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AFP: Copper Prices Slumping; Targets Cut for Barrick Gold and Goldcorp
Blackmont Capital has reduced its copper forecast, sending price targets lower on Canada's gold giants.

Precious minerals analyst Richard Gray told clients in a note that Blackmont has lowered its copper price forecast to $3 per pound for the fourth quarter of 2008 from $3.65. The research firm also now expects $3 copper until 2012. Blackmont's previous estimates were for $4 copper in 2010 and $3.50 copper in 2011.

Mr. Gray said Barrick Gold Corp. (ABX) will be impacted by the slumping copper prices, due to its copper production at the Zaldivar and Osborne mine.

He wrote:

We are lowering our NAVPS to $29.50 (from $30); our EPS estimates by 3% (2008), 10% (2009), and 16% (2010); and our CFPS estimates by 2% (2008), 7% (2009), and 11% (2010).

As a result, he dropped his price target on the stock from C$53 to C$49, but with upside of 47% still available, he maintained his "buy" rating.

"Barrick [is] expected to benefit from a flight to quality and liquidity in the gold sector," he said. For similar reasons, Mr. Gray lowered his price target on Goldcorp Inc. (GG) from C$50 to C$45, while maintaining his "buy" rating on the stock. He said Goldcorp, which is impacted due to the copper production from the 37.5% owned Alumbrera mine, will see its NAVPS drop from $24 to $23, while his EPS estimate falls 9% and 15% in 2009 and 2010, respectively and his CFPS estimate slumps by 6% and 11% over that same period.

The analyst also cut price targets at Newmont Mining Corp. (NEM), Yamana Gold Inc. (AUY) and Northgate Minerals Corp. (NXG) due to the copper price revision. All three stocks remain recommended as "buys."