Today’s session prompted a flurry of broker notes across most market sectors, with comments covering metal, mining and oil stocks sounding particularly upbeat notes as slight shoots of optimism seem to be returning to the market.
Solomon Gold’s (LON:SOLG) news that initial assay results from initial surface sampling on its Fauro Island project in the Solomon Islands were welcomed by Fairfax, which in its ‘Morning View’ said that, while the terrain and remote location are a challenge, the potential for a major discovery looks substantial. “We are highly encouraged by the high grades seen in surface sampling which if backed up by drilling could attract significant interest in the group.”
Fairfax also picked up on the apparent mood change: “The junior market for miners feels as if it is on the turn and looks poised for new gains driven by gold and by new confidence in the global economic outlook driven by China.”
It noted that oil is trading near a month high on the back of improving optimism in the global recovery. The positive revision of the Euro Zone GDP forecast and the increasing confidence in sustainable growth in China is leading to demand optimism, Fairfax added.
Separately, Fairfax commented on Mwana Africa’s (LON:MWA) AGM held today. The company highlighted progress at its Freda Rebecca gold mine in Zimbabwe, where higher grade underground ore should reduce costs to economic levels. New machinery to also raise the production and proportion of this ore processed should help further. “The mine has disappointed us with high costs and it sounds like the situation should improve, “Fairfax said.
Astaire Securities took the opportunity of Ascent Resources’s (LON:AST) latest director appointment to remind its clients that it continues to view the company as an “undervalued opportunity”.
Ascent has appointed former chief executive of Alkane Energy and Premier Oil (LON:PMO) operations manager, Cameron Davies, as a non-executive director. In its ‘Morning View’, Astaire wrote Davies’ industry contacts should prove valuable in progressing Ascent’s portfolio of European oil and gas development and exploration assets.
Fox-Davies Capital published a note in reaction to Circle Oil PLC’s (LON:COP) results for the first half ended 30 June 2010.
In Morocco, gas wells KSR-8 and KSR-9 were brought into production, and in Egypt, drilling continued on the NW Gemsa permit. Revenue from oil and gas sales for the period was up at US$21.3m (H1 2009: US$3.5m) resulting in EBITDA of US$8.5m (H1 2009: Loss US$1.2m)
Fox-Davies commented: “With operations on the right track and proceeding with a renewed pace and cash flow generation rapidly ramping up, the company is demonstrating that its strategy is finally paying off. We continue to believe the stock is very attractively priced at these levels. Financial forecasts and target price are unchanged.” It retains its ‘buy’ stance and 90p price target for Circle Oil.
Daniel Stewart & Co comments on San Leon Energy Plc (LON: SLE) in its ‘Equity Perspectives’ weekly book also reflected the improving mood in the oil and gas sector. It has started coverage of the company with world class assets in Poland, Ireland and Morocco. It carries a ‘buy’ rating on the stock and a 30p/share price target.
Collins Stewart initiated coverage of Latin American precious metal miner Minera IRL (TSX:IRL, LON:MIRL, BVL:MIRL) with a ‘buy’ recommendation and 90 percent price target, offering a near 40 percent upside to current levels.
The broker reckons the shares are due for re-rating as development projects move towards feasibility.
The release of the Don Nicolas feasibility and Ollachea pre-feasibility studies (from the Argentine and Peruvian projects, respectively) is anticipated in the second quarter of 2011. “We expect the positive outcomes of these studies to act as a catalyst for the re-rating of the stock in the market and to provide positive momentum to the Company’s share price,” Collins Stewart said.