Vulnerable Junior Base Metal Miners Forced to Delay Financing, Development

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While Haywood analysts realize that current market conditions are not conducive to higher risk investments, they are looking to companies with strong balance sheets, seasoned management teams, and an asset base "sufficiently advanced to be in a first-mover position when investor interest returns."

Haywood Securities Monday predicted markets will remain extremely volatile, with more base metal mine shutdowns inevitable with additional production curtailed as high-cost producers lose money.

"The bigger question will be whether these expected supply reductions will be offset by demand destruction precipitated by the global slowdown. As a result, we remain cautious on base metals stocks in the near term," said analysts Stefan Ioannou, Chris Thompson, and Danny Ochoa.

With share prices at or near all-time lows, Haywood expects that junior mining companies will be forced to deter near-term financings, delaying project development until market conditions improve. "Key to this ‘waiting game' is a balance sheet that is strong enough to weather the storm-not all companies have this luxury," the analysts said...

"we believe that junior base metals are extremely vulnerable under current market conditions. We have adjusted our formal valuations accordingly, posting some of the lowest target prices on the street," the analysts warned.

Haywood revised its metal and forecasts from $940/oz gold to $890/oz gold, silver from $17.80/oz to $15.10/oz, copper from $3.80/lb to $3.25/lb, and nickel from $12/lb to $9.75. All price revisions are for 2008.

While Haywood realizes that current market conditions are not conducive to higher risk investments, the analysts said they are looking to companies with strong balance sheets, seasoned management teams, and an asset base "sufficiently advanced to be in a first-mover position when investor interest returns."

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