employment may differ markedly from month to month. The household survey is used only for the unemployment measure - the market focusses primarily on the more comprehensive establishment survey. Together, these two surveys make up the employment report, the most timely and broad indicator of economic activity released each month.

This number will set the tone for the day and should continue into next week. The S&P 500 is above its 200day moving average but is flirting with trying to establish a strong close above its 50day moving average. This 1476.76 area has been like a magnet as of late. Tomorrow's economic number should establish this area as either support or resistance, then it is on to worrying about warnings season and what the Federal Reserve will do later in the month.

S&P 500 Index

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