Pacific Trader: Newly arrived Lundin Mining shows copper miners how it’s done

Since Lundin Mining moved to Vancouver, the company’s stock is up 59 percent

The stock: For all the chest thumping by economic development types and civic boosters, large corporations very rarely pull up stakes and relocate to another city. But Lundin Mining Corp. (TSX:LUN) did just that last fall, shifting its headquarters from Toronto to Vancouver. It explained the move in terms of being closer to its siblings in the Lundin Group of Companies: Lundin Gold, International Petroleum Corp., Filo Corp., NGEx Minerals, Lucara Diamond Corp. and others. This is the resource group controlled by the Swedish-Canadian Lundin family, founded by the late Adolf Lundin and today overseen by his equally entrepreneurial son, Lukas. Lundin Mining’s CEO is grandson Jack.

The drivers: Newly arrived in Vancouver, Lundin Mining promptly went on a tear, chalking up a 59-percent share price increase in the last six months. Part of that gain can be attributed to the recovery in the price of the company’s main product, copper. The brown metal is up 18 percent over the same period.

But virtually all of copper’s rise has come since February. Lundin Mining was outperforming its peers before that thanks to rising output, a moderate debtload (meaning it hasn’t been overly punished by high interest rates) and the promise of its growing cluster of mines in the Andes Mountains, including the operating Candelaria and Caserones mines in Chile and the Josemaria project under development just over the border in Argentina. The company also has mines in the U.S., Sweden, Portugal and Brazil.

For copper bugs dazzled by demand projections amid the energy transition but spooked by First Quantum Minerals’ (TSX:FM) debacle in Panama (where protests led to a shutdown of the huge Cobre Panama mine), Lundin Mining looks like a lower-risk alternative. It even pays a respectable dividend, with a yield of 2.4 percent. Following the tumble in materials stocks on Tuesday (June 4), LUN closed at $15 even.

Word on the street: “Lundin Mining is a diversified base-metal growth story,” Stifel analyst Cole McGill wrote last week. “With all three [Andean] assets located in close proximity to one another, we believe the company will be able to reap synergies as they develop this emerging copper district.” He has a “buy” recommendation on the stock with an $18 target.

Coming and going: Vancouver-based oil exploration company Reconnaissance Energy Africa (TSXV:RECO) has agreed to pay US$10.8 million to settle Canadian and U.S. lawsuits brought by investors over allegedly misleading statements about its project in Namibia. The company has also cancelled its contract with Florida-based stock promotion firm FTB Capital.