Opinions
Jason Mann
Turquoise Hill Resources
TRQ-T
TOP PICK
Apr 06, 2016
$3.300
Stock price when the opinion was issued
precious metals
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COMMENT
A Mongolian project with single assets. For all intents and purposes, it is a public controlled vehicle of Rio Tinto (RIO-N), which owns 51%. A low grade large deposit with lots of growth going down the road as they develop the underground portion. It is currently open pit. Feels it is fairly valued. Sensitive to copper.
precious metals
TOP PICK
It is a play in the huge Mongolian copper mine. They have another year and a half of liquidity. There are concerns that they cannot come up with their share of the CAP-X. It got deleted from the TSX index. The quality of the asset is not in question. There is also tax loss selling and it is now oversold. There should be a pretty good bounce in the stock. (Analysts’ price target is $1.44)
precious metals
HOLD
18 months ago, very few of his picks would have been in the resource sector, but he is seeing a shift to the cyclical value. This owns one of the best undeveloped copper assets globally. They are cash flowing from their open pit mine today. This has a 40-year life, so you are buying an asset that has got a very long time for cash flow. Has no debt problems, and has $1.3 billion cash on the balance sheet, which will be used to develop their underground mine. Trading at 6.2X EBITDA and about 14X PE. Price momentum has been improving as copper stocks have been moving up. Rio Tinto (RIO-N) has managed to do a creeping takeover over the last number of years, and own over half of it. If the cycle starts to turn, it would make a lot of sense for Rio Tinto to take in the minority.