SOURCE: Rothman Research

Rothman Research

March 04, 2010 09:04 ET

Are Mining Stocks a Good Bet Again?

JOHANNESBURG, SOUTH AFRICA--(Marketwire - March 4, 2010) -  Mining stocks constitute one of the major sectors of the FTSE Index. These types of great returns were possible only because of the demand of commodities worldwide, especially the demand from the fast growing economies of China, India and other emerging markets. "Mining stocks worldwide are not for the faint-hearted. As we have seen in the past few months as the demand for commodities fell, mining stocks were pulled down much more than the overall market indices. However when commodities were hot, mining stocks had an incredible run," affirmed Mathew Collier of Rothman Research.

A very current study by foremost online research firm gives some valuable insight into two of the leading mining companies, Vale S.A. ADS (NYSE: VALE), and AngloGold Ashanti Ltd. (NYSE: AU).

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So what does the future hold for mining stocks?

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Vale SA, the world's biggest iron-ore producer, said it plans to offer 65.7 million convertible notes split into two series due 2012 on global capital markets for general corporate purposes. The sale comprises 18.42 million common shares and 47.28 million preferred shares, currently held by Vale and whose sale will be fully guaranteed by the company, the company said.

The notes, to be issued by Vale subsidiary Vale Capital II, will be convertible in 2012 or earlier into American Depositary Shares, each representing one common share of Vale, or ADS representing one preferred Class A share of Vale. For more information, visit our Web site at

AngloGold Ashanti, has currently purchased ground near Sunrise Dam gold mine for water. The best performing mine for AngloGold Ashanti since it moved into the Australian gold mining scene has been Sunrise Dam. The company has now secured full ownership of a nearby gold prospect. Large quantities of water were encountered in the drilling and, given the proximity to the Sunrise Dam operation, this is of potential future value to AngloGold Ashanti Australia," he said.

Mathew Collier of recently explains, "Mining companies are dependent on the economic growth of individual countries, especially fast-growing countries such as China, India. The government of China and India has promised heavy spending on infrastructure projects such as roads, bridges, railroads, airports, etc. as part of their stimulus plans. Here in the US, the Obama administration has promised to invest heavily in upgrading the infrastructure as well. So in a way the demand for commodities might increase as these projects are implemented."

"However, all these government initiated efforts will not start immediately. Hence these stocks will continue to be extremely volatile. Gold will continue to be a favorite for investors in these tough times. But the demand for commodities like coal, silver, iron, copper, tin, etc. is difficult to predict at this time with any accuracy.

In a final statement, Matthew went on to say, "We expect the markets to do better than the economy. This may be the most exciting time to be a Gold stock trader since at least 1979-1980, and if current trends keep strengthening, we may be on the threshold of an era in the precious metals markets that will be talked about for generations to come. Visit to have free analytical opinions to help you in your due-diligence.

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