Barry FitzGerald: ‘Rocks and Stocks’… Morgans tips ahead of Noosa Mining & Exploration
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One of the biggest annual mass migrations of junior mining and exploration company CEOs to warmer climes is about to take place.
They are off to the Noosa Mining & Exploration Investor Conference where delegate registrations are said to top 1000.
About 65 CEOs will give rapid-fire presentations over two and half days (July 17-19) and if they are so inclined, they can stay for a while to take in the following “Noosa Alive’’ festival, a sort of Dark Mofo without the darkness for grown up affluent types.
Stockbroker and wealth adviser Morgans Financial is one of the sponsors and has produced a handy “Rocks and Stocks’’ form guide to the mass gathering.
Before listing its recommendations with target prices well ahead of current market prices, Morgans analysts made the point that market interest in the juniors is depressed despite the fact the big miners are reaping the cash flow rewards of a production boom.
“History shows that the best time to buy the juniors is when no one’s shopping. Overlooked companies with real prospects will in many cases deliver capital upside measured in multiples of their current value,’’ the analysts said.
“Juniors with real prospects still command real interest.
“This can be seen in an active private equity segment, increasing producer/junior joint venture activity (by the likes of Fortescue, OZ Minerals, South32 and Sandfire), increasing direct investment in juniors (like BHP and Newcrest investing in SolGold), and the significant premiums achieved for the acquisition of development/strategic exploration assets (like OZ’s 115 per cent premium takeover of Avanco and Sandfire’s 45 per cent premium bid for MOD Resources).
The list of companies attending is too long for the hard working analyst team to formally cover them all.
But they did come up with a list of 10 with “add’’ or “spec” buy recommendations across oil and gas, coal, nickel, uranium, copper-gold, mineral sands, power generation and drilling services.
The list is absent the current boom spaces of iron ore and gold, which is not a bad thing given that share prices in those sectors could quickly become top heavy on any signs of commodity price weakness.
So here’s the Morgans list:
Central Petroleum (ASX:CTP): Morgans has a 21c price target on the emerging east coast gas producer compared with its market price on Wednesday of 14c.
Cooper Energy (ASX:COE): First gas from its Sole development in Bass Strait is close at hand. Target price is 59c, market price 55c.
Otto Energy (ASX:OEL): An oil and gas producer in the Gulf of Mexico. Target price is 15c, market price 5.3c.
Metro Mining (ASX:MMI): Suffering from concerns about bauxite prices and a minor production downgrade, but Morgans has a price target of 26c on the stock compared with its 9.7c share price.
Panoramic Resources (ASX:PAN): It has restarted its Savannah nickel mine in WA, making it one for the true believers in the battery thematic. Target price 70c, market price 29c.
Vimy Resources (ASX:VMY): Talking about thematics, uranium’s role in providing part of the solution to global emissions is not going away. Advanced development project in WA, and fresh exploration upside in the NT. Target price 38c, market price 5.5c.
Stavely Minerals (ASX:SVY): Hunting for a big copper-gold discovery in western Victoria. Target price 28c, market price 23c.
Strandline Resources (ASX:STA): Emerging mineral sands developer in Tanzania and WA. Target price 38c, market price 14c.
Mitchell Services (ASX:MSV): Morgans said it was approaching material surplus cash flow generation. Target price 9c, market price 5.9c.
Genex Power (ASX:GNX): Completion of financing for a solar project in NSW and a pumped hydro project in Queensland will be a catalyst for a significant re-rating. Target price 35c, market price 24.5c.