I wrote about Hudbay Minerals (HBM) as a Top Idea almost a year ago to the day, and in that time, the stock is up 56% - not quite matching fellow Top Idea First Quantum (OTCPK:FQVLF) over that time (up 70%), but still doing pretty well amidst a better environment for copper miners (with Lundin Mining (OTCPK:LUNMF) and Freeport McMoRan (FCX)
also up nicely over the past year). This performance comes without a
huge improvement in copper prices and with Hudbay still facing some
significant financing needs to get its growth projects up and running.
While
I still like Hudbay quite a lot in terms of it being a quality mining
company, I'm not as bullish given the good run in the shares. The
acquisition of Augusta Resource (AZC)
adds some significant long-term growth potential, but not so much to
today's NAV. With a fair value around $11.50, I see less margin of error
for production, operating costs, and construction projects, but still
some upside remaining.
Read more here:
Execution Helping Hudbay Minerals Get Its Due
Showing posts with label Augusta Resource Corp. Show all posts
Showing posts with label Augusta Resource Corp. Show all posts
Sunday, July 13, 2014
Monday, July 8, 2013
Seeking Alpha: HudBay Minerals Almost Washed Out ... And Looking Like A Bargain
The list of mining stocks doing well over the past year is quite short, and HudBay Minerals (HBM)
isn't on it. Thumped by a large-scale move of investor funds out of
mining and declines in commodity metal prices, HudBay has further
worried investors with its upcoming capital needs, the possibility of a
dividend cut, and more general product/cost issues.
On the other hand, tough times don't last but tough companies do. Very few mining companies are looking at the sort of production growth potential that HudBay has over the next three to five years. What's more, while I don't think investors can sleep on the risk that the bottomless pit that once was China's appetite for basic materials has, in fact, found a bottom (meaning that the "super-cycle" is over), no analyst is currently projecting a long-term copper price whereat HudBay can't make money.
The valuation process for mining companies is slippery and inexact. That said, even using relatively low multiples on EBITDA, low price inputs into a NAV calculation, and the company's tangible book value suggest that these shares are undervalued. Unless you believe HudBay will actively destroy value by staying in business, these shares look at least 30% undervalued and may in fact be worth 70% to 100% more than today's price.
Please follow this link to continue:
HudBay Minerals Almost Washed Out ... And Looking Like A Bargain
On the other hand, tough times don't last but tough companies do. Very few mining companies are looking at the sort of production growth potential that HudBay has over the next three to five years. What's more, while I don't think investors can sleep on the risk that the bottomless pit that once was China's appetite for basic materials has, in fact, found a bottom (meaning that the "super-cycle" is over), no analyst is currently projecting a long-term copper price whereat HudBay can't make money.
The valuation process for mining companies is slippery and inexact. That said, even using relatively low multiples on EBITDA, low price inputs into a NAV calculation, and the company's tangible book value suggest that these shares are undervalued. Unless you believe HudBay will actively destroy value by staying in business, these shares look at least 30% undervalued and may in fact be worth 70% to 100% more than today's price.
Please follow this link to continue:
HudBay Minerals Almost Washed Out ... And Looking Like A Bargain
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