Sumatra Copper and Gold has been classified as a Phase II company and rated '3' on the five point PortfolioDirect rating scale where a '5' rating is the lowest...

John Robertson

PortfolioDirect

Sumatra Copper and Gold has been classified as a Phase II company and rated '3' on the five point PortfolioDirect rating scale where a '5' rating is the lowest risk category. The risk profile of Sumatra Copper and Gold has been greatly reduced and the company is now well enough funded for it to move to production. With a relatively depressed share price, the company also has low market risk leaving it better positioned than many in the sector. An expensive debt funding package has allowed development but the balance of returns now favours the debt providers rather than equity holders. Also, with a mine life of six years or less, the value profile potentially falls away quickly with the onset of production.The investment proposition for an equity investor now rests on an increase in the resource estimate which should enhance value disproportionately with the base capital having been committed. With over half the outstanding shares held by two parties, turnover in the company's shares is exceptionally low. The PortfolioDirect report is available through Bloomberg.


John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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