Edison Expands Global Mining Sector Presence with Launch of Coverage of MMG
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.
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 team,
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$0.59/lb respectively, positioning it in the middle of the
global cost curve for each commodity.
Over 80% of MMG’s 2012 zinc production came from the Century mine, scheduled to end
production in 2016. MMG is seeking to replace Century’s zinc production through its
development projects, including Dugald River, a high-grade zinc-lead-silver deposit in
Australia, and the Izok Corridor base metals project in Canada. Both developments are
currently under review.
MMG reported substantially lower profits in H113. In H213, despite lower revenues, we
expect a stable EBITDA, which benefits from a weaker A$/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
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
Edison, the investment intelligence firm, is the future of investor interaction with
corporates. Our team of over 100 analysts and investment professionals works with leading
companies, fund managers and investment banks worldwide to support its capital markets
activity. We provide services to more than 400 retained corporate and investor clients
from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is
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Edison is not an adviser or broker-dealer and does not provide investment advice.
Edison’s reports are not solicitations to buy or sell any securities.
For more information please contact: Gavin Wood Edison Investment Research +44(0)20-3077-5700 email@example.com Frankfurt +49(0)69-78-8076-960 Schumannstrasse 34b 60325 Frankfurt Germany London +44(0)20-3077 5700 280 High Holborn London, WC1V 7EE United Kingdom New York +1-646-653-7026 245 Park Avenue, 39th Floor 10167, New York US Sydney +61(0)2-9258-1162 Level 33, Australia Square 264 George St, Sydney NSW 2000, Australia Wellington +64(0)4-8948-555 Level 15, 171 Featherston St Wellington 6011 New Zealand
SOURCE Edison Investment Research