Hudbay Minerals (HBM.TO)

(A Top Pick Sept 1/15. Up 8.86%.) Have just finished building out Constancia and it is being commissioned. That is going to start producing great cash flow. They have a number of projects that could come on stream in the next number of years. Management has been particularly aggressive in taking costs out and taking some write-downs where they can, so feels it is really being set up well for the next 5-10 years.

A lot of the problems that have been there recently have been short term ones. Going forward, he thinks they are going to throw off some solid free cash flow. Have been able to expand their credit facilities lately, so they could be very opportunistic going forward.

(Market Call Minute) It seems to have bounced and he would take the opportunity to get your money out.

Base metals stocks have done well. Typically, you see a large correlation of base metals stocks, whether copper, lead, nickel or zinc, all running together, and this company is running along with them. It looks like the US$ is starting to pick up strength, which could be the end in the near term of the commodities play. It is not likely that China will be coming back building lots of stuff. He would go elsewhere.

Seasonally it does well from the third week in January until the second week in July. You have a short period of time to hold this stock. You may want to take money off the tale in a couple of weeks. Watch short term momentum indicators.

(A Top Pick Nov 4/15. Down 3.58%.) Had liked this for the long-term aspects as well as the optionality of owning an operating mine in a commodity that is trading at commodity market prices that nobody can mine at. Zinc is the hot metal today and this is a zinc producer.

(Market Call Minute.) Probably one of the better plays on copper and zinc right now. They are probably going to have to do a financing at some point or else have a royalty stream.

Over the next couple of years, with Constancia coming on stream and some of their other prospects further down the line, this is a company that is going to do well. A lot of people have been worried about the balance sheet and credit worthiness. In almost all their cases, their covenants have been modified or terms have been extended. One of the better managed mining companies.

(Market Call Minute.) Probably the highest leverage to zinc amongst the majors.

Normally base metals stocks like this do very well from October through to April of each year. We are getting to the end of the seasonal strength for base metals. Normally from around the end of April into May is the time to take profits. The chart is showing that it is starting to have difficulties and getting into resistance. This company is a major producer of copper. Copper, on a technical basis, broke a key support level just last week on the downside.

(Market Call Minute.) Copper has finally had its bounce and is not bouncing very nicely. If China really has an issue, there are a lot of yellow flags on this.

These companies are huge beneficiaries of the US$ rolling over. He would use this more as a trading opportunity. Pick a position, and if it rallies up sell some or all and replace it. These things are cyclical and move around quite a bit. There is still room left in the metals area, and zinc is one he thinks is opportune.

It was a top pick a couple of months ago. If you can buy it anywhere under $5 you should do fairly well. New management has come in and cleanup. He likes it. It is a well managed company with operations in northern Manitoba. He see increasing cash flow and production and a better commodity market would make it even better. With a clean balance sheet, he is not as concerned as some people seem to be at the current time.

The big question is, where are we in the metals cycle. There has been a terrific bounce on oil. Are we going to see a bounce in the base metals? Companies like this have a very hard time producing ore at a profit at these prices. They basically can’t make any money until the commodity cycle turns a little. At the moment he is zero weighted metal.

If you accept that base metals tag along with gold, then it could get moving. He is addicted to it. It is one of his few biggish mining companies.