Copper Bulls Have Every Reason to Buy This TSX Mining Stock

Published on: Mar 22, 2024
Author: Caroline Kong

In the commodities space, oil, gas, gold and silver attract most investors’ attention. However, the future of copper, a key industrial metal and an important part of the energy transition, is immeasurable.

As one of the most widely used metals, copper creates significant demand in sectors including construction, electrical wiring, and even renewable energy and electric vehicles, while avoiding the negative impacts of a downturn in any one of these sectors.

With limited copper resources around the world and mines taking years to develop, disruptions such as closures can lead to supply constraints. As renewable energy projects increase, so does demand, which could create supply shortages that could drive metal prices higher.

In the short term, analysts believe that a possible oversupply in 2024 could cause prices to fall. However, this won’t last long and will be followed by a long-term supply deficit, which makes just the right timing to invest in the shares of Canadian copper miners.

On the TSX, Lundin Mining (TSX:LUN) has already seen significant growth over the last year, and is likely to see more growth in the future thanks to investments in copper production.

Lundin has several mines around the world, located in Portugal, Brazil, the United States and Sweden. Copper accounts for 63 per cent of the company’s total revenue by 2022. It is due to this heavy investment in copper that analysts are quite bullish on Lundin’s stock, believing that its growth potential is huge. And copper, the company’s main mineral resource, is expected to rise in price over the long term, making Lundin stock attractive to long-term investors.

It’s worth pointing out that the company’s earnings for the fourth quarter of 2023 didn’t actually meet expectations. However, the company’s record copper production for the year, thanks to its strategic acquisition of the Casseroles copper mine in Chile, was noted in the full-year report, driving Lundin stock to climb to a 52-week high following the earnings release.

Meanwhile, the company’s Neves-Corvo project underwent an expansion, and fourth-quarter zinc production hit a record high. Management sees the company producing between 366,000 and 400,000 tonnes of copper by 2024.

At the same time, its total expenditures is expected to reach C$1.1 billion and exploration expenditures will reach C$48 million. Considering Lundin’s copper production of 314,798 tonnes in 2023, this outlook makes investors happy. With expectations of increased production capacity and higher copper prices, coupled with a 2.65% dividend yield, Lundin Mining is clearly a strong stock to consider buying.

Base Metals Copper Dividend Yielding Stocks Industrial Metals