Best In The West

Summary from Shares Magazine August 2005

AVO
Gold, Copper, Nickel
Upside: The Gold drill-hits keep coming.
Main risk: Mining costs are rising as the skill shortage affects the Gold Sector.
Verdict: Mining will start again at Higginsville.
Watch Closely for reports of Mining Costs and resource inventory.

CAZ
Gold, Uranium, Base Metals.
Upside: Cazaly has a record of creating opportunities from assets ignored by bigger companies.
Main risk: CAZ is an inexperienced mine operator.
Verdict: Success not yet assured, but downside is limited at recent prices.

CSM
Consolidated Minerals - Manganese, Chromite, Nickel, iron ore.
Upside: A deal-maker with strong operating Cashflow.
Main risk: Requires a focused strategy in areas where CSM has expertise and competitive advantage.
Verdict: Long-term investors need to see manganese resources increase further.

FMG
Iron Ore
Upside: FMG aims to build a world class iron-ore business from scratch.
Main risk: resource quality, financing and the final split of ownership for the mega-project remain unclear.
Verdict: The world-scale of the project and high margins in the iron-ore industry will appeal to risk-inclined investors.

HRR
Nickel, Cobalt, Iron-ore, Mineral Sands.
Upside: The technical feasibility of the Kalgorie nickel project is being advanced by JV partner Inco Ltd. with NO Cash requirement from Heron.
Main risk: HRR at early stage of Feasibility Work.
Verdict: Steady progress is being made: Market conditions over the next decade will prove more relevant to Heron than the 2005 commodity price boom.

LIM
Nickel, copper, gold
Upside: The Waterloo and Honeymoon Well nickel resources appear to rank among the best underdeveloped nickel sulphide deposits in the world.
Main Risk: Must maintain strong operational performance and constrain new-project capital costs.
Verdict: Has the opportunity to build on its success and become better known by Australian investors.

MEP
Nickel, cobalt.
Upside: Minara paid a maiden dividend of 5c a share in March and retains strong cash backing of about $100 million. Continued strong nickel prices will underpin its ability to generate cash. A program to improve operations started at Murrin Murrin recently will begin to beat fruit by the end of 2005.
Main risk: Ongoing maintenance issues at Murrin Murrin are the greatest risk.
Verdict: Becoming more attractive over time as lead project matures. Good exposure to changes in nickel prices.

MAH
Mining contractor serving diamond, copper, nickel, iron and iron ore mines in WA and further afield.
Upside: The demise of Herny Walker Eltin led to an unexpected consolidation of mining contractors - a positive for Macmahon because it is placing upward price pressure on contract renewals.
Main risk: Skill shortages will increase cost pressures. Macmahon will aim to pass this on to customers through contract renegotiations and renewal.
Vedict: Well placed to continue recent graowth.

SMY
Nickel, copper, cobalt.
Upside: The upper levels of the Sally Malay deposit are performing above expectations in a nickel market that is itself above expectation.
Main risk: There are still technical risks at Lanfranchi due to difficult ground conditions that may influence production levels and costs.
Verdict: Has delivered on past promises. Significant gains may come from exploration success in the Kimberley and/or in the near-mine environment at Lanfranchi.

STX
Oil, gas
Upside: Exposed to an exploration programme in Western Australia and elsewhere, despite only limited market capitalisation.
Main risk: Oil and gas drilling usually has only a one-in-five commercial success rate.
Verdict: Exploration will determine the share price in the short-run. Further capital will be required - whether exploration brings success or failure.