The Canada-listed zinc stocks on our list are trading at a discount to peers on a cash-flow basis
SmallCapPower | November 27, 2017: Zinc prices are up 23% over the last six months, as Chinese producers have announced forced production cuts for the winter months impacted by environmental inspections. Demand for the metal has remained robust between June and September, as global usage during that time amounted to 4,678K tonnes compared to metal production of 4,522 tonnes. Today we have identified four Canada-listed zinc stocks that trade at a discount to future cash flows compared to their peers.
Lundin Mining Corp. (TSX:LUN) – $9.53
Lundin Mining operates as a diversified Canadian copper, nickel and zinc producer with operations in Chile, the United States, Portugal and Sweden. The Company’s zinc-producing mines include the Zinkgruvan operation in Sweden and the Neves-Corvo operation in Portugal. Lundin Mining’s 2017 guidance aims to produce 152,000 to 162,000 tonnes of zinc.
- Market Cap: $ 6,930 Million
- Month over Month Returnn: -3.2%
- Forward Price to Cash Flow Per Share (2018): 6.8x
- Peer Average: 15x
Hudbay Minerals Inc. (TSX:HBM) – $10.36
Hudbay Minerals is a Canadian copper-zinc producer with assets in North and South America. The Company’s assets include its Manitoba and Peru operations. The Company’s Constancia copper porphyry project was acquired in 2011, and was brought into production in 2014. The Constancia property comprises 22,520 hectares in southeastern Peru, 100 kilometers south of Cusco. In addition, Hudbay has three producing mines in Manitoba; the 777 Mine, the Lalor Mine and the Reed Mine. Additionally, Hudbay operates two processing facilities in Snow Lake and Flin Flon, Manitoba.
- Market Cap: $2,701 Million
- Month over Month Return: 3.0%
- Forward Price to Cash Flow Per Share (2018): 4.1x
- Peer Average: 15x
Teck Resources Ltd. (TSX:TECK.B) – $29.64
Teck Resources is one of Canada’s largest resource companies with business units focused on the production and exploration of copper, zinc, coal and energy. The Company has interests in 13 mines and 6 projects in Canada, Peru, Chile and the United States. Teck has set a 2017 guidance for 302.5kt of refined zinc and 655kt of zinc contained in concentrate.
- Market Cap: $16,910 Million
- Month over Month Return: 1.8%
- Forward Price to Cash Flow Per Share (2018): 3.6x
- Peer Average: 6.5x
Trevali Mining Corp. (TSX:TV) – $1.13
Trevali Mining Corporation is a Canada-based zinc focused mining and exploration company with operations across the world. The Company has interests in four producing mines, which include the Santander, Perkoa, Rosh Pinah, and Caribou, which are located in Peru, Burkina Faso, Namibia and Canada, respectively.
- Market Cap: $936 Million
- Month over Month Return: -2.0%
- Forward Price to Cash Flow Per Share (2018): 5.8x
- Peer Average: 15x
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own units in any of the companies mentioned above.
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