By SINCLAIRE SOLOMON
INVESTMENT broker Evans and Partners has described Highlands Pacific and Marengo Mining as among exciting “new kids on the block” in the copper sector of the Australian market, The National reports.
Looking beyond the three major pure copper producers in Australia, the broker highlighted opportunities among the junior producers, namely Highlands Pacific, Marengo, Intrepid Mines and Sandfire.
However, it said Indonesia was not as pro-mining as neighbouring Papua New Guinea where the Highlands Pacific and Marengo had large scale porphyry copper projects while Intrepid Mines had its projects in Indonesia.
Sandfire has a higher grade copper project in DeGrussa, Australia, it noted.
“As expected given the long term and capital intensive nature of development, the porphyries are trading at a greater discount to valuation,” Evans and Partners said in a report released last week.
It said that while Highlands Pacific remained its preferred copper producer among the junior sector, Intrepid Mine also featured as an interesting producer, “with a large discount to valuation and strong exploration upside, but with a higher risk profile due to location within a protected forestry region in Indonesia”.
Highlands Pacific has a 18.8% interest in Frieda copper project in Ambunti-Dreikikir electorate, East Sepik, being developed by Xstrata as well as interest in Ramu nickel and cobalt project being developed by RamuNiCo in Usino-Bundi electorate, Madang, and exploration in the Star Mountains of North Fly, Western.
Marengo Mining has a 100% stake in the Yandera copper and molybdenum project in Usino-Bundi electorate, Madang.
Evans and Partners said that a positive for the project was that a Chinese off-take partner might take a stake.
It is a three-million tonne attributable copper resources and has a production timeline from 2015.
The broker also noted that Yandera was a very large scale project, unusual for a junior to retain a majority stake in such a large project.
Research analyst Cathy Moises said: “Looking at key supply/demand metrics, we feel over the next decade supply is likely to exceed demand for copper which may lead to price weakness in later years.”