Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

While sometimes risky, mining stocks can also be strong performers when commodity prices move up. However, due to the volatility of these stocks, Pat McKeough recommends that they only form a modest part of a well-balanced portfolio.

Canadian penny mining stocks are some of the riskiest stocks you can buy. These companies are trying to find mineral deposits that mine at a profit and such a find are exceedingly rare. Because of this, it’s even more important to look for investment quality in penny mines.

For example, we automatically rule out investing in penny mines that promote themselves too aggressively or do so misleadingly. The mine-finding effort is more likely to succeed if the managers focus on finding a mine rather than hyping their stock.

Junior mining stocks are usually smaller companies that typically take on riskier mining projects. However, if a junior mining stock is successful at finding and mining, it can mean huge returns for investors.

No matter what type of mining stocks, or other stocks you invest in, TSI Network recommends following our three-part Successful Investor strategy:

– Invest mainly in well-established, mostly dividend-paying companies;
– Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities);
– Downplay or avoid stocks in the broker/media limelight.

HudBay Minerals Inc

The gold, silver, copper and zinc miner significantly increased its output in the latest quarter—a move that’s lifted revenue as well as cash flow.

HUDBAY MINERALS INC. (symbol HBM on Toronto; www.hudbayminerals.com) produces base and precious metals including copper, zinc, gold and silver.

The company first sold shares to the public at $2.25 each and began trading on Toronto in December 2004. Before that, the company operated as Hudson Bay Mining & Smelting Co., Limited (HBM&S). That business explored for minerals and operated mines in and around Flin Flon, Manitoba, for over 80 years.

HudBay produces most of its zinc and copper in northern Manitoba, where it owns the 777 mine. In 2015, it started full production of copper, gold and zinc at its Lalor and Reed projects, also in that province.

In Peru, the company began production at its $1.7-billion Constancia copper mine in 2014. Constancia now produces 110,000 tonnes of copper per year.


The inside story on mining stocks

Mining stocks play a key role in your portfolio whether commodity prices are up or down. Pat McKeough tells you why in this special report—and gives you the outlook on gold, copper, uranium, and the remarkable story of Canadian diamonds.

Read this NEW free report >>


HudBay’s revenue and cash flow vary with commodity prices. Its revenue fell (along with gold prices) 41.9%, from $809 million in 2011 to $517 million in 2013. Revenue then recovered to $556 million in 2014. Cash flow per share dropped from $1.31 in 2011 to $0.07 in 2014.

Mining Stocks: Company switches to U.S.-dollar reporting

In 2015, the company’s revenue jumped 74.6%. HudBay also began reporting its results in U.S. dollars. Annual revenue that year was $886.1 million U.S. Cash flow per share soared to $0.95 U.S.

In the three months ended September 30, 2016, the company recorded its highest output to date for copper, zinc and precious metals. That production increase lifted revenue in the quarter by 15.4%, to $311.4 million from $269.8 million U.S. a year earlier. Cash flow per share also rose 55.9%, to $0.53 from $0.34.

As of September 30, 2016, HudBay held cash of $118.3 million U.S., or $0.50 a share. Its long-term debt of $1.2 billion U.S. is a high 74% of its market cap.

In 2017, the company plans to spend $185 million to maintain its existing mines and another $85 million on new projects in Manitoba, Peru and Arizona. This includes the Rosemont copper project in Arizona.

The stock trades at just 3.3 times HudBay’s 2017 forecast cash flow of $2.00 U.S. a share.

TSI Network recommendation: HudBay is okay for aggressive investors to hold.

For our recent report on a Canadian gold stock we rate as a buy, read New Gold sets target for new mine.

For our view on the risks and rewards of junior mining stocks, read What you need to know to invest profitably in junior mining stocks.

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Mining Stocks Post Archives

Mining Stocks: Cash flow jumps for HudBay Mineral

Mining Stocks: Cash flow jumps for HudBay Mineral

The gold, silver, copper and zinc miner significantly increased its output in the latest quarter—a move that’s lifted revenue as well as cash flow.
HUDBAY MINERALS INC. (symbol HBM on Toronto; www.hudbayminerals.com) produces base and precious metals including copper, zinc, gold and silver.
The company first… Read More

Mining Stocks: Challenges ahead for Northern Dynasty Minerals

Mining Stocks: Challenges ahead for Northern Dynasty Minerals

Pat McKeough recently replied to an Inner Circlememberlooking for an opinion on this mining stock. The company aims to mine one of Alaska’s largest copper/gold deposits, says Pat. But it faces opposition.
Q: Hi Pat. I am considering Northern Dynasty Minerals (NDM) for the aggressive part… Read More

Mining Stocks: Gains ahead for Yamana Gold

Mining Stocks: Gains ahead for Yamana Gold

The gold producer saw its cash flow soar in the latest quarter on higher output at its mines but also rising prices for the precious metal.

YAMANA GOLD (Toronto symbol YRI; www.yamana.com) owns and operates six gold mines in Canada, Mexico, Brazil, Chile and Argentina… Read More

Mining Stocks: Outlook brightens for Teck

Mining Stocks: Outlook brightens for Teck

The miner’s cash flow could nearly double in 2017 on stronger prices for metallurgic coal but also zine and copper.
TECK RESOURCES LTD. (Toronto symbol TECK.B; www.teck.com) is a leading producer of metallurgical coal, a key ingredient in steel making. It also produces copper and zinc.
The… Read More

Mining Stocks: Finning ready for growth

Mining Stocks: Finning ready for growth

Finning International Inc. lifted its earnings in the latest quarter despite low commodity prices and their impact on sales of its heavy equipment.
FINNING INTERNATIONAL INC. (Toronto symbol FTT; www.finning.com) sells and services Caterpillar-brand heavy equipment in Canada, South America and the U.K. Its main customers… Read More

Mining company stocks: What to look for before you invest

Mining company stocks: What to look for before you invest

The best mining company stocks will have a record of success and a strong management team
Mining company stocks involve the exploration for, and the development and production of minerals. While sometimes risky, mining stocks can also be strong performers when commodity prices move up.
We think… Read More