Mining Stocks With No Exposure To Henry

This story features BHP GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: BHP

By Greg Peel

In the ongoing fallout from the Henry tax review and subsequent proposal for a 40% resource super profits tax (RSPT), Australian stockbroker DJ Carmichael has provided advice to its clients.

DJC notes the mining companies hardest hit by the RSPT will be those with large, long-life and high profit-margin projects which have already been significantly depreciated over the years. This impacts most heavily on iron ore and coal [and specifically takes in your BHP Billiton ((BHP)) and Rio Tinto ((RIO)) combination].

The flip-side is that projects with short-mine lives and high costs won't be as severely impacted, with relief provided until those assets are fully depreciated over five years.

Exploration companies would be much better off, DJC notes, given the new resource exploration rebate. However, money still needs to actually be spent on exploration so the rebate will not help if junior miners are struggling to find funding in a commodity price down-cycle.

It is definitely clear that offshore projects will not be subject to the tax. To that end, DJC has compiled a list of Australian mining companies with no exposure to the RSPT on that basis, albeit investors much recognise some value offset for sovereign risk. The list includes only those stocks in DJC's coverage universe on which the analysts have a positive view.

Among the producers, they are: Medusa Mining ((MML)), Perseus Mining ((PRU)), Pan Australian Resources ((PNA)), Equinox Minerals ((EQN)), Paladin Energy ((PDN)), Olympus Pacific ((OYM)), Kingsgate Consolidated ((KCN)), Kingsrose Mining ((KRM)), and NSL Consolidated ((NSL)).

Among the explorers, they are: Hot Chilli ((HCH)), Ampella Mining ((AMX)), Gryphon Minerals ((GRY)), Chessar Resources ((CHZ)), Nkwe Platinum ((NKP)), Wild Horse Energy ((WHE)), and Kasbah Resources ((KAS)).

Click to view our Glossary of Financial Terms