Tag - Metals

Bway Holding Co. (NYSE: BWY) CEO Ken Roessler said the company is raising prices on its metal packaging products in order to battle the rising cost of metal. The chief executive made the comments during a morning conference call.

“We believe that the challenges currently faced by our metals packaging business are short-term,” Roessler said. “We have announced a sales price increase effective Jan. 1, 2008 and concurrently we are rebalancing our steel supply base.”

Before the opening, Bway reported fourth-quarter net sales of $252.8 million, up 2% from $249 million a year earlier. Analysts expected $248.3 million in net sales.

“We are very encouraged by the results of our plastic packaging business and the positive momentum we generated and we are pleased with the success of our recent Canadian acquisitions and by our free cash flow results,” Roessler said.

Roessler said the downturn in the housing market hurt the firm’s quarterly results.

“The housing market may be out of our control but the way we operate our manufacturing system is not and we are taking appropriate actions,” he said.

The company posted a quarterly loss of $1.4 million, or $0.06 per share, up 59% from a loss of $3.4 million, or $0.17 per share, during the period of 2006. Wall Street projected earnings of $0.13 per share.

For fiscal 2007 ended Sept. 30, Bway swung to a net loss of $3.1 million, or $0.15 per share, from a profit of $8.9 million, or $0.35 per share, during fiscal 2007. The 2007 results included a pre-tax charge of $29.7 million, or $0.83 per share, in public offering-related expenses.

Bway’s fiscal year net sales rose to $959 million, up 4% from $918.5 million during 2006.

The firm said it expects a loss in the range of $0.16 to $0.22 per share in the first quarter 2008, which ends Dec. 30. For fiscal 2008, Bway said it projects earnings in the range of $0.68 to $0.78 per share.

In midday trading, BWY shares are down 6.52%, or $0.64, at $9.17. Over the last 52 weeks, shares have ranged from $7.01 to $15.75.

A.M. Castle & Co. (NYSE: CAS) shares are dipping after the metals and plastics distributor reported its third-quarter sales jumped 16.5% to $350.3 million, below analyst estimates of $364 million and from $300.8 million a year earlier. The firm’s profit for the three months ended Sept. 30 fell to $12.9 million, or $0.57 per share, below Wall Street projections of $0.70 per share and compared with $15.5 million, or $0.82 per share, during the same period of 2006.

“We continue to experience softer demand across our business in general. This trend began during the second half of 2006 and it has continued through 2007 to date," CEO Mike Goldberg said in a statement. “Demand from our aerospace customers has also slowed, which we attribute to a build-up of inventory throughout the whole aerospace supply chain. Even in light of the current slowdown, we believe that our strategy to become the foremost provider of specialty metals and value-added services to targeted industries, including aerospace and energy, has us well-positioned for growth in the longer-term through the economic cycles.”

Goldberg warned that the firm’s fourth quarter is typically the company’s slowest, due to fewer effective shipping days.

“In addition, softer market conditions will likely continue through at least the end of the year,” the chief executive said. “Our focus will continue to be on managing inventory and margins for the balance of 2007 and remaining steadfast on the execution of our long-term strategy.”

The Franklin Park, Ill.-based company’s sales, general and administrative expense during the quarter rose to $34.9 million, from $26.8 million during the prior-year period.

In morning trading, CAS shares are down 10.44%, or $3.27, at $28.06. Over the last 52 weeks, shares have ranged from $22.72 to $38.10.

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.