Hudbay Minerals (HBM.TO)

If you think gold is rallying because it has been oversold, with the stock starting to turn the corner with a little bit of volume, you could be a Buyer here. It seems to be at its low of 2009. Would be a little leery about analysts changing their tune on gold stocks because of a good week.

(A Top Pick Feb 25/15. Down 70.84%.) The primary concern is what the pressure is going to be on their debt covenants at current copper prices. Given the production they have coming online in the next couple of years, you should see those covenants relax. Should finish this year with about $200 million in cash at least, and they still have fairly large credit facilities. There are also some good assets coming on stream. Dividend yield is 0.65%.

Sell or hold? He would say there is no catalyst for this stock. If you had to go into another mining stock, Lundin (LUN-T) wouldn’t be a bad stock, but he would prefer going into a forestry company such as West Fraser (WFT-T).

They have a major mine, Constancia, coming on stream in Peru, and have managed to finance it despite a lot of people who didn’t think they could pull it off. Good management and they have some more opportunities going forward.

It is attempting to form a bottom, but he will not buy it here. It needs to break the neckline at about $7.

This has a really good successful track record in building mines on time, at cost, and bringing them into service. In the last little while they have brought in a Constacia mine in Peru, which has tripled their copper production. They also have development properties in their pipeline. When copper does go up, you get torque on the upside. Dividend yield of 0.3%.

One of Canada’s leading producers of zinc, copper and precious metals, with operations in Canada, Peru and the US. A new mine coming on stream next year. Other, temporary transportation issues are resolving. They have good future prospects.

Constancia is coming on more and more as the year progresses. Their recoveries in the latest quarter were well over 60%, as opposed to under 40% in the last quarter. Sees them making improvements in their Canadian mines at 777, Reed and Lalor. This is not only going to be a survivor, but is going to prosper as the cycle improves. Dividend yield of 0.31%.

Not involved in base metals currently. There is nothing wrong with this company. You have to trust your instincts in a trading stock. You can be brave and start picking the bottom, providing you are ready to sell when you’ve had a nice gain.

This is really a very rare category. The closest thing we have got to a large mining company. They are a company which is very busily expanding its interests beyond Manitoba and into Latin America. Have been doing quite well and are buying assets. You are best not buying things before the cycle has started again, and be patient if you can.

One of his primary holdings within the materials sector. This is the year that Constancia is coming on stream and he thinks free cash flow is going to grow fairly significantly. Likes their production profile and thinks it is going to build substantially. He could see them buying some other assets if they become available.

This is still slightly expensive. There is a great story in copper that it really gets tight in a couple of years from now. 90% of copper is still profitable, so it really needs to fall.

This has been through a roller coaster in the last couple of years, and could be a candidate for tax loss selling near the end of the year. It has 2 periods of seasonal strength. One is from October to December, but this is probably going into the 2^nd period of seasonal strength, the end of January until May. Right now the technicals are bad and this is in a downward trend.

A good name and one of the better company names, but he doesn’t see a catalyst. If you are going to buy this, he would buy later. You are going to have more clarity on China, global growth and on Europe. Right now is not the time to Buy.

Has typically been a zinc producer in Manitoba. Recently expanded and moved into Peru with a copper acquisition. Have been generating negative free cash flow for a number of years as they developed that asset. Right now they’re turning the corner on that asset. As it comes online it is beginning to generate free cash flow. Their free cash flow coming out is quite impressive, going from negative to potentially $200 million plus in the next few years. Against its enterprise value that is a yield of 6%-7% which looks attractive. Balance sheet is quite stretched because of all the debt needed to build the asset. It has all the things that he is looking for. Near term headwinds he is seeing in the copper market is keeping him out of this name. He would take a position, but lower down.