The Southwood Group comments as developments in the Rio Tinto Group give way to an appealing buying opportunity substantiated by the current share price weakness, continued efficient cost cutting which will almost cut its debt in half and its $6.6 Billion Oyu Tolgoi mine begins shipments this week.
Rio Tinto looks set to begin shipments from Oyu Tolgoi, Mongolia this week, which is the largest mining project in Mongolia’s history, and the project is predicted to account for a third of the country’s economy by the end of the decade. Rio Tinto’s continued aggressive push in cost cutting will enable Rio to cut its debt in half. Rio is currently seeking to bolster its balance sheet by divesting a range of its non-core and poorly performing assets, its aluminum assets, Canadian iron ore and coalmine stakes and a copper-gold mine in western Australia are among the sectors as it continues to fight aggressively in all sectors of mining.
“There has been growing investment interest in RIO, advised investors should be happy to buy Rio as long as iron ore prices don’t drop below $80 dollar per metric ton. Iron ore prices continue to drop as Chinese steel production slows down but not so fast to hurt Rio Tinto, analysts predict prices will stay above $100 per tonne for the remainder of the year. We believe it is an attractive buying opportunity given the recent low share price, Rio has also done some very efficient cost cutting measures lately that will certainly improve its share price and given the Oyu Tolgoi mine is to begin this week it looks very promising indeed,” said Senior Vice President of Mergers and Acquisitions James Morgan at The Southwood Group.
Oyu Tolgoi mine has the go ahead from the Mongolian government to start shipping copper concentrate to China starting on the 9th of July. Scheduled shipments to Chinese smelters were twice postponed, first on June 14th at the request of Rio Tinto, which owns 66% of the mine though its Turquoise Hill Resources Ltd unit and on June 21st at the request of the government, which controls the remaining 34% percent.
The Mongolian mine Oyu Tolgoi has produced more than 40,000 metric tons of copper concentrate, according to press release findings issued late June by Turquoise Hill. The stockpiled concentrate is to be delivered 80 kilometers south to the border town Gashuunsuukhait, and then on to China.
“The Southwood Group has been monitoring the Rio Tinto Group, as one of the largest publically listed mining companies in the world we feel it is undervalued right now and are upgrading the stock to a buy. We are currently advising our clients as to the right strategies to take advantage of this position, with the currently low share price set to rise given the positive news regarding the cost cutting implementation and the prospects of the Mongolia mine beginning shipments to China this week,” concluded Senior Vice President of Mergers and Acquisitions James Morgan at The Southwood Group.
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