One to Watch: Gambling on copper
ALTHOUGH based in Australia, Discovery Metals is principally involved in the development of its Boseto Copper Project in Botswana.
Discovery Metals has yet to generate any revenue from its developing licences but the potential looks interesting. The next few months should see a marked increase in newsflow, including confirmation of recent exploration results to investigate further the extent of the Boseto Reserve.
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Hide AdIt is widely assumed that a trading partner will take a 10 per cent major stake in Discovery, providing much of the funding to develop the Boseto licence. Moreover, drawing in a partner should make it much easier to raise debt financing going forward. It was Mark Twain who said that a mine was a hole in the ground with a liar standing beside it, and while not imputing the executive officers of Discovery Metals, prospective investors must understand the inherent risks involved in any resource company in its development stages.
Copper remains one of the principal building blocks of economic growth and its price has been rising steadily; partly, most recently, as a result of the tragic earthquake in Chile, a major producer.
Nevertheless, if one believes, as I do, that the global economic prospect is essentially underwritten by the ambitions and urgencies of the developing regions such as India, the Pacific Basin and Latin America, the copper market is likely to remain well supported. Investors in a company such as Discovery must recognise that they will be periodically called upon for funds as the project is developed, but for those who are prepared to accept such qualifications, Discovery looks an interesting prospect.
The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.
Chime Communications
209p -6p
Broker says BUY
NUMIS has a "buy" rating and 292p target price on Chime shares following "excellent" results from the group, including a normalised profit before tax of 18.8 million, ahead of the broker's expectations. Numis said: "We see clear scope to upgrade our forecasts as we progress through 2010."
ProStrakan
98p unchanged
Broker says BUY
AHEAD of results next week from the drugs developer, analysts at KBC Peel Hunt have upgraded ProStrakan, noting "the shares have fallen too far". The broker said of its products: "We consider the setbacks for Sancuso are now fully priced in and the market is ignoring the potential upside from Abstral and Cellegesic."