The Canadian copper stocks we have uncovered trade at discount on a cash flow per share basis
SmallCapPower | July 27, 2018: Copper prices have been falling from a five-year high of US$3.30/oz on June 10, to its lowest point in 2018, US$2.72/oz on July 19. Since then, copper has rebounded to US$2.84. To illustrate potential upside, we have identified four Canadian copper stocks that trade at large discounts to forward Price to Cash Flow, as compared with their peer average of 4.3x. These stocks could have substantial upside as their current cash flow may not be incorporated into their stock price.
Capstone Mining Corp. (TSX:CS) – $0.95
Copper
Capstone Mining is a Canada-based producer with three copper mines. The Company’s assets include Pinto Valley in the U.S., Cozamin in Mexico and Minto in Canada. In addition, Capstone has two projects under development: Santo Domingo in Chile and Kitcho in Canada. The Company’s flagship Pinto Valley mine comprises an open-pit project, located 125 kilometers east of Phoenix in Arizona.
- Market Cap: $379.5 Million
- Forward Price-to-Cash-Flow/Share (NTM): 2.15x
- 1 Month Total Return: -10%
- YTD Total Return: -34%
Copper Mountain Mining Corp. (TSX:CMMC) – $1.17
Copper & Gold & Silver
Copper Mountain Mining operates the Copper Mountain Mine, a conventional open pit, truck and shovel operation with an estimated mine life of 16 years. The Company holds a 75% interest in the Copper Mountain mine, as part of a JV with Mitsubishi Materials Corporation (25%). CMMC is guided to produce 80 million lbs of Cu, 25,000-30,000 oz of Au, and 275,000-325,000 oz of Ag in 2018.
- Market Cap: $220.1 Million
- Forward Price-to-Cash-Flow/Share (NTM): 2.17x
- 1 Month Total Return: -9%
- YTD Total Return: -24%
Imperial Metals Corp. (TSX:III) – $1.48
Copper & Gold & Silver
Imperial Metals Corporation is a junior producer operating in British Columbia. The Company operates two producing mines, which produced 93.7Mlbs Cu, 81,000 oz Au, and 170,000 oz Ag. Imperial also owns one mine currently on standby, and four exploration and development projects.
- Market Cap: $178.8 Million
- Forward Price-to-Cash-Flow/Share (NTM): 1.59x
- 1 Month Total Return: -20%
- YTD Total Return: -56%
Atico Mining Corp. (TSXV:ATY) – $0.45
Copper & Gold & Silver
Atico Mining is a Canada-based copper-gold producer operating in Latin America. The Company’s El Roble mine in Columbia is located 3.5 hours from Medellin and produced 20.6M lbs Cu and 11,000 oz. gold in 2017. The site hosts reserves of 1,865Mt at 3.5% Cu, 2.3 g/t Au, and 8.9 g/t Ag.
- Market Cap: $43.8 Million
- Forward Price-to-Cash-Flow/Share (NTM): 1.83x
- 1 Month Total Return: -16%
- YTD Total Return: -41%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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