Pat McHughHudbay MineralsHBM.TOCOMMENTMay 28, 2007

Whole base metals space does well over 5 years, though perhaps poorly over 6 months. Dearth of Tier 1 deposits, whole bunch of Tier 2 deposits. For him Tier 1 means world-scale size and top quartile on ROIC, but bottom quartile on costs. Likes its built-in growth and renewed focus in Arizona, but not its financial performance.

His firm's preferences in resources have been oil, gas, gold. Some of the cyclicality might be coming out of copper. There's lots of it, but does take a long time to get new mines into production. It's in everything, and we'll probably see a time when demand outstrips supply.

Not recommended yet, but a name to keep an eye on.

Still a core holding within the materials sector. Company hopes to expand production 24% over next few years. Extending mine life. Copper World is a potentially big addition.

Management's really grabbed the reins and turned it around. He'd still recommend as a Buy today.

We're in early stages of long-term bull market for commodity stocks. You can buy and hold this name.

That said, his team is tactical. Went to the sidelines when it broke the 50-day MA a couple of weeks ago. Can likely pull back to 200-day, around $24-25 -- that's ~10%, and a decent point to re-enter.

Right space for the last 6-8 months, so stock's moved up fairly significantly. Depends on your view of precious metals moving forward. Commodities are cyclical in nature, so when the bottom falls out it can fall pretty hard. 

Really good company, well run. But is it the place to be for the next 6 months? He'd be careful on commodities as we stretch into all-time highs on many of them. He's not a PM guru, so some of the other BNN guests could give more timely advice.

If you don't own, wait for a pullback; or buy part of your position now as a baby step, and wait for a pullback to add the rest. If you own it, look at its weighting in your portfolio because it's gone up so much; you may want to trim. Same as with gold, copper prices have really been extended.

Is a little concerned with the chart. It's had a very good run this year, from $15 to $25, but we're seeing a correction in metal stocks. The chart has a double top now, unable to break $25 twice. The floor is $20-21, but if it falls, it could fall back to $15, a real risk. Watch this to see if it holds $20.

He bought it a while ago when he saw a copper shortage. Plus, HBM has a gold kicker. They have a leading property in Arizona that could be mined for copper. But it's a cyclical stock that can move up or down big. He sees the copper story still unfolding. He has sold half his position a few weeks ago.

Materials are currently being revalued. Commodity prices improving. The multiple investors are prepared to pay is expanding. The value of what's in the ground is expanding. We know there's demand for power everywhere in the world. There are only so many copper-producing assets, with very few new ones coming on. This name has been a big position of his for a long time.

Gold and copper. Likes copper long term for the power opportunities. Multi-mine and multi-jurisdiction, so not all eggs in one basket. (FM found out how something can change and really cause a problem.) Produces cashflow, solid operating business. 

Very interesting opportunity in Arizona for Copper World, an accretive deal. Well financed. Trump keeps saying how he wants US to have its own copper production. Recently broke out of 5-year base technically. A mid-cap that could, ultimately, become someone's target. Yield is 0.13%.

Safe jurisdiction. Multi-mine opportunity. We're into a resource cycle that will go on for a long time.

Copper and gold. Significant FCF. Market's waiting to see what happens with its massive copper project in Arizona. Will probably need to find a partner on this one, would boost production by 50%. He hopes for shovels in the ground in 2026, then 2-3 years before first production comes online.

He's watching it for the second half of the year, waiting for an inflection point on Arizona mine news, including possible fast-tracking by the US administration.

Does have international exposure, so it's not immune to geopolitical risk. A country can look stable at the outset of an investment, but then look different 10 years later. More volatile relative to some peers, so you need a strong stomach. Long-term view still positive.

Still in metals, gold and copper, that will deliver growth going forward. Sees demand for gold getting stronger as we move through the year. Copper is still needed for the electrical and infrastructure grid buildouts. 

They operate in less politically risky areas like Peru which is expanding, and are not in Africa, and a copper mine in Arizona. Also will develop a project in Alberta. Today, they reached an agreement with the Cree Nation in Alberta--good news. Copper is needed for electricity production and we will likely see more demand in the future.