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Three Junior Copper Miners on a Roll

1. Augusta Resource (AZC) is engaged in the acquisition, exploration and development of natural mineral resource properties and has a price-to-book ratio of 4.03, as compared to 8.4 recorded by a Canada-based mineral exploration company Duluth Metals. The company is developing the Rosemont copper property, which has an estimated reserve of 560 million tons scheduled to be developed from 2012.

Recently a Korean consortium including LG International agreed to invest $176 million in Augusta's Rosemont project for a 20% joint venture interest in the project. Besides, the consortium has also agreed to buy 30% of the copper concentrate and 20% of copper cathode and molybdenum concentrates produced annually at Rosemont.

Augusta has a payback of 2, which is lower than peers like Hudbay, with a payback of 3.2, while the leverage is 9.7 times, much higher than Hudbay's leverage of 6.8. In a scenario where metal prices are assumed at current levels, Augusta is estimated to gain 278%, and when the prices move 30% higher or lower, the stock is likely to gain 121% or 436%, respectively.

The company has a capital expenditure of $897 million, which is very low as compared to the production of 220 million pounds of copper per year. The Rosemont project is likely to be the third-largest copper mine in the U.S.. Augusta has a cash cost of $0.62 per pound.

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AZC $2.95 -5.75%
BHP $46.44 0.00%
FCX $20.67 0.00%
HBM $8.66 0.00%
PLM $1.28 0.00%


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