Three Attractive Junior Mining Companies: Ubika Research Investment Idea of the Day

According to a survey conducted by Vancouver’s Mining Recruitment Group, in which 125 mining executives participated internationally, the outlook for the mining industry has vastly improved in the past four months. Almost 47% of the respondents (up from 8% as per the Q3 2012 survey) held a bullish view for the short term outlook on the overall strength of the mining industry. We note that the Global X Junior Miners ETF gained 14.7% YTD while the SPDR S&P Metals & Mining ETF recorded a 7.5% decline during the same period.

Ubika Research has shortlisted three Canadian junior mining stocks that are rated buy by a majority of analysts polled by Bloomberg and offer significant upside potential.

Taseko Mines Ltd. (TSX: TKO) is a mining company that acquires, develops and operates mineral deposits with its major focus being the production of copper and molybdenum from the Gibraltar mine and on permitting the New Prosperity gold and copper project. It has two other properties in British Columbia - Aley, an exploration niobium project and Harmony, an exploration stage gold property.

Six of the eleven analysts covering the stock recommended a buy with an average 12-month price target of C$ 5.1, indicating 83% potential upside from current levels.

On Oct 9, 2012, the company announced its third quarter 2012 total production of 23.7 million pounds of copper and 276,000 pounds of molybdenum at its 75% owned Gibraltar Mine as compared to 21.3 million pounds of copper and 324,000 pounds of molybdenum in third quarter 2011. Taseko revealed that the commissioning of the new molybdenum plant is expected to start in November and the new concentrator in December. The fourth quarter will witness the final tie-ins and wet commissioning of the new molybdenum plant and GDP3 concentrator which will contribute to operations.

Novacopper Inc (TSX: NCQ), a base metals exploration company is mainly focused on exploring and developing the Ambler mining district containing copper, zinc, lead, gold and silver and carbonate replacement deposits containing copper, cobalt and silver. The company’s properties include the Ambler Project located in Northwest Alaska, which consists of copper-zinc-lead-gold-silver, and the Bornite property.

Three of the fourteen analysts covering the stock recommended a buy with an average 12-month price target of C$ 5.0, indicating 115% potential upside from current levels.

The company recently announced additional significant results from exploration diamond drilling at the South Reef Zone of the Bornite Property, one of its Upper Kobuk Mineral Projects. In the drilling program, NCQ drilled 22 holes at the South Reef Zone of the Bornite Property comprising 15,457 meters it was highlighted that four holes intersected significant high-grade copper mineralization and the company President and Chief Executive Officer added that they are delighted with these results, which have now expanded the high-grade copper mineralization at the South Reef Zone in three directions.

Novacopper reported its third quarter results and provided an update on its 2012 exploration program on Oct 10. NCQ’s net loss widened to $12.6 million as compared to net loss of $6.3 million in third quarter 2011 due to increased project activities at the UKMP projects worth $9.1 million in the current quarter compared to $5.6 million last year. Meanwhile, as of Aug 31, 2012, the company recorded $29.1million in cash and cash equivalents.

Keegan Resources Inc (TSX: KGN) is a natural resource company engaged in the acquisition and exploration of mineral resources in West Ghana with its mineral properties currently in the exploration and development stage. Its primary property is the Esaase Gold project and Asumura Property in west Ghana while it has a portfolio of other Ghanaian gold concessions in various stages of exploration.

Five of the eight analysts covering the stock recommended a buy with an average 12-month price target of C$ 5.7, indicating 52% potential upside from current levels.

On Oct 15, 2012, the company announced that it had arranged a private placement with South Africa-based Highland Park S.A. and other investors to raise an initial $32.5 million through the issue of 9.4 million shares at C$ 3.44 per share, with an option to raise a further $37.8 million. Highland Park will become a major strategic investor in the company but is not expected to materially affect control. The investment will boost Keegan’s already strong financial position and provide access to Highland Park's substantial resource management skills. Keegan recently appointed experienced mine builders - Peter Breese as President and Chief Executive Officer and Tony Devlin as Chief Operating Officer, both of whom have an extensive record of mine development in Africa.

In mid-October, Keegan announced results of a revised mineral resource estimate for its Esaase gold project in Ghana based upon almost 200,000 metres of RC drilling and 78,000 metres of diamond drilling carried out over the past five years at Esaase. The company recorded Measured and Indicated resource of 68.92 million tonnes averaging 1.73 grams per tonne gold for 3.83 million ounces, and Inferred resource of 22.23 million tonnes averaging 1.75 grams per tonne gold for 1.25 million ounces.

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