I’m not digging the miners

Interesting article on Motley Fool about copper miner ANTO (Antofagasta) releasing its interim report today.

EPS down 7% on the year

Here’s some top miners and how they’ve reacted today:

ANTO 1131p -0.09% (PER 12.3)

BLT 1911.50p -1.08% (PER 9.5)

RIO 2791.50p -2.46% (PER 6.6)

ANTO has held up well, but BLT and RIO has caught a cold. TMF puts this down to the EPS figure being marginally above 65c forecast. Copper prices down 13.8% from 2011H1, EBITDA fell by 5.4%. TMF reports:

Antofagasta has attempted to offset this by increasing its production … largely from its Esperanza site

Hmmm, I’m getting a distinct whiff of value trap here. They’re obviously in the “making it up with volume” school of thought here. According to Sharelock Holmes, operating margins are 50.6%. Other miners are similarly high. Commodity companies with monopolistic margins looks a tricky buy.

TMF reports:

With the fall in price of commodities, investors are wary of the mining sector at the moment. However, the well-respected management behind Rio Tinto (LSE: RIO) believes that there will be an upturn in China as we approach 2013, which will bring an increased demand for metals and thus a positive effect for mining companies.

Further:

As such, the mining sector is one of The Motley Fool’s top sectors of 2012

Mind you. these guys never saw a single-digit PER that they didn’t like.

Coinflip time. Do you feel lucky?

About mcturra2000

Computer programmer living in Scotland.
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