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.[NLINSERT]
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Disclosures from CIBC, Hudbay Minerals Inc., April 18, 2019
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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.