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. . . . . .-i;, Walston &- Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY eXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,'wlood) OFFICES COAST 10 COAST 8Y OIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER March 25, 1955 Edmund W. Tabell telephones from Florida as follows Last week's market action was extremely encouraging and apparently has confirmed the belief that the six-day decline of thirty-four pOints from the March 4th high of 421.83 to the March 14th low of 387.50 was merely a shakeout that has strengthened the cyclical pattern. Not only did the decline halt above the 385 level where the industrial average has met supportthree times previously, but it has also required only nine trading days for the industrials -to most completely reco\er the ground lost since the early March high. Friday's high was 416.64. The industrials continue to hold in the 385-420 area which has been the trading range since last November. Recent action implies a nearby testing of the upper level of this area. The.market background continues to remain favorable for advances in selected issues where earnings, dividends or special developments warrant higher price levels. MAGMA COPPER COMPANY – 8tatistics The investor who is patient Current Market Current Dividend Current Yield 86 enough to wait for substantial long-term capital gains and who does not require current yield will do well to consider the Long Term Debt. Preferred Stock None acquisition of Magma Copper Company in the 80-70 range,slightly Common 1,069,326 shs. below the current market. Despit – N– et p–er- Share, 1954- – — 5 . 1-8- . – tl1.' Jecen.1Jlhenominal price rise – \ from 25 to 90 over the -past Net Per Share, 1953 4 45 year, the stock, viewpoint, seems from a to have technica conside r- Sales, 1954 Sales, 1953 million 15.3 million able appreciation possibilities. A look at the basic statistics 0 the company would seem to bear Mkt. Range 1954-55 90 – 23 7/8 No cash dividends. 7 stock paid in 1954. 10 stock paid in 1953. this out. Magma is a nedium-sized copper producer whose entire earnings heretofore have come from the RFC Loan 94 million to wholly owned Magma Mine in Arizona. However, subsidiary guaranteed by Magma. since 1944 the through a wholly-owned subsidiary, has been developing the San Manuel Mine in Pinal County, Arizona. To finance this development, the subsidiary, San Manuel Copper Corporation, has borrowed 94 million from the RFC. This loan has been guaranteed by Magma which has also advanced a substantial amount of cash to San Manuel. The terms of the loan also prohibit payment of cash dividends by Magma. Under agreement, the government has guaranteed to purchase 695 million pounds of copper 'during the first years of pro- .J,uction at a minimum of 24 a pound. Co Since this agreement was made, however, the U. S. price of copper has risen to a current 33 cents a pound and further rises are in prospect. Estimating a cost of 15 cents per pound of copper mined, this constitutes an operating profit of 18 cents per pound. Taking the most pessimistic view and assuming a rise in costs to 18 cents and a decline in the copper market which would force San Manuel to sell its oUtput to the government at 24 cents, this still leaves a 6 cents per pound profit.