Edison Expands Global Mining Sector Presence with Launch of Coverage of MMG
LONDON, October 22, 2013
LONDON, October 22, 2013 /PRNewswire/ --
Edison Investment Research, a leading international investment research firm,
announces the initiation of coverage of MMG (HKG: 1208), a base metals-focused
global resources company and one of the world's largest producers of zinc.
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Edison's comprehensive report, Pursuing growth opportunities, was published
today, and examines the investment case for MMG.
Highlights from the analysis by Gavin Wood, an analyst on Edison's Mining
MMG is one of the world's largest producers of zinc, contributing close to 5%
of global production in 2012, ranking third behind Glencore Xstrata (12%) and
Vedanta Resources (7%). Following the acquisition of Anvil Mining in 2012,
copper has also become a major commodity for MMG. In 2012, we estimate that
MMG's average copper and zinc C1 cash costs were US$1.60/lb and US$0.59/lb
respectively, positioning it in the middle of the global cost curve for each
Over 80% of MMG's 2012 zinc production came from the Century mine, scheduled
to end production in 2016. MMG is seeking to replace Century's zinc production
through its development projects, including Dugald River, a high-grade
zinc-lead-silver deposit in Australia, and the Izok Corridor base metals
project in Canada. Both developments are currently under review.
MMG reported substantially lower profits in H113. In H213, despite lower
revenues, we expect a stable EBITDA, which benefits from a weaker A$/US$ rate.
In FY14, we forecast that lower operating costs and a reduction in the
depreciation charge will offset weaker revenues and increased finance charges,
resulting in a stable profit after tax and EPS increasing by 26%.
We value MMG at HK$1.90/share based on long-term copper and zinc prices of
US$2.96/lb and US$1.13/lb, and a 10% discount rate. We see potential upside
from several different sources, including internal exploration and
development, joint venture exploration projects and potential acquisition
opportunities. Our valuation is highly leveraged to the copper price and a 10%
increase in the long-term copper price would raise our valuation by 19%.
MMG is a mid-tier global resources company that explores, develops and mines
base metal deposits. It currently produces copper, zinc and lead, with gold
and silver by-products at its operations in Laos, the Democratic Republic of
Congo and Australia, and has two advanced-stage development projects in
Australia and Canada.
For the full report see:
The launch of coverage on MMG marks a further expansion of Edison's worldwide
mining coverage. Edison provides research coverage on more than 100 mining
companies across the UK, mainland Europe, North America and Australasia. All
reports published by Edison are available to download free of charge from its
website http://www.edisongroup.com .
About Edison Investment Research
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advice. Edison's reports are not solicitations to buy or sell any securities.
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