The four copper mining stocks on our list all have active copper mines and maintain attractive valuations
SmallCapPower | May 9, 2018: The copper price fell 7% from US$3.26/lb to US$3.02/lb since our last copper article in February 2018. However, it remains far above the US$2.50/lb price we saw at this time last year. The four copper mining stocks on our list today have seen an average year to date (YTD) decline of 16%, significantly underperforming the TSX’s 3% fall over the same period. The correction has introduced a possible value opportunity, as these four stocks show a median price/cash flow of 3x; a discount to other copper producers, which trade at 4x.
Nevsun Resources Ltd. (TSX:NSU) – $3.82
Specialty Mining & Metals
Nevsun Resources is a producer of copper, zinc, gold and silver. The Company’s flagship open-pit Bisha mine, located in Eritrea, is expected to produce 20M-30M lbs of copper and 210M-240M lbs of zinc in 2018. Nevsun has a 60% ownership stake in the property, while the Eritrean government retains control of the remaining 40%. The Company’s other major asset is a pre-production mine located in Serbia, known as the Timok project. Drilling is expected to begin in Q2 2018, with production commencing in 2022. Further exploration projects are underway in Macedonia, Serbia and Eritrea.
- Market Cap: $1,154.9 Million
- YTD Total Return: 24.8%
- Forward Price to Cash Flow Per Share (NTM): 8.5x
- Price to Cash Flow Per Share (2018): 26.2x
Hudbay Minerals Inc. (TSX:HBM) – $9.01
Specialty Mining & Metals
Hudbay Minerals is a low-cost Canadian copper producer. The Company’s mining operations fall within the first quartile of Wood Mackenzie’s 2018 projected cost curve. It operates four active mining assets with exploration underway for additional projects. Hudbay’s existing mines, located in Manitoba and Peru, are expected to produce 123k-145k tonnes of copper in 2018. Additionally, Hudbay’s open-pit Rosemont project, located in Arizona, is anticipated to produce an additional 127k tonnes of copper annually when fully operational. This site may account for up to 10% of all U.S copper production. Hudbay is currently in the process of securing all necessary permits for Rosemont.
- Market Cap: $2,354.1 Million
- YTD Total Return: -19.0%
- Forward Price to Cash Flow Per Share (NTM): 3.6x
- Price to Cash Flow Per Share (2018): 3.3x
Taseko Mines Ltd. (TSX:TKO) – $1.43
Specialty Mining & Metals
Taseko is a copper producer operating in Canada and the U.S. The Company’s flagship asset is the Gibraltar Mine, which is an open-pit, copper-molybdenum mine located in south-central British Columbia. The mine is expected to produce 140 million lbs of copper and 2.5 million of molybdenum in 2018. The Company also owns the New Prosperity gold-copper, Aley niobium, Florence copper and Harmony gold projects.
- Market Cap: $324.8 Million
- YTD Total Return: -51.4%
- Forward Price to Cash Flow Per Share (NTM): 3.0x
- Price to Cash Flow Per Share (2018): 2.3x
Capstone Mining Corp. (TSX:CS) – $1.19
Specialty Mining & Metals
Capstone Mining is a Canada-based copper producer with three 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 open-pit mine is located 125 kilometers east of Phoenix in Arizona.
- Market Cap: $474.7 Million
- YTD Total Return: -17.4%
- Forward Price to Cash Flow Per Share (NTM): 2.7x
- Price to Cash Flow Per Share (2018): 3.0x
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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