HudBay Minerals

HBM : TSX : C$10.87

Target: C$13.50
HudBay Minerals is an integrated Canadian zinc and
copper producer with operating assets in Manitoba,
and development or exploration properties elsewhere
in Canada, in the U.S., and in Peru.

All amounts in C$ unless otherwise noted.

Metals and Mining — Base Metals and Minerals
GROWTH TO 2019; 
We have incorporated the Augusta Resources/Rosemont copper project
into our HBM full valuation model, and incorporated our new
commodity price forecasts throughout the model.
Action and valuation
We are maintaining our BUY recommendation and raising our 12-
month target price to C$13.50 (from C$11.00). Our C$13.50 target price
is based on the average of: i) 7x 2015E EV/EBITDA, which would imply
a share price of C$12.81, and ii) our NPV10 estimate of C$14.12.
We see the potential for upside to our target price as Constancia and
Rosemont progress. 6x 2016E EBITDA (with Constancia in production)
equates to a share price of C$14.89, and 5x 2019E EBITDA (with
Rosemont in production) equates to a share price of C$30.51.
Our NPV10 estimate of C$14.12 includes C$7.50 for Constancia and
C$4.89 for Rosemont (treating AZC acquisition costs as sunk costs).
We are forecasting low-point cash balances of C$213 million mid-2015
during Constancia start-up, and then C$166 million mid-2018 during
Rosemont start-up.
Next potential catalysts and investment risks
We believe Constancia commissioning and Rosemont permitting are key
catalysts and key valuation risks for HBM over the next 12 months


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