Lundin Mining Corp. (LUN.TO)

Materials tend to do well between now and May, and mining stocks tend to be a bit varied from that. You want to be in mining stocks between the start of the year and about mid-February. After that, they tend to be very volatile and gyrate around. There can be underperformance versus the material sector. Start to think about taking profits here, and rotating more towards the broad material sector, such as your chemical companies.

Likes the management team. He doesn't own any companies in the base metal space, largely because of the demand/supply dynamics in the industry currently. Some of the exposure this company has, primarily places like zinc where there isn't as much supply, is a little better. He is far from optimistic on a near to intermediate trajectory for the industry. However, you can do a lot worse than having this if you want the exposure.

The “back end of the market” is the deep cyclicals, industrials and metals. In the miners, inventory is thin and it is an overlooked sector. Thinks the stock is in the perfect spot. Chart shows a series of higher lows from 2011. Doesn't see a lot of downside.

Lundin (LUN-T) or Hudbay (HBM-T)? Owns both because they have the lowest development risk as a percentage of NAV. As to 1) when are they at the end of their big capital spending run, 2) when does cash flow start to get generated and 3) when does free cash flow start, this one is slightly better. This would be his preference, but he likes both.

Metals tend to wait a little for the market to pick up a little bit and some conviction in the economy. Also, emerging markets tend to have a seasonal period that starts later on in November, a little bit later than the broad Western markets. So companies like this will actually start performing well at about that time. It might start earlier, but right now there's no sign of that happening.

This is more of a pure play on copper based on where their properties are and the acquisition they did last week. Copper is clearly struggling at the $3 level, but from what he has seen, a lot of the estimates on copper global production and global demand, it looks like everyone was expecting a $400-$500 thousand surplus coming into this year, but it now looks like it is going to be more of a deficit. Very well-positioned in terms of growth.

It is unlikely to get a sustained tailwind in this sector. Picking a bottom is difficult. Where is money going next – not into this space.

Hudbay Mining (HBM-T) or Lundin (LUN-T)? He likes zinc. Some of the major mines will be shutting down over the next couple of years so the price has been moving very well on base metals for the last few months. Both companies have exposure but this company has more nickel exposure so he would lean more towards Hudbay for zinc exposure. Hudbay is also bringing on mines in Peru, and they will double or triple production of copper, zinc and gold over the next couple of years.

Historically base metals have trouble from May to October each year. But this one still has a trend up. Strength is negative relative to the market and it is below its moving average, so you have 1 out of 3 technicals. He would wait until October to buy it.

Preferred way to play base metals. HBM is not bad either. It has not moved yet to the same degree as others in the sector.

(A Top Pick Aug 20/13. Up 37.86%.) This is heavily Shorted and disliked, which is a perfect setup if you are a contrarian. Still not too late for this.

Surge Energy (SGY-T) or Lundin Mining (LUN-T) for a long-term hold? He is starting to look at the copper plays, and he has always liked this company’s management. This company has an $8 target on this. These are "different two animals", and he would suggest you go back to asset allocation. With this, you would have so much in energy and so much in base metals.

Thinks they will acquire Candelaria, and will have access to the money that they need. Feels the financing associated with this will probably flatten the stock out over the next month or 2, but feels it is a transformative transaction. The Eagle mine is coming into production, and the cash from this along with the cash from copper/zinc operations in Europe combines to give this company unbelievable financial flexibility.

Hudbay (HBM-T) or Lundin Mining (LUN-T) for the zinc? He likes them both, and likes very few mid-tier Canadian mining companies. Of these two, his preference would probably be Hudbay. This one is a careful company. It just acquired a very interesting, maybe limited life, high quality asset in northern US.

Likes it in terms of production numbers. People are moving out of some of the other base metal names and into this one. Likes the management team.