Gartmore uncovers more opportunities in mining

Gartmore continues to hold a significantly overweight exposure to the mining sector (relative to its benchmark) in its UK Growth and UK Focus Funds, with Kazakhmys, Rio Tinto, Vedanta Resources and Xstrata among the UK investment team's most favoured stocks.

While prices across the sector have risen well over the past year, Sacha Sadan, manager of Gartmore's £271m UK Growth Fund, believes that the market remains overly pessimistic about the outlook for industrial metals.

"Copper prices for forward delivery suggest no more than a modest decline between now and 2010. This contrasts sharply with the median expectation of analysts, who appear to be discounting a much sharper fall," says Sacha.

Sacha points to continuing strong demand from the world's developing countries and scant evidence of any actual collapse in demand in the west as evidence that the cycle for metals is likely to be significantly longer than the stock market is currently prepared to believe.

In recent weeks, Gartmore has added BHP Billiton to its UK portfolios, taking the view that the stock has been de-rated excessively following BHP's decision to table an offer for Rio Tinto.

Another recent addition has been Talvivaara Mining, a Finnish company with one of the world's largest known sulphide nickel resources. Talvivaara is moving closer to production and is operating on-budget and on-time. With the risks receding of teething problems associated with mines moving into production and with the demand for nickel staying strong, Gartmore considers Talvivaara to represent a significant opportunity.