Boliden AB (BOL) gained the most in more than three weeks in Stockholm trading after SEB AB advised clients to buy the share, citing an expected doubling of earnings from the expansion of its Garpenberg and Aitik mines.
Shares of the Swedish copper and zinc producer rose as much as 3.9 percent to 100.5 kronor, their steepest intraday advance since Aug. 9, with trading volumes at 56 percent of the daily average in the past three months. Boliden rose 3.8 percent to 100.4 kronor as of midday local time, giving the company a market value of 27.5 billion kronor ($4.2 billion).
SEB upgraded Boliden to buy from hold and raised its share-price estimate to 111 kronor from 98 kronor after increasing its earnings forecasts by 2 percent to 8 percent for 2013, 2014 and 2015. Boliden is now rated buy by 35 percent of the 20 analysts that cover the company. Some 25 percent have hold ratings and 40 percent advise investors to sell the shares, according to data compiled by Bloomberg.
“The Garpenberg investment period is in its final phases, and the mine is set to be a strong contributor to free cash flow in 2014,” SEB said in a note to clients today. “The Aitik mine expansion will also add around 1 billion kronor to free cash flow by 2016 based on our metals price forecasts. The expansion is the main driver behind SEB’s projection of a doubling of earnings before interest, tax, depreciation and amortisation from 2013 to 2016, it said.
Boliden’s 3.9 billion-krona expansion at Garpenberg, its second-biggest investment ever, is projected to increase the mine’s ore production capacity to 2.5 million metric tons a year from the current 1.4 million tons, according to the company’s second-quarter report. The new facilities at the mine are scheduled to start production in the first half of next year.
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