Over the past month, shares in Hudbay Minerals Inc. (TSX:HBM)(NYSE:HBM) have increased approximately 30%, indicating investors and analysts have begun to pick up on the value story which exists with this relatively small producer of base metals and precious metals.
The company has indicated it remains open to acquisitions, recently acquiring small prospective mining company Mason Resources Corp. for approximately $30 million, a fact which has remained contentious among some investors in the firm, given the follow-on capital requirements of the company's current operations such as the firm's Rosemont mine in Arizona which has been under regulatory scrutiny for some time now.
I believe the company's current base of assets to be strong, providing the company with the potential to earn out sized returns for investors over the long run, despite short term concerns over permitting in Arizona, and operating costs in some of the company's mines currently.
The mining sector as a whole has experienced a significant amount of turmoil of late due primarily to very low commodity prices relative to historical norms, leading to heightened discussion of costs relative to the long term value of the assets held by companies.
Herein lies the value of Hudbay for long-term investors willing to parse out asset value from short term deliberations about costs (which can be improved over time with operational efficiency enhancements).
I believe Hudbay has the management expertise to bring margins to where they need to be over the long run, and with one of the best base metals asset structures of any of its peers, I would wager a penny that this company will perform well over the next 10 to 20 years.
Invest wisely, my friends.
