Lundin Mining Corp. (LUN.TO)

This has lots of things going on right. With what has been going on with base metal prices recently, their cash flow will really start to ramp up. They are in the process of trying to sell one of their mines to the Chinese. Technically, it ranks fairly well, which probably has to do with increasing copper prices.

A very good operator and one of the larger base metals producers in Canada. They acquired new mines in the US in the last couple of years. His view on base metals is that they are stuck in no-man’s land and there is no sign of a renewal. If you have to own a base metals name this would be one of the safer ways to do it.

Fundamentally he likes this a lot. In the Canadian market this has a better balance sheet than many other companies. However, in base metals in the materials space, it is hard to see a sustained catalyst for stocks given that China’s growth is quite slow and that they are trying to move to a consumer economy and away from an export led and manufacturing led economy. He would be cautious, but if you want to buy a little, this is a fine company.

His favourite name in the copper space, but has been one of the poorest performers year to date because it is such a good company. They don’t have a lot of debt. Thinks a lot of investors are nervous about buying a company that wants to buy somebody else. He would have this is a Long, offset was some Shorts on companies he is not favourable on.

(Market Call Minute.) A zinc play, and he would prefer zinc to copper or nickel. You have 2 choices, Hudbay (HBM-T) or this one, and he owns Hudbay, but this one will be a good play as well.

Using the earnings along with the balance sheet and he calculates Fair Market Value at $1.03. They issued the balance sheet and didn’t take any write offs on their assets, which is strange to him.

Recently made an agreement with the Ecuador government. If anyone is going to put this project to good use, it will be the management behind this company. Long-term this is a great project and has a lot of potential. It has a touch of political risk because of Ecuador.

He would buy it here. Their margins have increased and they did a good job of exploration. He is very comfortably buying it here. This is the one to own for a copper recovery.

Copper zinc and nickel. Anything connected to mining has just been atrocious over the last 3 years. In periods like this, valuations can be quite attractive, but you never know when the cycle is really going to turn. This is a fairly well run mid-tier company. They have no debt problems. Their cash costs in their mine are relatively low. Good management. If you want exposure to mining, this is not a bad place to be.

The finest of the copper miners. He is switching away from copper, however.

(A Top Pick June 27/14. Down 0.69%.) One of the knocks, which he doesn’t agree with, is lack of visible growth. A lot of their growth is oriented around expansion of existing assets. They are low risk and move the needle 10% every couple of years. They keep the costs down and have no major CapX blowups. You can see 50% of its revenue coming from nickel and zinc, not just copper.

He has less than 1% weighting in the mining sector, and continues to be a little bit cautious, especially because the heavy industrial usage comes out of China, and right now they are really kind of weak in demand. This is a good solid company.

If you like copper this is one of the better ways to play it. Copper stocks are very cheap. Have had some good growth off of acquisitions over the last couple of years. The risk is copper prices in general. If the US$ keeps on rising the way it has, copper prices will remain under some pressure. This is a risk in the short term. Longer-term, global supply is somewhat restrained and he thinks the US$ is closer to the end of long bull market than he has seen for the past couple of years. That should benefit the commodity producers.

(A Top Pick Nov 11/14. Up 4.89%.) Chart shows a rising low from 2011, and he thinks there is an inverted head and shoulders pattern in 2014-2015, which is a very bullish sign. There are not many stocks in the sector, so the inventory is low, so it could be subject to takeouts.

Doesn’t own any mines. He continues to be a little bit cautious. We had a super cycle in mining from the turn-of-the-century until 2010-2011. This correction is going to last longer than people think. It went up so fast and for so long, so it is now going to take a while. This is probably the most attractive name and is probably a pretty solid play.