Stephen Simpson, CFA
Itinerant • 11 Comments
Mon, May 16, 3:24 PM
- Hudbay Minerals (HBM +7.2%) is upgraded to Outperform from Sector Perform with a $7.50 price target at RBC Capital, which cites HBM's attractive valuations, strong funding position. and high leverage to zinc, which RBC says is its preferred commodity.
- The firm believes the zinc market is in deficit and will remain in deficit, drawing inventories down below critical levels and leading to very strong pricing; with 23% of HBM's 2016 revenues expected to come from zinc, and the highest earnings leverage to zinc in its North American coverage universe, RBC expects improving zinc prices to yield significant upside for the shares.
- In addition, RBC says its sensitivity analysis suggests that at spot commodity prices and currencies, HBM would be free cash flow positive through 2018.
- Now read Hudbay Minerals: Not good enough yet but there's hope
Tue, Apr. 19, 12:49 PM
Thu, Apr. 7, 12:45 PM
Thu, Jan. 14, 1:23 PM
- HudBay Minerals (HBM -12.2%) is sharply lower after saying its FY 2015 production of copper, zinc and precious metals was within guidance ranges in both its Manitoba and South America units.
- HBM forecasts 2016 copper, zinc and precious metals production to rise 12%, 9% and 16% Y/Y at each respective midpoint, reflecting the first full year of capacity at its Constancia mine in Peru.
- HBM says it plans to cut 2016 capex by more than 20% to ~$300M.
- Barclays downgrades shares to Underweight from Overweight and cuts its price target to $4 from $10.
Oct. 7, 2015, 5:39 PM
Sep. 2, 2015, 11:29 AM
- Rio Tinto (RIO +1.3%) owns more than half of the shares of Turquoise Hill Resources (TRQ -1.7%), and likely will buy out the shares it does not already own in the next 12-18 months, CIBC analyst Tom Meyer predicts.
- Rio will make its move once key risks from the Oyu Tolgoi copper-gold project in Mongolia are removed, the analyst says, such as financing, a cost update on Oyu Tolgoi’s underground development, and next year’s Mongolian election.
- But Meyer maintains an Underperform rating and $4 price target on TRQ in a relative valuation call, saying higher-cost, higher-leveraged copper plays such as First Quantum Minerals (OTCPK:FQVLF) and HudBay Minerals (NYSE:HBM) offer more upside if commodity prices go up in the short term.
May 4, 2015, 11:26 AM
- Hudbay Minerals (HBM -1.6%) says 180 unionized workers are on strike at its Manitoba operations, representing ~12% of its workforce in the province, adding that it has a contingency plans in place and expects operations to continue.
- HBM has four producing mines in Manitoba, including the Snow Lake project it bought last month, plus processing facilities.
- Reports say it is the first time the Manitoba mine workers have gone on strike in 40 years.
Jan. 16, 2015, 10:10 AM
- Hudbay Minerals (HBM +3.2%) says it plans a 2015 capital spending budget of C$425M, down ~60% from 2014 levels.
- HBM also says total 2014 copper production of ~37.6K tons was below guidance due to “nominal” copper concentrate output at its Constancia mine in Peru in late 2014; production at the mine started in Q4 and commercial production is expected in Q2 of 2015.
- Sees 2015 copper production of 140K-175K tons, zinc production of 95K-120K tons, and precious metals production of 135K-170K oz.
Jan. 14, 2015, 12:49 PM
- As TD Securities analysts test free cash flow for Canadian copper producers at US$2.50/lb. for copper, every company in their coverage area except Copper Mountain Mining (OTCPK:CPPMF -13.5%) is found to have negative free cash flow.
- First Quantum Minerals (OTCPK:FQVLF -11.4%) might have the biggest problem, the TD analysts say, calculating that its free cash flow is negative US$1.2B at $2.50 copper due to a royalty hike in Zambia and major spending commitments at the Cobre Panama project.
- The favorite names in a low price environment are Lundin Mining (OTCPK:LUNMF -12.7%), HudBay Minerals (HBM -13.7%) and Nevsun Resources (NSU -4.7%), thanks to their solid balance sheets and low capital spending requirements in 2015.
Jan. 14, 2015, 12:43 PM
Jun. 23, 2014, 8:36 AM
- Augusta Resources (AZC) +5.7% premarket after accepting a revised takeover offer from HudBay Minerals (HBM).
- The revised offer is worth ~C$555M, or $3.56/share; HBM is offering 0.315 of its shares for each AZC share, the same as its initial hostile bid, but it is now adding 0.17 of a warrant for each AZC share to facilitate a friendly deal.
- The deal gives HBM the Rosemont project in Arizona, one of the world’s most promising undeveloped copper deposits, with 7B lbs. of copper reserves and resources.
Mar. 28, 2014, 11:25 AM
- Augusta Resource (AZC +3.2%) says nine parties, including "significant industry players," had expressed interest in the company in response to its strategic review process, as it tries to find a white knight bidder to fight off HudBay Minerals' (HBM +1.8%) hostile takeover bid.
- AZC says it will hold site visits to its Rosemont copper project, which is near construction, over the next few weeks.
- AZC also says it will hold a shareholder meeting May 9 to keep the poison pill put in place last year when HBM started building its stake in AZC.
Feb. 28, 2014, 11:59 AM
- HudBay Minerals (HBM +3.4%) CEO David Garofalo tears into the management at takeover target Augusta Resources (AZC +1.6%), calling the company "essentially insolvent" and warning that its shareholders were at risk without a quick wrap-up in permitting for its Rosemont copper project.
- AZC said this week that it expects to receive its final required permit for Rosemont in H1 of this year, while HBM contends the permitting process will take much longer and could cause serious liquidity problems, noting that a $109M loan comes due in July.
- AZC "really [has] no money, they have significant debt, and that debt is coming due very soon," Garofalo says, adding that two permits AZC has obtained are facing legal challenges, which could delay planned funding from Silver Wheaton (SLW).
Feb. 12, 2014, 9:59 AM
- Traders are lining up bets that Augusta Resource (AZC +2.3%) will win a higher offer than HudBay's (HBM +3.2%) recent unsolicited bid of C$2.96/share - ~C$540M including net debt -
- AZC’s Rosemont copper project in Arizona is large enough to attract other producers including OZ Minerals (OZMLF) and Teck Resources (TCK), Laurentian Bank of Canada says, estimates the company’s value is at least C$3.89/share based on similar deals.
- Freeport McMoRan (FCX) is another possible suitor with the financial strength to outbid HBM, according to National Bank Financial.
- “HudBay’s offer has little chance of success at its current valuation,” says a Toronto Dominion analyst.
Jan. 9, 2014, 10:29 AM
- HudBay Minerals (HBM -5.8%) says a syndicate of underwriters has agreed to purchase 18.2M common shares on a bought deal basis at C$8.25/share for aggregate gross proceeds of ~C$150M.
- HBM intends to use the net proceeds of the offering for general corporate purposes, including providing flexibility to pursue opportunities to advance its growth strategy.
Feb. 6, 2013, 3:32 PM
HudBay Minerals (HBM +2.5%), expecting to more than quadruple copper output by 2015, seeks to capitalize on a buyers’ market for mining assets as small companies struggle to raise funds and larger competitors consider sales, CEO David Garofalo says. HBM plans to focus on smaller deals in countries such as Peru, Mexico, Colombia and Brazil.| Feb. 6, 2013, 3:32 PM