Opportunities arising in small resources
Opportunities arising in small resources. Goldman Sachs have identified what they believe is an opportunity in some out of favour junior resource companies. The broker notes that the small resources sector weighting within the small cap index has dropped from a peak of 45% to around 20%. Of that 20% index weighting just 10 companies make up for around half of resources weighting. Goldman notes, At the peak of the miners' weighting in 2012, almost 45% of the resources weight in the small cap index was from non-producing companies. That has now fallen to c.20%. Producers replacing development companies reduces the level of risk in resources weightings. The broker says that the recent weakness has created opportunities in a couple of well established producers. Sirius Resources (SIR) and PanAust (PNA) have both been upgraded from Neutral to Buy.