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Target Price Raised on Base Metals Firm with Key Near-Term Catalysts
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The company's Manitoba assets were discussed in a CIBC report.

In an April 18 research note, analyst Oscar Cabrera reported that CIBC raised its target price on HudBay Minerals Inc. (HBM:TSX; HBM:NYSE) to CA$10.50 per share from CA$9.50 following a management-led presentation and site visit to the company's Manitoba, Canada, projects. In comparison, HudBay is trading at around CA$8.90 per share.

Cabrera summarized the takeaways from both events.

On April 15, 2019, four HudBay executives delivered a presentation, in which they emphasized the potential of Lalor's zinc-gold-copper mineral resource and new exploration targets in the Snow Lake area, both in Manitoba. The "Manitoba assets account for about 16% of the roughly $4.2 billion operations and development project net asset value," wrote Cabrera.

The next day, CIBC attended site tours at Lalor, whose "mine development and operations showed well," and the New Britannia mine and mill located at Snow Lake. Both projects "highlight future potential," noted Cabrera.

The analyst added that "the successful development of Lalor gold and copper-gold zones is expected to increase Manitoba life-of-mine production of gold, copper, zinc and silver by 65%, 23%, 11% and 15%, respectively." CIBC also participated in an aerial tour over Snow Lake.

Regarding Lalor, Cabrera pointed out that management's efforts to improve throughput there are starting to pay off. However, further upside may not be realized until 2012, after the New Britannia mill has been refurbished, commissioned and ramped up.

Cabrera also noted upcoming catalysts. Those in the near term that should increase HudBay's cash flows are strong operating performance at the Manitoba and Peru assets, the Rosemont selldown and the Pampacancha land rights acquisition.

Further out, in early 2020, "an increase of mineral resources with conversion into reserves in the Snow Lake region could deliver a positive catalyst," Cabrera highlighted.

CIBC has a Neutral rating on HudBay Minerals.


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Disclosures from CIBC, Hudbay Minerals Inc., April 18, 2019

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analysts employed outside the U.S. are not registered as research analysts with FINRA. These analysts may not be associated persons of CIBC World Markets Corp. and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers.
Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Hudbay Minerals Inc. (HBM)

∑ CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Hudbay Minerals Inc. in the next 3 months.

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