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» JSE:PALLINGHURST RES. (GUERNSEY) LTD:
430c 2%

Brendan Ryan's stock picks for 2009
Brendan Ryan
Posted: Thu, 08 Jan 2009

[miningmx.com] -- PICKING a portfolio of resource stocks for 2009 under current market sentiment is akin to being asked to choose your preferred method of execution - but it’s what I do, so here goes.

Unlike Miningmx editor David McKay, who played safe and plumped for a portfolio of heavyweights, I am going to live dangerously and go for, hopefully, a select group of junior miners.

Gold should perform in 2009 given the torrent of liquidity being poured into shattered world financial markets. Sadly, the metal has not delivered so far but one can only live in hope.
I am going for DRDGold
There are safer plays but I am going for DRDGold. It is expanding its exposure to low cost and low risk surface dump retreatment operations and has finally shut down its loss-making, deep-level ERPM mine.

I want a platinum share because I believe the sector is way oversold and will recover, although the timing on that is anybody’s guess. My choice is Eastern Platinum.

The company is producing metal and has good operational management. Most important of all - given financial market conditions - it had 169m Canadian dollars in the bank at the end of September, which is equivalent to 200c (South African) a share. The JSE share price is just 345c.

The portfolio needs a coal share. Eskom’s demand for coal is going to remain at peak levels for years to come and the world’s energy crisis must inevitably reassert itself.

My pick is Sentula. The share price has been hammered into the ground because of the well-publicised corporate shenanigans of 2008.

If you believe CEO Robin Berry’s assessment that Sentula is finally “clean”, this should be a good recovery stock.

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I also like Sentula’s exposure to the export market via its 50% stake in Koornfontein, which owns an allocation through the Richards Bay Coal Terminal and is therefore in a much stronger position than those juniors still looking for a way to get coal out of the country.

Next up is Metorex - a company I dubbed a “serial underperformer” many years ago because of the time it spent seemingly going nowhere.

That was before the share price went from about 200c to above R30 as Metorex dived into Zambia and the Democratic Republic of Congo (DRC). Metorex is back to about 200c following the financial crisis at its Ruashi 2 project in the DRC.

The company now has the money and Ruashi is coming into production. The dilution to shareholders has been horrendous, but you have to ask: just how much further can the share price drop?

Finally, I am going for Pallinghurst Resources. The share price is at bargain basement levels and the company has money to invest in a buyer’s market. I am betting chairman Brian Gilbertson and Viking partner Arne Frandsen will deliver the goods.

The writer has put his money where his mouth is, and owns shares in all the above companies except Sentula.