Tag - Copper

Coleman Cable, Inc. (Nasdaq:CCIX) CEO Gary Yetman said volatility in the copper market, continued weakness in residential construction and general market uncertainty have hurt the maker of electrical wire and cable’s bottom line. Yetman said the Waukegan, Ill.-based firm is also experiencing inflationary pressures due to higher fuel and PVC costs. The expense pressures have been “somewhat offset” by price increases and cost-saving initiatives, he said. Yetman made the comments during a midday conference call.

For the first quarter of 2008, Coleman said in a statement that it expects revenue between $245 million and $255 million. First-quarter earnings are projected to range from $0.15 to $0.24 per share.

If the market remains calm, the CEO said he anticipates an uptick during the second half of 2008.

“Based on stable market conditions and the benefit from the synergies of our acquisitions and our cost-saving initiatives, we would expect consistent performance in the second quarter of 2008 and would then anticipate an uptick in the second half of the year from the projected benefits of the acquisition of [electrical products maker Woods Industries Inc.],” Yetman said.

After Thursday’s close, Coleman Cable reported fourth-quarter revenue of $254.3 million, up 146% from $103.2 million a year earlier. Wall Street analysts anticipated $227.4 million in revenue.

For the three months ended Dec. 31, Coleman’s net income was $4 million, or $0.24 per share, compared with $1.7 million, or $0.12 per share, during . . .

With a fifth of the world's population and a supercharged economy on pace to surpass Germany and become the world's third largest by the end of 2007, China is booming. Beijing reported that China's $2.8 trillion economy grew just shy of 12% in the second quarter, its fastest clip in 12 years. Investment in public works projects, which account for about 9% of the GDP, shot up an astounding 25.9% in the first half of 2007.

In the 1990s, the country of 1.3 billion began a monumental undertaking: building the tens of thousands of miles of modern roads and highways that today crisscross the nation (rivaling the best in the United States and Europe). Even so, after decades of under-investment, China is still playing catch-up to bring its largely antiquated infrastructure up to snuff. After all, building a global economy requires reliable communications networks, efficient transportation systems, dependable energy sources and clean water.
 
Today, an unprecedented infrastructure build-out is consuming half of the world's cement, 40% of its steel and 20% of its copper. (Approximately 45% of China's copper is used for carrying electrical current and generating power, and the demand for copper is increasing 20% annually.)

Fushi International, Inc. (Nasdaq: FSIN) is China's largest manufacturer of bimetallic wire. Its principal products are copper-clad aluminum (CCA) wires, which are primarily used for telephone lines, cable TV (CATV) systems, network signal transmission cable, electric railway conductor lines, patch cords for electronic components and other applications. Copper clad aluminum is composite wire used as a substitute for pure copper wire. Consisting of a solid aluminum core metallurgically bonded to a copper sleeve, the product takes advantage of the high conductivity of copper and aluminum's lower cost and lighter weight.

In today’s column, four noted advisors – Eric Roseman, Tom Bishop, Curtis Hesler and Nick Jones -- look at small-cap mining operations, covering gold, silver and copper. With the caveat that junior miners are dependent on the success of their developing exploration activities and, as such, offer both high risk and high reward, we offer these four favorite mining plays.

“The stage is being set for the next big rally in gold stocks,” says resources expert Eric Roseman in his Commodity Trend Alert. “I know this current market is depressing, but there is light at the end of this tunnel – bright, screaming radiant light.”

Roseman predicts that over the next several weeks, “one of the most incredible rallies will take hold in the mining sector, as the U.S. dollar comes under renewed downside pressure amid lower short-term interest rates. In hindsight, the credit crisis in the mortgage-backed securities market will be a ‘gift’ for commodity investors.”

As to specific stocks, Roseman has added a new mining buy to his portfolio: Northgate Minerals Corp. (ASE: NXG), which has a market cap of $686 million. He explains, “The stock is trading just above its low and ripe for the plucking. Northgate is a rocket, (it) mines throughout the Americas (gold and copper) and has been on my radar for months. Now is the time to kick into action and buy.”

Copper catches the attention of Tom Bishop, who notes, “Taseko Mines Ltd. (ASE: TGB), with a market cap of $619 million, is going a little bit nuts, and has doubled since I picked this as my ‘stock of the year’ in January.”

The editor of BI Research notes, “I have been asked, 'Is this takeover speculation?'  Well, it is possible in this environment of cash rich mining companies looking to add to reserves the easy way.”

The mining sector in general entails significant risk. Needless to say, low-priced, small-cap mining firms should be viewed as highly speculative. For those comfortable with these risks, a trio of advisors sees upside potential in three mining firms – two focused on gold, and one on copper.

“Caveat emptor,” emphasizes Ivan Martchev in discussing DRDGold Ltd. (Nasdaq: DROOY). In his Vital Resource Investor, he explains, “DRDGold, previously called Durban Rooodeport Deep, is a very high risk special situation. DRD may be South Africa’s fourth-largest gold miner, but the share price hit $0.54 March 14, a level it last saw in late 2000 when the precious metals boom started.”

He notes that the company is a “serial diluter,” pointing out that the company had 105.4 million shares back in 2000 and currently has 370.3 million shares outstanding. As a result, he cautions, “Its results are not an apples-to-oranges comparison.”

“Can DRD make it?” he asks. Says Martchev, “My answer has been yes, even though the brilliant managerial talent DRD possesses is starting to wear me out. Indeed, management needs to come to its senses, which is still a work in progress.”

Martchev emphasizes that this is a highly speculative idea, particular because the stock “doesn’t have an obvious catalyst, other than the fact that a sharp rally in gold can make miracles happen.”

Looking ahead, Martchev states, “If the gold price heads toward $800, the fire under DRD’s shares will be difficult to put out given the high-cost nature of production. Because I’m bullish on the gold price and precious metals in general, I think that this remains a great speculation.”

Usually investing in mining companies means having to choose between a junior company that is working to get a mine up and running, and a more stable, mature miner that is already in production.

With the former, you get more risk, at least until the final permit is received, the mining plan finalized, equipment in place, and ore being processed. Of course, that can often mean greater leverage to metal prices. With the latter, you know what you’re getting in terms of output from the mine, but that typically limits any blue-sky financial upside for investors.

But then there’s Northern Orion Resources Inc. (TSX: NNO, AMEX: NTO), which allows you to put money into both types of play with one stock. The Vancouver-based miner has a minority position in a major gold and copper mine in Argentina that, after a decade of production, is only half-way through its estimated lifespan. And investors also get exposure to the nearby—and soon-to-be-developed—Agua Rica project, which contains copper, gold, and molybdenum.