Dear VMS Ventures and North American Nickel followers,
Here is last week’s Dundee Capital Markets report. The title is “TOP 10 Reasons: the Next Up-Cycle for Base Metals has Begun” which might suggest why I felt you should see it.
The summary is below, as is the link to the full piece.
Best regards,
Rick Mark
CEO
VMS Ventures Inc.
VMS owns 27.5% of NAN
DUNDEE CAPITAL MARKETS Joseph Gallucci, MBA
Base Metals and Bulk Commodities David Charles, CFA
September 4, 2013 Patrick Racicot, CFA
Iain W. Farmer, B.Eng
TOP 10 Reasons the Next Up-Cycle for Base Metals has Begun
1) Regional PMI indices all turning upwards: including China, US, Europe.
2) Relative Performance of TSX Metals vs. TSX (and copper price) at cyclical bottom.
3) Chinese economic growth and commodity super cycle expectations have collapsed.
4) Over 20 new Mining CEO's are focused on optimizing current mine performance and deferring or selling projects.
5) Over $70 billion in write downs taken in sector in the past 12 months.
6) Copper market saw its first supply deficit in 7 months in May.
7) Commodity prices appear to be bottoming (copper, coking coal, iron ore, gold).
8) Sector trading at trough multiples, room to catch up.
9) Insiders and institutions now buying or adding to positions.
10) Sector capitulated in June, now reverting to mean.
Time for the Global Miners to Play Catch Up!
New up-Cycle rally underway: Trough now behind us
Since the S&P TSX Diversified Metals & Mining (M+M) sub-index bottomed at the end of June at 662.2, it has rallied 22.3% in two months. As we have previously highlighted, in each of the last two years the sector has bottomed in Q2/Q3 and then rallied into January of the subsequent year. In 2011 this seasonal rally saw the sub-index rise 67.4% in 3 months, and in 2012 the sub-index rallied 34.3% in 5 months. We believe that the current rally is not just seasonal but is finally the cyclical rally that marks the beginning the next up-cycle in the Metals and Mining sector.
New Target Prices: Room for sector multiples to play catch-up
We present new target prices (TP) for our DCM universe based on our view that the mining sector even with a history of poor capital allocation, deserves multiples higher than the trough multiples it is currently trading at. We define the new multiples by looking at the 2014 ranges for the sectors in the TSX and by looking at historical multiples for the sector (including a period prior to the commodity super cycle).
- Our preferred equities include First Quantum Minerals, Lundin Mining (Top Pick) and Capstone Mining in the copper group and Teck Resources in the diversified (coal) group and Trevali Mining as a mine developer/zinc company.
- We are also upgrading Thompson Creek Mining to NEUTRAL from SELL (as it now trades as a gold producer with Mt Milligan entering production).
- While we are more sanguine for the producers, it may be a while before equity markets are again open to the junior developers, so we continue to prefer those which have strategic partners/alliances including NGEX Resources and Reservoir Minerals.
IN THIS REPORT:
This report presents the changes to our ratings and target prices for our DCM coverage universe, outlines the logic for increased sector multiples, comments on some selected companies (FM, LUN, HBM, TCK.B, TCM, CUM, TKO, CS and CUM) and finally highlights our top 10 reasons why we believe the sector has reached a global bottom.
Full Report - http://research.dundeecapitalmarkets.com/en/~/media/Dcm/Publications/CoverageListResearch/2013/September/B/BaseMetals090413.ashx
***THIS REPORT IS PRICED AS OF FRIDAY AUGUST 30TH, 2013**
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VMS Ventures Inc.
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EXPLORATION STAGE |
CODE : VMS.V |
ISIN : CA91828R1091 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
VMS Ventures is a zinc and gold exploration company based in Canada. VMS Ventures holds various exploration projects in Canada. Its main exploration properties are REED LAKE, LYNN LAKE GABBROS, PUELLA BAY and COVER in Canada. VMS Ventures is listed in Canada, in Germany and in United States of America. Its market capitalisation is CA$ 13.9 millions as of today (US$ 10.1 millions, € 9.3 millions). Its stock quote reached its highest recent level on December 31, 2007 at CA$ 1.76, and its lowest recent point on January 22, 2016 at CA$ 0.05. VMS Ventures has 146 480 000 shares outstanding. |