This week our top five analysis looks at the metals and mining sector. In the interests of accessibility for most of our readers, I'm focusing on Europe and North America.
Also on our list are a couple of royalties companies - firms which finance mining projects in return for a share in the profits. These can be a good bet for investors who want to diversify their risk across multiple projects. They also tend to rank higher in our screens due to their excellent balance sheets.
Akobo Minerals [Oslo:AKOBO]
Akobo Minerals is listed in Norway and could be starting to show some life, having risen 69% in a month. The shares are still down 34% over the last six months in local currency terms. Akobo is a gold exploration and mining company with operations in Ethiopia. It provided an operational update last week covering the latest mining and processing activities at the Segele mine.
Since mid-May, operations have shifted from development mining to production mining. Two separate working areas are now extracting high-grade ore in line with the block model. We think the company is in the process of a significant re-rating.
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Magna Mining [TSXV:NICU]
Magna Mining's stock has been on a great run recently in Canada. Shares are up over 141% over 12 months and +19% in the last month alone. We think there is still plenty of very significant upside on this one. Income and cash flow look good, and the company has continued its expansion strategy with the acquisition of a portfolio of base metal assets in the Sudbury basin from KGHM International.
Magna closed a CAD 33m private placing in March and has also produced 790,000 lbs of copper equivalent from its McCreedy West mine. A cash balance of CAD 38m at the end of May also looks good to us.
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