It has been something of mixed-bag today as far as analyst research is concerned, with a number of different companies being discussed.
Kenmare Resources (LON:KMR) is set to benefit from strong titanium prices, according to research by Dublin based broker Davy.
This morning Davy analyst Job Langbroek highlighted Rio Tinto’s (LON:RIO, ASX:RIO, NYSE:RIO) positive titanium production numbers and that they reflect a much improved demand profile for the metal.
“Rio Tinto's Q4 operational data and management comment indicate a business running at full capacity where possible to reap the benefits of strong commodity pricing,” Langbroek said in a note to clients.
“It ties in with market intelligence generally, which indicates strong demand for titanium dioxide feed-stocks across the board.
“This in turn is stoking a much stronger pricing regime for producers in the current year for titanium minerals.”
The analyst emphasised that the Rio numbers support his positive view on the industry in general and Kenmare in particular.
Langbroek recently upgraded his valuation for Kenmare to 45p per share.
Range Resources (ASX:RRS, LON:RRL) will transform into a major player if its Puntland exploration projects prove successful, according to research by specialist City broker Old Park Lane Capital.
This afternoon Barney Gray, analyst at Old Park Lane, published research on Range Resources and its joint venture in the autonomous Puntland region of Somalia.
Yesterday Range, and its partners Africa Oil (TSX-V:AOI) and Lion Energy, announced that it has amended its production sharing agreements (PSAs) for the Dharoor Valley and the Nugaal Valley exploration areas.
The amendments will allow Range to spud its first exploration well before 27 July 2011.
“This is very good news for Range as it implies that full mobilisation is likely in Q2, providing the company with exposure to multi-billion barrel upside potential,” Gray said in a note to clients.
He adds: “In November 2010 we increased our risk parameters to reflect the longer lead times for mobilisation in Puntland.”
“However, with the extension of the PSAs and renewed visibility on mobilisation ahead of a July spud, we are confident that success in Puntland will transform Range into a major player in the E&P sector.”
Fairfax Securities responded to today’s update from Medusa Mining’s (LON:MML, TSX:MLL, ASX:MML) reporting the latest drilling results from the Co-O gold mine in the Philippines, returning stronger grades that the broker said it was “accustomed to”.
Medusa reported that the Royal Vein set continues to be delineated by drilling and development along the northern side of the Co-O Mine resource model, while drilling of the North Tinago Veins has continued to return “encouraging” drill hole intersections and surface delineation is continuing.
Drilling highlights included intersections of 1 metre grading 76.51 grammes per tonne (g/t) gold, 1 metre at 69.90 g/t gold, 1 metre at 16.70 g/t gold, 1.85 metres grading 12.77 g/t gold, 2.75 metres grading 50.38 g/t gold, 1.6 metres grading 12.25 g/t gold and 1.2 metres grading 48.72 g/t gold.
Fairfax has upgraded its valuation of Medusa to 541 pence per share following an upgrade in its gold price forecast, which represents a large premium to the current share price of 471 pence.
The broker has retained its “buy” recommendation for Medusa.
In January 2010, the stock was trading at below 200 pence.
According to the broker’s assumption, Medusa will expand its production to 200,000 ounces per annum (ozpa) in 2014 with production at 125,000 oz next year and the following year. Fairfax assumed cash costs of US$210/oz for the expanded operation and capital cost of US$86 million for the expansion.
Calling Medusa an “established dividend paying gold producer”, Fairfax applied a 75% premium to the net present value (NPV) of the Co-O mine, looking to raise the premium as details on the expansion plans firm up.
The broker also included US$52 million for exploration, year end cash and bullion holdings that total US$43 million.
“Cash generation from Co-O should be more than ample to fund the expansion programme,” said Fairfax.
In conclusion, the broker said that the latest round of drilling re-affirmed the quality of Co-O.
“The ongoing success we feel will lead to extending the mine life currently valued to 2021, and supporting the enlarged 200,000 ozpa operation.
“Co-O is a rare and high quality asset that is now well established with management demonstrating a very successful cash generating operation.
“We see considerable upside to come from the delineation of further resources at and around Co-O as well as other exciting exploration targets that sit within the company’s highly prospective exploration tenements,” said Fairfax.