Lundin Mining: BMO Lowers Targets, Rating Based On Expected Lackluster News Flow

On August 19, BMO Capital Markets lowered their 12-month price target on Lundin Mining Corporation (TSX: LUN) to C$14.50 from $16 and downgraded their recommendation to market perform from outperform. Their analyst, Jackie Przybylowski, is expecting fewer catalysts in the second half of 2021. This comes after JP Morgan and Raymond James also cut their price target earlier this year. The stock was down 6.5% yesterday on the news.

Lundin Mining has 23 analysts covering the stock, with an average consensus estimate of $14.21, or a 35% upside. Out of the 23 analysts, 3 have strong buy ratings, 7 have buys and 13 have hold ratings. The street high sits at $20 from IA Capital Markets while the lowest sits at $10.

Przybylowsk warns that Lundin’s growth and optimization of existing sites will take longer than expected and expects the processes to be completed by 2022 at the earliest. She adds, “We see downside risk in the near term as projects reach the challenging “implementation” stage.”

BMO points to two challenges the company is facing. The first being operational challenges at Candelaria, where the company previously lowered their 2022 and 2023 copper production guidance by 10-15%. BMO is hoping to get more granular detail at the company year-end guidance in late November or December. She adds, “which is likely to include a corresponding drop in gold guidance after the mine and production plan is reviewed in detail.”

The second challenge cited is execution risk at Neves-Corvo. They believe that expectations are not accounting for a 20-day outage required to complete the mine in January 2022.

The last thing BMO warns investors about in their note is the potential geopolitical risk, which serves as a headwind. They warn that risks of higher taxes and royalties in Chile are likely to move the stock, even though Lundin has tax stability in place until 2023.

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.