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Ivanhoe Mines receives Bullish Upgrade as Deal is almost Finalized

Ivanhoe Mines is now on the verge of finally completely the long waited Oyu Tolgoi Investment Agreement. This deal which is shared with Rio Tinto would greatly boost both companies share price. The CEO for Ivanhoe is very confident that the deal will be great for both parties. Ivanhoe has soared recently by the anticipation of this deal getting finalized. It is up over 200% since February and will continue to rise now that the deal is in place. Personally I would not buy into IVN right now as it has apprecoiated quite a lot yet I would also not sell. I think the Copper Industry is a Bullish Market and this is why.

Copper is a Great Play

Demand for copper is expected to increase by 1% in 2010 after falling 4% in 2009. To add to this the price of Copper is expected to skyrocket in 2010 jumping to $2.90 a pound from $1.80 in 2009. Moving on construction is expected to pick up in 2010 therefore another indicator to increase demand. The U.S. is currently the world’s second largest consumer and economist predict that money pledged to construction will increase more than 1% and a 2.5% increase in homebuilding. China has offset some of the demand by stockpiling commodities throughout 2009 though I don’t see that as much of a long-term concern. Look for demand to outweigh supply greatly within the next year as the output of existing mines wears out and looking forward there are very few new mines under construction. There is also belief that the mining industry will consolidate sending prices higher. Long-term however secular demand will grow for basic metals. The industrialization of China, India, and Africa will lead to great demand along with the increased capital spending in the United States. All these point to great signs for the sector.

What this means for IVN

Adding value to IVN is the fact that once the deal is finalized they will be constructing one of the largest copper mines in the world. Lets just wait to hear the full details of the deal yet if all goes as planned expect Ivanhoe to soar up to $15 a share.