AI
Wednesday, March 01, 2006 12:57:35 PM
*** Base Metal related post (EZM/MMGG.OB) ***
>>>EZM has more than doubled since July, but should continue higher given the zinc supply gap situation.
With all these other zinc stocks doubling or so recently, that bodes well for MMGG, which is only about 25% up from its 6-year low.<<<
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Beautiful call on MMGG, alohamart.... I owe ya! <vbg>
EuroZinc May Still Have Upside, Aljustrel Key Going Forward
By Michael J. DesLauriers
27 Feb 2006 at 11:20 PM EST
TORONTO (ResourceInvestor.com) -- Back in late May of 2005, your correspondent highlighted EuroZinc Mining [TSX:EZM] as a solid play which we thought should have “some meaningful upside”. At the time we noted that the company’s nickname was ‘E Z Money,’ on account of its symbol and solid fundamentals and indeed, the shares have performed, up from 66c at the time of writing to a close of C$1.64 today, and having recently been as high as C$1.80. While we still like the story and see it moving higher in the future, there is no question that the E Z Money has been made.
The company presented today at the annual BMO Nesbitt Global Resource Conference, and despite that fact that the market won’t see their Q4 numbers until Thursday, had some interesting things to say. Before looking forward however, lets look back.
When RI last visited the situation, the company was really starting to find its feet, although debt levels were much higher and the prospect for bringing on zinc production at both Neves Corvo and Aljustrel (in particular) seemed rather distant and remote. Nevertheless it was our conviction that the people behind EZM were solid and would make good operators in a country that doesn’t exactly gift-wrap things for you.
RI concluded that, “With a continually improving balance sheet and the prospect of new production, it looks to us as though EZM shares have some meaningful upside. The company should also benefit from copper and zinc markets that are likely to remain tight for the foreseeable future.”
Today, not only are copper and zinc prices both at least 50% higher than last May, but the company has accomplished a number of important objectives. At Neves Corvo, EuroZinc produced 197.3 million pounds of copper this year, generated over 125 million of cash flow, retired its original acquisition loan, repaid its price participation loan in eight months and increased productivity by 12% to 14%. If that weren’t enough, the company seems to be running right on schedule with its zinc production and should have annual production in the order of 55 million pounds starting in July, with the potential to double that number within three years.
The company has also come a long way at Aljustrel. Management released an agreement today that wipes out the previous obligation on the project. According to CEO Colin Benner “its [Aljustrel] a much more viable situation for us than it would have been a year and a half, or two years ago.” Benner also pointed out that at current zinc prices the project would generate about $175 million in revenue, without even accounting for its lead and silver component.
Conclusion
EuroZinc made a decidedly perspicacious move on Neves Corvo and the company’s timing couldn’t have been better. Over the last few months, investors who were smart (and read RI) have done extremely well.
The key going forward, as illustrated by the graph above, is clearly going to be Aljustrel. While your correspondent has every faith in management, what may be called for here is a watching brief. Although things would appear to be moving in the right direction it wouldn’t hurt to take some profits off the table until it is more clear that the company can actualize the next phase of its growth.
Aljustrel has great potential but the company’s model may well be stymied by the Portuguese (apparently rest on Sunday isn’t just God’s luxury) in more ways that one.
Shares in EZM closed Monday at C$1.64, unchanged on heavy volume.
http://www.resourceinvestor.com/pebble.asp?relid=17445
>>>EZM has more than doubled since July, but should continue higher given the zinc supply gap situation.
With all these other zinc stocks doubling or so recently, that bodes well for MMGG, which is only about 25% up from its 6-year low.<<<
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Beautiful call on MMGG, alohamart.... I owe ya! <vbg>
EuroZinc May Still Have Upside, Aljustrel Key Going Forward
By Michael J. DesLauriers
27 Feb 2006 at 11:20 PM EST
TORONTO (ResourceInvestor.com) -- Back in late May of 2005, your correspondent highlighted EuroZinc Mining [TSX:EZM] as a solid play which we thought should have “some meaningful upside”. At the time we noted that the company’s nickname was ‘E Z Money,’ on account of its symbol and solid fundamentals and indeed, the shares have performed, up from 66c at the time of writing to a close of C$1.64 today, and having recently been as high as C$1.80. While we still like the story and see it moving higher in the future, there is no question that the E Z Money has been made.
The company presented today at the annual BMO Nesbitt Global Resource Conference, and despite that fact that the market won’t see their Q4 numbers until Thursday, had some interesting things to say. Before looking forward however, lets look back.
When RI last visited the situation, the company was really starting to find its feet, although debt levels were much higher and the prospect for bringing on zinc production at both Neves Corvo and Aljustrel (in particular) seemed rather distant and remote. Nevertheless it was our conviction that the people behind EZM were solid and would make good operators in a country that doesn’t exactly gift-wrap things for you.
RI concluded that, “With a continually improving balance sheet and the prospect of new production, it looks to us as though EZM shares have some meaningful upside. The company should also benefit from copper and zinc markets that are likely to remain tight for the foreseeable future.”
Today, not only are copper and zinc prices both at least 50% higher than last May, but the company has accomplished a number of important objectives. At Neves Corvo, EuroZinc produced 197.3 million pounds of copper this year, generated over 125 million of cash flow, retired its original acquisition loan, repaid its price participation loan in eight months and increased productivity by 12% to 14%. If that weren’t enough, the company seems to be running right on schedule with its zinc production and should have annual production in the order of 55 million pounds starting in July, with the potential to double that number within three years.
The company has also come a long way at Aljustrel. Management released an agreement today that wipes out the previous obligation on the project. According to CEO Colin Benner “its [Aljustrel] a much more viable situation for us than it would have been a year and a half, or two years ago.” Benner also pointed out that at current zinc prices the project would generate about $175 million in revenue, without even accounting for its lead and silver component.
Conclusion
EuroZinc made a decidedly perspicacious move on Neves Corvo and the company’s timing couldn’t have been better. Over the last few months, investors who were smart (and read RI) have done extremely well.
The key going forward, as illustrated by the graph above, is clearly going to be Aljustrel. While your correspondent has every faith in management, what may be called for here is a watching brief. Although things would appear to be moving in the right direction it wouldn’t hurt to take some profits off the table until it is more clear that the company can actualize the next phase of its growth.
Aljustrel has great potential but the company’s model may well be stymied by the Portuguese (apparently rest on Sunday isn’t just God’s luxury) in more ways that one.
Shares in EZM closed Monday at C$1.64, unchanged on heavy volume.
http://www.resourceinvestor.com/pebble.asp?relid=17445
Dan 
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