Value Microcaps Motherboard

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FYI: Copper downgrade abstract by Prudential. Again analyst could be wrong again.

Prudential Equity Group
1 New York Plaza
New York, N.Y. 10292

WE ARE REDUCING OUR COPPER-INDUSTRY rating to Unfavorable from Neutral.

We are lowering our demand growth estimates for copper to a decline of 0.5% in 2006 down from growth of 4%, and to growth of 2% in 2007 down from growth of 4%.

We expect the adverse impact of substitution to be felt principally in 2007 and 2008 with a one or two year time lag from the $3 per pound mid-April 2006 copper price. We believe the adverse substitution [or economization in the form of thinner wall tubing and, lighter gauge wires] occurring today involves reactions to the $1.50 per pound price run-up one year ago. Other factors are specific changes in China to higher refined output and higher copper exports.

While we previously raised our 2006 copper price forecast to $2.25 per pound from $2.00 to reflect the first-quarter actual average and April rally, we are lowering our 2007 price estimate to $1.25 per pound from $1.75, and lowering our 2008 price to $1.25 from $1.50.

We are cutting our ratings on Phelps Dodge, Freeport-McMoRan Copper and Gold and Antofagasta PLC each to Underweight from Neutral Weight.

We are lowering our earnings-per-share estimate for Phelps Dodge to $5.10 from $8.80 for 2007, to $4.69 from $6.78 for 2008, to $4.57 from $4.70 for 2009, and to $4.34 from $4.47 for 2010. We are maintaining our EPS estimate for 2006 at $8.85.

We are lowering our EPS estimate for Antofagasta to 92 cents from $2.84 for 2007 and to $1.48 from $1.97 for 2008. We are maintaining our earning estimate for 2006 at $4.19.

We are lowering our EPS estimate for Freeport-McMoRan Copper & Gold to $1.65 from $3.20 for 2007, to $2.45 from $3.45 for 2008, to $1.50 from $1.54 for 2009 and to $1.93 from $1.97 for 2010. We are maintaining our earning estimate for 2006 at $4.31.