Mining Speculations

04/16/2004 12:00 am EST


Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

In addition to his focus on high-growth tech stocks, Ian Wyatt also seeks to balance his Growth Report portfolio with a few natural resource holdings. We caution that these are highly speculative positions based in large part on future exploration success. Here are his reviews.

"Argentex Mining (AGXM OTC BB) is a gold and silver company with several prospective properties in Argentina that we believe could hold significant promise for early investors. Argentina is one of the top emerging countries for mineral production and exploration, thanks to a government that encourages foreign investment. Additionally the devaluation of the Argentina's peso since January 2002 to the tune of 70% has made the country more attractive than ever for foreign investors and exploration companies. In fact, we consider Argentina the latest hot spot for gold and silver exploration. Argentex CEO Chris Dyakowski has over 25 years of experience in the resource sector. We believe investors who position themselves in Argentex around $1.50 could reap healthy returns in the coming months, as management moves forward with their exploration plan. We are initiating coverage with a buy rating and a 12-month target of $2.50 based on the speculative appeal of junior mining companies at a time when gold and silver are trading at unusually high prices.

"We are also adding Northern Orion Resources (NTO ASE) to our portfolio. Northern Orion is an emerging producer of copper and gold in Argentina. Northern Orion is a compelling investment opportunity. Unlike many of the other mining plays, the firm is producing cash from its 12.5% interest in the Alumbrera mine, and should report solid earnings for 2004. While this is exciting in and of itself, the future of Northern Orion will be the Agua Rica project, which will provide significant upside for the company in the coming years. The price of copper has gone through the roof in the past year, and with the price expected to only go higher as a result of increased global demand, we believe Northern Orion will be a major beneficiary. Its dual listing in Canada and on the American Stock Exchange (which became effective on April 8) is also a very positive development. We believe the added exposure and credibility should propel shares higher in the near term as the company aggressively gains exposure to US investors. We are initiating coverage of Northern Orion with a target of $5."

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