Freeport-McMoRan Copper & Gold (FCX): Freeport is one of the world’s largest copper, gold and molybdenum mining companies in terms of proven reserves and production levels. The company has worldwide reveres of copper of around 90 billion pounds, 1.8 billion pounds in molybdenum, and 41 million ounces of gold. With production levels since mid-2008 of 4.35 billion pounds of copper, 85 million pounds of molybdenum, and 1.8 million ounces of gold. In 2007, mining revenues by commodity are as follows: 78% copper, 12% molybdenum and 10% gold. In mid-2006, Freeport and Phelps Dodge announced that they signed a definitive merger agreement under which Freeport will acquire Phelps Dodge for approximately $26 billion dollars in cash, creating the world’s largest publicly traded copper company. On February 13th 2009, Freeport raised $740 million dollars from the net-sale of an additional 26.8 million common shares, as the company looked to lower its $7.4 billion dollars of debt. With Freeport supplying a substantial amount of the worlds copper, there are several things an investor must follow with regards to the health of this company: the Baltic dry freight index as a judge of foreign demand, particularly from China. DryShips (DRYS) is also a good market tell on the health of the Baltic dry index, and the liquidity of credit in the economy. The spot price of copper, which has ranged from $4.5 per lbs to $1.2 per lbs is also extremely important as it costs Freeport about $.80 cents to $1.00 per lbs to produce. And ironically the U.S housing market, as in each new home over 600 lbs of copper are newly installed. Freeport is likely overvalued here north of $43 per share, so wait for a short-term pullback.

Aloca (AA): Aloca is one of the world’s largest aluminum producers accounting for almost 40 percent of the worlds aluminum produced. For the full-year 2008, Aloca earned $30.7 billion dollars in net revenue with a 15.5 percent EBITDA margin. Sales were broken down by region as follows: 55 percent came from the United States, 25 percent came from Europe, 14 percent came from Asia Pacific, and 6 percent came from other regions of the world. 2008 revenue by industry was as follows: 25 percent for direct primary use, 10 percent was turned and used into alumina, 16 percent for packaging related goods, 14 percent for industrial goods, 14 percent for aerospace, 9 percent for automobiles, and 5 percent from transit. On March 19th Aloca cut its dividend for the full-year of 2009, persevering much needed operating cash and raised an additional $1.1 billion worth of common stock and debt to reduce its annual cost of capital and operating expense by more than $2.4 billion dollars by 2010.

Cliff Natural Resources (CLF): Cliff Natural Resources is the largest producer of iron ore in the United States with annual ore production of 36.5 million tons per year, and over 958 million tons of proven and probable reserves. Iron ore is the raw material used to make pig iron, which is one of the main raw materials to make steel.

6 month spot prices for aluminum are down almost 75% from $1.50 per lbs in July, to $0.6565 per lbs currently---low spot prices equal to lower revenue and EBITDA margins. Century, which recently increased its leverage to the spot price of aluminum, bought back forward hedge contracts from one of their largest equity and debt holders. Investor sentiment regarding this transaction was mixed; some thought that Century was taking off needed revenue hedges, while others thought the decrease of debt in the firm’s capital structure was a positive. Century also issued a secondary of 6,500,000 shares in the public market at a stock price of $62.25 per share. This netted the firm around $400 million dollars or so. Right now there is a massive glut of supply of aluminum on the market, but with companies like Rio Tinto Alcan, and Alcoa cutting back production the price should stabilize here. Net sales for the 3rd quarter 2008 came in at $552 million dollars, with operating income of $111 million dollars. Earnings for the 3rd quarter were $0.59 per share vs. a loss of ($0.06) per share just 1 quarter ago. Total firm revenue for the full year 2008 is $1.9 billion dollars with EBITDA margins of 22% firm wide. Iceland was hit especially hard by the ongoing credit and economic crisis of 2008, because the debts of banks within the country were 6x total GDP. In late October, the Icelandic parliament passed emergency power to take over the three largest commercial banks in Iceland do to massive outstanding debt notes Iceland, which is not part of the ECB was forced to raise the nations interest to over 18% , in part by the terms of acquiring a loan from the International Monetary Fund. Century’s exposure to Iceland and the ensuing economic crisis has company’s short-term outlook, but with the stock down about 85% from here it’s safe to assume that this has already been priced into the stock.

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