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BMO Starts Coverage Of 3 Canadian Mining Companies, With 2 Bullish Picks

Dave Royse

BMO Capital Markets started coverage of three Canadian metal mining companies this week that are looking to grow, with a bullish stance on two.  

The Analyst

Jackie Przybylowski initiated coverage of Taseko Mines Ltd (NYSE: TGB) with an Outperform rating and CA$1 (76-cent) price target.

Przybylowski initiated coverage of Copper Mountain Mining Corporation (OTC: CPPMF) at Outperform with a CA$1.30 (99-cent) price target.

Przybylowski started coverage of Capstone Mining Corp (OTC: CSFFF) with a Market Perform rating and CA$0.65 (50-cent) target price.

The Takeaways 

Taseko is looking to grow beyond its flagship Gibraltar mine in western Canada, and Przybylowski said in a Thursday initiation note that it might finally be poised for success with its Florence in situ copper leach project in Arizona. (See her track record here.) 

The company announced in April that the test facility is operational and producing copper.

Przybylowski did warn that the company hasn’t always had great relations with the communities in which it mines, and pointed to its recent lawsuit against the town of Florence, Arizona for $1.7 million as a concern.

“We would like to see Taseko learn from past mistakes and setbacks and attempt to strike a more conciliatory tone with its local stakeholders,” the analyst said.

“We will be closely watching the permitting process for the full production facility at Florence for risks to the company’s long-term growth plan.”

Copper Mountain

Vancouver-based Copper Mountain looks even better, Przybylowski said, adding that it has the lowest risk and most achievable plan for growth among its peers.

The company is expanding the mill at its flagship Copper Mountain mine to boost production and integrating new production from the nearby New Ingerbelle pit, a combined project expected to massively increase the life of the mine, the analyst said. 

BMO also likes Copper Mountain’s new Eva exploration project in Australia on a recently acquired mine in Queensland.

Whether it sells the asset or develops the mine, “we expect Copper Mountain will deliver value at Eva through exploration,” Przybylowski said. 

Capstone: What’s The Story?

BMO is less bullish on the third company, Capstone, and questioned its identity and ultimate strategy, with Przybylowski calling it a “growth story in need of a project.”

The company "is caught between a high-torque growth story and a more mature and stable producer,” the analyst said.

“The company’s relatively high-cost assets and its major development project identify the company squarely as a leveraged growth investment. However, it’s not clear to us (or, in our view, to the market) that Capstone will pursue growth.”

Capstone’s most important asset, Pinto Valley, appears to be ready to turn a corner after operational issues in 2018, she said. 

“Consolidation and growth is also a temptation — the region is home to several mines or former projects, which management has long mused about consolidating in the region." 

Price Action

Over-the-counter Taseko shares were up 0.69% at 53 cents at the time of publication Friday; Copper Mountain shares were up 2.4% at 64 cents; and Capstone shares were up 3.63% at 82 cents. 

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Latest Ratings for TGB

Date Firm Action From To
Jul 2013 Initiates Coverage on Buy
Sep 2012 Initiates Coverage on Underperform

View More Analyst Ratings for TGB
View the Latest Analyst Ratings

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