Questor share tips: Antofagastas cash makes it a copper-bottomed play

Garry White 600PM GMT 09 March 2010

There are stability concerns about a improvement in the copper price, but Questor feels these worries are overdone. The dollar has been strengthening, buoyed by concerns over the eurozone, and this is disastrous for commodity prices.

However, the fundamentals of the copper marketplace sojourn tight. It is approaching to be in necessity in 2011 as the tellurian mercantile liberation gathers pace. Copper faces supply side pressures since the retrogression has caused a miss of investment in new mines. When direct rises a supply break is roughly certain.

Antofagasta might be on the M&A route Investors in Venture should opt to fool around a watchful diversion Lonrho is a suppositional fool around on African growth Wood will good as oil firms go on to deposit SSEs energy is geared to income seekers Broker tips buy Dominos Pizza, sell Scottish & Southern Energy

Because of the clever change sheet, Antofagasta has been equates to to go on to deposit via the downturn. The organisation expects to enlarge prolongation over the subsequent dual years by roughly 60pc from 442,500 tonnes in 2009 to some-more than 700,000 tonnes in 2011.

The association continues to have estimable money pot on the change sheet, call an additional special division payment. Some analysts had been awaiting a higher special money lapse and this is probably the reason the shares ticked reduce yesterday.

The last division for the year was 6 cents (4p), bringing the sum typical placement to 9.4 cents. However, there is additionally a special division remuneration of fourteen cents a share, bringing the sum distributed for the year to 23.4 cents. The last twenty cents will be paid on Jun 10.

Some analysts design the group"s money to climb to $2.6bn by the finish of this year. This implies that subsequent year"s special division remuneration could be almost higher.

This equates to that the organisation paid out of 35pc of net gain for 2009. Even after the division remuneration is done the organisation will have a net money on all sides of about $1.4bn and there is a intensity for serve special division payments going forward. However, since this year"s special division was reduce than expected, there is conjecture the organisation might be out on the merger trail.

The new trembler in Chile had minimal stroke on the group"s operations. At the Los Pelambres cave there was a energy cut for twenty-four hours, but prolongation was behind to normal inside of 72 hours. There was a little stroke on the enlargement plans at the site, as a substation that supposing physical phenomenon to the area was damaged.

The enlargement at the Esperanza projects, that is approaching to come on tide in 2011, will additionally move bullion prolongation in to the company. The organisation is targeting 270,000 ounces of bullion prolongation per year from 2011.

The shares were initial endorsed as a buy on Dec thirteen at 915p and the shares are 8pc forward compared with a marketplace up 6pc. The shares are trade on a Dec 2010 gain of 12.5 times, descending to only 8.1 in 2011.

The organisation generates a estimable volume of money and the medium-term opinion for the copper industry is bullish. The position stays buy.