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Petra Diamonds sparkles as broker welcomes find

Published: 22:55 24 Mar 2016 AEDT

Truck-transporting-ore-at-the-Williamson-open-pit-mine-in-Tanzania

RBC Capital Markets took a shine to Petra Diamonds Limited (LON:PDL) after the southern Africa-focused miner banked US$15mln from selling a 32.33ct pink diamond from its Williamson mine in Tanzania.

Petra also kept an interest in the polished proceeds, receiving 10% of the value uplift of the polished product. Shares in the miner lifted 1.25p to 108.75p.

RBC analyst Des Kilalea said the proceeds would not significantly affect its valuation of Petra as it had already included US$15mln in the second half of 2016 for special stone sales.

But Kilalea added: "This is positive in that it further indicates the coloured stone potential at Williamson once it is ramped up and adds to Petra's headroom to complete its capital projects."

Elsewhere in mining, Goldman Sachs took Centamin PLC (LON:CEY) off its 'conviction buy' list but kept its 'buy' rating on the miner, whose main asset is the Sukari gold mine in Egypt.

Goldman said it saw limited imminent catalysts for Centamin, which also has exploration projects in highly prospective regions in Burkina Faso and Cote d'Ivoire.

But the broker said the miner's shares had risen 32.7% against the FTSE World Europe index, which lifted 0.9%, since it joined the conviction list in October last year.

"We continue to view Centamin as the most attractive pure play gold stock in our coverage," Goldman said.

Goldman also cut Mexican silver miner Fresnillo Plc (LON:FRES) to 'sell' from 'buy' and reduced its price target to 700p. Shares in Fresnillo dropped 36p, or 3.8%, to 914p.

The broker said: "Fresnillo is up 48% year-to-date while silver/gold are up 7%/16%; we believe the rally is justified but the quantum is not."

But Goldman was keen on AngloGold Ashanti Limited (JSE:ANG), reiterating its 'buy' rating with a new 12-month price target of R300 against R160 previously.

"AngloGold has restructured its balance sheet with the sale of CC&V and is generating significant free cash flow – which means it can increase dividends," the broker said. 

In the financial world, Liberum Capital downgraded Aberdeen Asset Management (LON:ADN), although it said the outlook was improving.

The broker reduced Aberdeen to 'hold' from 'buy' and reduced its expectations for adjusted pre-tax profit by 8%-9% a year.

Liberum has increased its net fund outflow assumptions for the full year 2016 to £26bn from £21bn.

The majority of net outflows would be from Aberdeen's higher margin equities business, leading to an 11% year-on-year decline in the group revenue yield to 33.4 basis points (bps), the broker said.

That would result in a two percentage-point deterioration relative to Liberum's existing forecast of 34.1bps, it said.

But the broker's analysts said in a note that there were signs in the last couple of months that emerging market sentiment and Aberdeen's fund performance had improved.

"We might just have turned a corner," they said.

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