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Mining Share Tips for Coming Year


RichTheNewbie

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Mining is one of those sectors that has been hit by a miture of low commodity prices and a strong dollar.  I know quite a few mining companies stuggled last year and a few went into Admin (African Minerals as an example).

 

Do you think now is a good time to invest into miners and is there any particular commodity in particular?  

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  • 2 weeks later...

No. I'm particularly concerned by the weakness in all commodities although conversely if they go much further (to varying degrees) I think the potential is huge in many of them.

AFPO played a blinder since I lasted tipped it and is double/triple the price already. Market was more generous than I expected though considering the climate so well done to the brave who held even longer.

XTR has continued to perform extremely well operationally but as you say commodities are getting hammered. In their case gold and copper. Gold not doing well but a very slow decline compared to copper's nightmare. This is my biggest concern with this stock which I would otherwise be piling into. Undecided for now and a bit like oil at this exact moment (daily/hourly speaking in oil's case) I'm sitting on my hands.

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Commodity prices will fall lower and so will the miners. I tip watching commodity related companies such as Glencore and BHP Billion for the right long term opportunity. They seem oversold and are at bargin prices at moment and may fall lower over the coming year, so pick your opportunity.

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Yes Glencore is very much oversold, I think when I had a look at the Statement of Financial Position for the half year 2015, I think I saw assets to liabilities ratio of 1.48. The NAV value per share is approx £3.29 after the new stock issuance announced yesterday, currently its trading at £1.27. RSI at 26.6 on the monthly chart. I think this Glencore is good value at moment, if you buy for the long term, now or when it drops further, either way it is a bargin.  

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In South Africa, where mining is one of our primary concerns, the following is happening....

 

Impala Platinum [JSE:IMP], the world’s second-largest producer of the metal, plans to cut as many as 1 600 jobs at its Rustenburg operations as prices have fallen to six-year lows...

 

Platinum producers in South Africa, which holds more than 70% of global reserves, are cutting staff, delaying capital expenditure and closing operations as prices plunged to levels near the lowest since 2009. Earnings were also hit by a five-month strike last year.

Lonmin [JSE:LON], the third-largest producer, is planning as many as 6 000 job cuts, while Anglo American Platinum [JSE:AMS], the largest, said in June as many as 420 managerial and supervisory positions may be eliminated.....

 

Atlatsa Resources Corporation plans to trim its workforce at the Bokoni mine in northern Limpopo province by 500, or 10% of all employees, spokespersorson Prudence Lebina said by phone on Thursday. Amplats is Atlatsa’s partner at Bokoni...

 

Iron ore prices have fallen 19% this year and are 70% below a 2011 high of $191.70 a ton because of rising low-cost output and weaker growth in China, the biggest buyer. The price of coal at Richards Bay has declined 15% as the Asian nation, which is the largest user of the fuel, turns to cleaner alternatives....

 

Glencore [JSE:GLN], the worst performer on the UK’s benchmark stock index this year, sold $2.5bn of new shares to pay down debt to help protect its credit rating amid a rout in commodities prices.

Glencore sold the stock at 125 pence a share, a 2.4% discount to the closing price on Tuesday, the Baar, Switzerland- based commodities trader and miner said in a statement. Chief executive officer Ivan Glasenbergpaid about $210m to buy shares in the sale in order to maintain his 8.4% stake, honouring a commitment that he and other senior managers representing 22% of the company wouldn’t dilute their holdings...

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Thanks for the insight , as pointed out in your post, the commodities sector is going through a depressed phase around the globe and it is due to an oversupply of commodities and not enough demand. I personally think this is a temporary situation and these cycles happen throughout history, and it is only a matter of time that everything picks up. The only question is can companies like Glencore and BHP Billion Plc weather the storm and survive the temporary downturn in prices. As you mentioned, Glencore sold additional shares, it also cancelled the dividends, sold some assets, and closed some positions in order to raise 10Bn to pay down it debt. Which is the right thing to do, because the main concern of the market with Glencore is whether it can survive the downturn, with such a high debt level and low margins. If their credit rating goes then that will be the end of Glencore. I personally think I would like to wait a little while longer to see how this situation develops.

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  • 2 weeks later...

GLEN is a bet on copper. If copper struggles to break it's decline then so could/should GLEN. If copper rebounds then GLEN should make you lots from here. You could follow that through and therefore say that a bet on GLEN is a bet on China (though that's slightly less direct).

BHP should be safer longer term and be able to outlast almost everyone but is ultimately at the mercy of commodity prices which are anybody's guess at this moment in time for the future.

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