Lundin Mining Should Resume its Foward Run

On August 28th, 2007, I wrote an analysis of base metals miner Lundin Mining Corporation (LMC). Since I wrote the article, LMC has gone on to score over a 20% gain in under a month.

I believe shares in the company are still undervalued. The fundamental picture for LMC looks great. The company is expanding its base metals production and expects to bring the increased production online in the current quarter. LMC is cash rich and has low debt. Insiders, mainly the Lundin Family, are also increasing their share holdings in the company, a strong indication that good things are on the horizon.

Let's recap a few brief statistics from Lundin’s Yahoo! Finance profile:

Total Cash: 388.21M
Total Debt: 47.73M
ROA: 13.01%
ROE: 22.44%
Trailing P/E: 8.1
Forward P/E: 7.19

If we look at the chart, we see a nice smooth uptrend followed by a recent breakout to $12.39. At the moment we are under the recent high which is discouraging. We may see some profit taking in the short-run

LMC 1-year chart

Since the fundamentals look so strong, I expect to see LMC resume a run forward, so long as the market remains in flat to positive territory. I purchased shares of LMC at $10.19 on August 29th, 2007. My end of the year price target for LMC is $14.

Disclosure: The author holds a long position in LMC.

Comments

[richandmer:]

I have been reading your articles on Lundin and ended up buying the stock over the last couple of weeks due in large part to your analysis. Luckily the stock is now trending higher. I do have to wonder why the stock dropped so much to begin with.

You mentioned that your year end price goal is 14. My question is where do you see this company 1, 3 and 5 years from now? Is this a stock that should be held for the long term?

Thanks,

2007 Sep 24 02:41 PM

[berberick:]

If you want long term buy BHP , RIO , or PCU .

2007 Nov 10 01:15 AM

[berberick:]

If you want long term buy BHP , RIO , or PCU .

2007 Nov 10 01:15 AM

[Raw Greed:]

Rich I like the high insider holding amount. The Lundin family has great incentive to create value for shareholders. I see this stock at $16-$18 in a year.

2007 Oct 26 03:28 AM

[Norman Lepo...:]

Mr. So's timing was extremely poor, but I do think he is right longer term.

2007 Dec 09 10:40 AM

[Woodrebel:]

So where is LMC going from here? Why no update after they reported?

2007 Dec 14 09:53 AM