There were few interesting news from the recent Oxiana's AGM. Other than a golden handcuff resolution to the Chief ($2.2 millions worth of shares to keep him at the company for a further three years..!!), it actually makes me reconsider my intention of selling OXR shares to top up on a smaller PNA (Pan Australian Resource).
The other thing is there is this mid week buy alert on OXR from Fat Prophet. This sort of alert usually push the price up a bit, so maybe a good time to sell and buy it again when they wane off?
Here's the alert:
Mid week Alert Oxiana - Buy around $3.10
In FAT320 we highlighted Oxiana as a potential buying opportunity. In hindsight, we should have issued a buy recommendation as the stock has since moved higher. The reason for our initial caution was that we expected Oxiana's production to decline slightly in 2007 and 2008 before picking up strongly in 2009. We therefore thought members could afford to wait before buying. However, given the persistent strength in metals prices and the ever present prospect of corporate activity, we believe the risk lies in NOT having exposure to Oxiana.
The diversified miner held their Annual General Meeting today and the tone was very upbeat. The company has a number of large production projects in the pipeline and if base and precious metal prices hold up, earnings should be stronger than current market expectations.
Oxiana currently produces copper and zinc and a small amount of gold, however gold and silver production will ramp up significantly in the years ahead. The company also holds a 57 percent stake in listed uranium company Nova Energy via the recent takeover of Agincourt Resources.
The company also indicated an intention to 'consider more strategic corporate activity' in 2007, meaning acquisitions remain a focus. On the other side of the coin, Oxiana remains attractive to potential predators, given its development pipeline and cheap valuation. On consensus earnings estimates, the company trades on a price to earnings ratio of 10 times 2008 earnings, and we believe those earnings are overly pessimistic.
We recommend Oxiana as a buy to all Members around $3.10. While the share price may prove volatile in the short term due to the current sensitivity to copper and zinc prices, for those Members taking a two year plus investment timeframe, we believe Oxiana represents an attractive buying opportunity.
Oxiana will be added to the Fat Prophets Portfolio.
Kind regards, Fat Prophets Investment Heavyweights
1 comment:
this is interesting Mbak Nanine. is this open to non-Australian.
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