Base Metal Miners Analyst Watch: December Edition

by: Itinerant

For the last time in 2013 we would like to update our readers on analyst targets and recommendations for selected base metal mining companies. The December edition of our article series summarizes the latest entries in our data base and also provides some comparison to last month's edition.

Most companies mentioned in this article have more analysts following their progress than considered in our database. This difference is due to the fact that not all analysts release their predictions to, which is the source of the presented data.

Unchanged from last edition, we are considering the following companies in alphabetical order: Freeport McMoRan (NYSE:FCX), Hudbay Mining (NYSE:HBM), Nevsun Resources (NYSEMKT:NSU), Southern Copper (NYSE:SCCO), Taseko Mines (NYSEMKT:TGB), Teck Resources (TCK), Thompson Creek Metals (TC), Turquoise Hill Resources (NYSE:TRQ).

Additionally, we have added the following four companies to our data base: Copper Mountain Mining (OTCPK:CPPMF), First Quantum Minerals (OTCPK:FQVLF), Capstone Mining (OTCPK:CSFFF) and Augusta Resource (NYSEMKT:AZC).

N.B. Price targets for Imperial Metals, Copper Mountain Mining, First Quantum Mineral and Capstone Mining are provided to us in Canadian Dollars and we have used a conversion rate of 1 Can$ = 0.94 US$.

Our data for these stocks is summarized in the table below. The first three columns list the company names, ticker symbols and share prices at the time of writing. Price targets (low, median and high) are listed in the following three columns. These targets are followed by a column giving the numbers of analysts providing data to and the mean recommendations given by these analysts ranging from 1.0 (strong buy) to 5.0 (sell). This concludes the data sourced directly from

The following columns are colored in light green and contain data derived from our source data. These data points are given in percentages related to the share price at the time of writing. The column titled "median-price" gives the difference between the share price and the median target price. The column titled "high-low" gives the difference between the high and the low target. The last four columns titled "target change" document the changes in price targets since the November report with the last columns giving the average change over the low, median and high price targets.

The difference between the current share price and the median price target is listed in column "median-price" and visualized in the diagram below. Under normal circumstances we would view a large value in this column as an indicator for the potential of disproportionate gains over the coming year.

Augusta Resource has taken the lead in this chart with a 226% price rise necessary to reach the median target from present levels. If permitting of the Rosemont mine succeeds in coming months then such an increase is certainly a possibility.

Despite claims to the contrary here on Seeking Alpha, Thompson Creek Metals is still rated very highly by analysts. The Mt Milligan mine is currently ramping up and the success of this operation will be determined in 2014.

Turquoise Hill Resources and Taseko Mines are the other two miners with median targets close to 100% above the current share price.

At the other end of the spectrum Imperial Metals and Freeport McMoRan are trading less than 20% away from their respective median price targets.

Column "high-low" measures the divergence in analyst opinions. The results from this column in the table at the top of this article are visualized in the next diagram.

Copper Mountain Mining seems to be causing the greatest degree of disagreement among analysts followed by Taseko Mines while analysts agree very closely on targets for Hudbay Minerals, Nevsun Resources and Imperial Minerals.

Monthly changes in price targets as listed in the table above are visualized in the diagram below.

Target were cut severely for Turqoise Hill Resources while targets for most other companies remained almost un-changed.

On average price targets were cut by -19.5%. If the price target cut for Turqoise Hill is regarded as an outlier and ignored then the average computes to only 1.5%.

The final diagram visualizes analysts recommendation ratings. The small red bars indicate changes in the recommendation score since last month.

Nevsun Resources and Augusta Resource receive the most favorable ratings, followed by Imperial Metals and Capstone Mining. Interestingly, Turqoise Hill Resources has received a substantial rating improvement despite the massive cuts to the price targets.

Thompson Creek Metals carries the red lantern in this ranking.

Parting Shot

The past year has been a difficult one for the mining industry in general. The companies included in this review also had to overcome their share of challenges. For some of them the coming year will bring moments of truth as permitting will be decided. For some others large capital projects are being completed. And for all of them commodity prices will continue to provide a rollercoaster to be managed with an even hand.

We would like to wish everyone still interested in these companies a jolly holiday season and much success in 2014.

As some our friends would say: See youse all in the New Year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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