Last quarter’s sales surged 52% over the same quarter a year ago. And it just approved a new program to profitably process mine tailings, which should substantially improve margins. (Mine tailings are the materials left over after processing the ore.)
Aguablanca, Spain: This nickel and copper mine recently bumped operating efficiency up 46%.
Galmoy, Ireland: About 100 miles from Dublin, the lead and zinc mine benefits from having a sound
infrastructure already in place.
Aljustrel, Portugal: The lucrative zinc mine is still ramping up capacity, which gives us an opportunity to get in on the ground floor.
What’s more, Lundin Mining has a few up-and-coming operations in the pipeline that are showing incredible promise, too.
One is the world class Tenke Fungurume copper/cobalt project in the Democratic Republic of Congo. It’s being touted as the largest and richest known copper/cobalt discovery in the world, covering almost 600 square miles of the Katanga Province. This blockbuster mine has an expected life of 40 years. And is projected to be in the lowest quartile of operating costs for copper producers.
The reasons for owning Lundin are numerous, but in spite of its enviable (and growing) inventory of proven reserves, shares can be had for a steep discount. The company is valued at $2 billion, which is only 0.63 times its book value. Even better, the forward price-to-earnings ratio is a measly 5.73, despite the company’s mines having a growth rate around 30% to 35% a year.
The market’s been noticing Lundin’s value as well. In recent days, a takeover bid has emerged that could drive share prices higher if it’s approved. However, in light of the number of merger agreements that have gone unfulfilled, there may not be a takeover.
Regardless, of whether it happens or not. These developments should serve to remind you that while the market may not see the value in Lundin, it’s competitors do. And so do we.
Editor’s Note: Today’s column is excerpted from the just-released Supercycle Report. Lundin Mining is just one of the five companies it recommends. Together, they represent the most compelling plays in the mining sector. And that’s critical, given the investment climate in which we’re presently operating. Follow the link to get the full Supercycle research report - and all five profit plays.
Today’s Investment U Crib Sheet
If you’re looking for investment ideas, the biggest bang for your buck will come from small-capitalization companies. Last week, Louis Basenese showed us that small-cap stocks are the best place to be right now. To get two companies he likes right now, check out Investment U Issue #888, Small Caps: Why It’s Time To Think Small.
But small-cap mining companies have another thing going for them. Small mining producers and explorers have a tremendous advantage over their larger peers - it’s called leverage (the ability to control large dollar amounts of assets with a comparatively small amount of capital).
You see, large-cap miners are frantically searching for new deposits. These behemoths can choose to either 1) invest their own capital for exploration, or 2) acquire smaller explorers who’ve already assumed the risks of finding ore bodies themselves. Many are choosing the latter. That’s why the investment appeal in smaller-cap mining companies is so great.
There’s currently over 4,000 mining companies listed on North American exchanges, but only a handful deserve our investment attention.
If you’re looking for an easy way to take advantage of the metals and mining sector, check out the SPDR S&P Metals & Mining ETF (NYSE: XME). It invests 100% in U.S. small-cap stocks. One of the other benefits of buying closed-end ETFs is that you know if you’re buying them at a discount or a premium - and XME is currently trading at a 14% discount to its net-asset-value (NAV).
