As the world’s leading mining and exploration company, RIO possesses a high-quality, low-cost asset base, extracting a variety of minerals and commodities including gold, alumina, coal, iron ore, copper, diamonds and other industrial minerals. This makes the company a good play on global commodity needs and high global commodity prices.

During the first half of 2010, the company reported revenue of $26.8 billion, up 42% from the similar period of 2009. The revenue growth was driven by a record production of iron ore, alumina and coking coal and a strong pricing environment. Prices improved for nearly all of RIO’s major commodities: iron ore, as well as copper and molybdenum prices have nearly doubled, while aluminum prices are 50% higher in 2010, compared to 2009. Meanwhile gold and silver prices set new all time records in 2010.

Solid revenue growth, combined with the benefits of cost reduction efforts undertaken during 2010 allowed RIO to post a first half record of $5.8 billion in underlying earnings, up 125% from the similar period of 2009. Accordingly, cash flow from operations increased 78% to $9.9 billion and net debt reduced to $12.0 billion at June 30, 2010, from $18.9 billion at 31 December 2009. A similar track continued in the third quarter of 2010, with strong operating performance and production run at close to or above capacity rates.

Going forward, the company committed to heavily invest in exploration for new projects and expansion of existing operations. The company approved more than $4 billion of capital projects during the third quarter, including $2.1 billion in September 2010 for further development of its Pilbara iron-ore mine; $800 million for completion of the underground block cave project at the Argyle Diamond Mine located in Australia; and $1.6 billion investment for development of the Hope Downs 4 iron ore project. This takes the company’s total approvals to $5.5 billion in 2010 and is consistent with its previous CAPEX guidance of $13 billion over the next 18 months to December 2011.

RIO recently announced its plans to spend more than $1 billion to expand its two Canadian aluminum smelters: Saguenay-Lac-Saint-Jean, Quebec and Kitimat, British Columbia. The company adopted the move as it expects that aluminum demand is poised to recover and the pricing environment would further improve. Simultaneously, RIO is adopting some austere measures to reduce costs and strengthen its business.

The company has also increased its stake in Ivanhoe Mines, from 35.0% to 49.0% in order to directly manage the Oyu Tolgoi copper-gold project in Mongolia. RIO acquired 20 million shares in Ivanhoe Mines by exercising its remaining warrants and provided a financial package to the latter including the $1.8 billion interim loan facility. As a result, the company’s intervention accelerated the project development, which now is expected to finish by early fiscal 2012 as opposed to late fiscal 2012.

RIO has also formed a memorandum of understanding and joint venture with Aluminum Corporation of China Limited – Chinalco (NYSE: ACH) for the development and operation of the Simandou iron ore project in Guinea and exploration of mineral deposits in China. RIO will have a 49% share in the latter while Chinalco will own the balance.

In addition, the company made a $3.5 billion bid approach for Africa-focused Riversdale Mining Limited. Riversdale confirmed that RIO was talking about an offer around $14.81 a share for Riversdale, which would value the group at $3.48 billion. Riversdale has hard coking-coal projects in Mozambique that could eventually supply 5% to 10% of the global market for the steel-making material.

The latest developments are indicative that RIO is targeting new highs and better valuation and we expect this trend to continue given its low cost structure, strengthening demand for metals and high commodity prices.

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Here is the chart:

The stochastics indicate that this stock is clearly oversold.  it may have farther to fall since it is in distribuion, but it clearly has some pressure to rise.  A sub-penny stock, it could fall as low as $.00075 before it corrects and rises again, IMO.

This is a non-reporting pink sheet company so the risks are known.  They say that they have been in business since 1996.  JCDS has put out a number of press releases that seem to indicate that the company is on a positive trend.  But, companies have been known to lie in press releases (shocker, huh?). They have a website that gives information about what they do: click for link.  They need to put a few dollars in the website…it really doesn’t show the company off well and is very dated.

Extremely risky…..short term play….put it on your radar….good luck and good trading

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