Kidman Resources (KDR:AU) and Sumatra Copper and Gold (SUM:AU) have both produced their first gold recently. They now both run modest sized operations reflecting pressures on the industry to start small and grow from internally generated cash. Both show evidence of being able to expand their resource base to add years or annual production. The approach reduces the prospect of a dramatic price response to the commencement of production. On the upside, however, the ‘starting small’ strategy underpins a longer term value appreciation which is often hard to find in the sector and, at the right price, can offer attractive investment returns. PortfolioDirect rating reports on these two stocks have been published and can be accessed through the latest weekly investment report: (VIEW LINK). The report also highlights the increasing evidence (typical of a cyclical bottom) of large cap stocks giving up the comparative return advantage they had enjoyed through the cycle, until recently.


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