Lundin Mining Corp. (LUN.TO)

The good news is that the materials space has been down a lot in the last 3 months. This company has been going sideways. He takes that as on-balance strength in the name. His model price is $8.87, a 21% increase. If we get everything going positively, big earnings and everybody back into the mining sector, probably the most you are going to get to is $9.16. If we go into a big Bear market, it goes down to $3.70. He would Hold this here, but is looking at the $9 top.

They have over $1 billion in cash, and the market is anticipating how they might deploy it. Rather than a special dividend, they are more likely going to do some sort of transaction. The bottom line is, it is not easy to find good projects today that are not owned by the majors. He likes the name. They are generating free cash flow. The NAV is well protected in that a very small percentage is in development. This is well diversified across zinc, copper and nickel. Nickel has been the driver up until now and he thinks zinc will be part of the driver for the next couple of years. A good way to get exposure to 3 basic materials.

One of the solid, mid-cap diversified miners in Canada. They’ve had a great track record of building economical mines, conservative balance sheets. He likes this company. If you want exposure, it is a good commodity mix.

Feels this is undervalued compared to its competitors. One of the knocks is the big mine in the Democratic Republic of the Congo with Freeport McMoran (FCX-N). The two are getting out and Chinese firms are coming in to take over. The question is, when they sell the company how do they redeploy that capital. Historically they have gone into unfriendly jurisdictions very early, waited for them to turn around and then sold them. Shareholders have done very well with that.

A small position is how you should play a lot of these companies, as these almost trade like options. They are going to do really, really well, or they are going to really hurt you. They are volatile. This is a good company. In the past, they have earned a pretty good ROC. If we can get back to normal, you are going to get a nice pop. His figures showed that this could be $10-$12.

This has lots of things going on right. With what has been going on with base metal prices recently, their cash flow will really start to ramp up. They are in the process of trying to sell one of their mines to the Chinese. Technically, it ranks fairly well, which probably has to do with increasing copper prices.

A very good operator and one of the larger base metals producers in Canada. They acquired new mines in the US in the last couple of years. His view on base metals is that they are stuck in no-man’s land and there is no sign of a renewal. If you have to own a base metals name this would be one of the safer ways to do it.

Fundamentally he likes this a lot. In the Canadian market this has a better balance sheet than many other companies. However, in base metals in the materials space, it is hard to see a sustained catalyst for stocks given that China’s growth is quite slow and that they are trying to move to a consumer economy and away from an export led and manufacturing led economy. He would be cautious, but if you want to buy a little, this is a fine company.

His favourite name in the copper space, but has been one of the poorest performers year to date because it is such a good company. They don’t have a lot of debt. Thinks a lot of investors are nervous about buying a company that wants to buy somebody else. He would have this is a Long, offset was some Shorts on companies he is not favourable on.

(Market Call Minute.) A zinc play, and he would prefer zinc to copper or nickel. You have 2 choices, Hudbay (HBM-T) or this one, and he owns Hudbay, but this one will be a good play as well.

Using the earnings along with the balance sheet and he calculates Fair Market Value at $1.03. They issued the balance sheet and didn’t take any write offs on their assets, which is strange to him.

Recently made an agreement with the Ecuador government. If anyone is going to put this project to good use, it will be the management behind this company. Long-term this is a great project and has a lot of potential. It has a touch of political risk because of Ecuador.

He would buy it here. Their margins have increased and they did a good job of exploration. He is very comfortably buying it here. This is the one to own for a copper recovery.

Copper zinc and nickel. Anything connected to mining has just been atrocious over the last 3 years. In periods like this, valuations can be quite attractive, but you never know when the cycle is really going to turn. This is a fairly well run mid-tier company. They have no debt problems. Their cash costs in their mine are relatively low. Good management. If you want exposure to mining, this is not a bad place to be.

The finest of the copper miners. He is switching away from copper, however.