One to Watch: It's as good as gold

GREAT Basin Gold (GBG) was trading at circa $0.95 when we recommended it in September. The gold price continues to hold up well and we believe GBG remains attractive. Though the short-term impact of escalation in sovereign risk sees the market buying dollars – generally bad for the gold price – the longer-term impact of this increase in uncertainty, we believe, is positive for gold. We continue to recommend GBG, because:

&149 Two geographies: GBG is developing the Hollister mine in Nevada (US) as well as the Burnstone mine (South Africa), with a possible new mine being explored in Nevada;

&149 Fully funded: GBG is not expected to need to raise more capital before both mines get into full production;

&149 Sharp ramp-up in output: the Hollister mine has started producing and generating cash flow. We expect Burnstone to come on line from July;

&149 Wide margins: with cash cost expected to remain well below $500/oz, the gold price of $1,120/oz could deliver operating margins of more than $500/oz;

Exploration: GBG sports a portfolio of exploration assets in Tanzania, and the Hollister property continues to hold significant upside potential.

GBG offers solid output growth at high margin – all of which is already fully funded, with strong delivery starting from July 2011. It offers risk diversification that protects against the current strength of the rand while maintaining the highly geared nature by virtue of its South African exposure that comes on line in 2011.

A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities for GBG and has provided it with investment banking services in the past year.

The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.

Schroders

1,310p +74p

Broker says BUY

KBC Peel Hunt says Schroders' preliminary results yesterday met expectations with fund performance and flows remaining strong.

The broker adds: "We believe that the strength of the balance sheet (1.5 billion] is a key attraction and is assisting the group win new business."

Whitbread

1,472p -5p

Broker says ADD

WHITBREAD'S fourth quarter trading update yesterday was "robust", according to Charles Stanley, with all divisions delivering positive sales growth.

Analyst Sam Hart believes that over the long term, the group's Premier Inn chain is well placed to benefit from structural growth in the budget hotel sector.