Oxiana (OXR) Update

Submitted by Share Trading on 16 April, 2008 - 12:39

Oxiana (OXR) has a maintained $4.00 share price target from Australian sharemarket analyst Macquarie Research Equities.

Oxiana (OXR): Ox Still Prominent

Oxiana (OXR) rallied strongly this morning, up 3.5% following the release of their 1Q08 operating results. The company delivered a stronger than expected quarter for copper and gold, according to Macquarie Research Equities (MRE), however delivered a lower production number for zinc. This is MRE’s view...

The key catalyst for the stock price target is the prospective merger with Zinifex (ZFX). The conglomerate would rank as the world’s second largest Zinc miner and also maintain sizeable production in copper, lead, gold and silver. Weighing on the firm, however, is the marked delay in the Prominent Hill copper gold project…

Impact
- Stronger that expected quarter for copper and gold, lower for zinc
- Guidance for 2008 at all operations unchanged – MRE indicated that they would not be surprised to see Sepon copper deliver at the upper echelon of their production range of 60 – 65kt
- Prominent Hill Delay – initial production has been delayed from 3Q to 4Q, expected production is now 10kt copper and 6koz gold

MRE deliberate a 3% expected downgrade to CY08 EPS forecasts given the above impacts. They maintain a $4.00 price target price with the possible merger with ZFX the key driver of this view. It is interesting note and also close on the presumption that if MRE factored in spot copper prices for the balance of 2008 then this equates to a circa 15% upgrade to their CY08 EPS estimates.

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