Why Teck Resources should buy HudBay Minerals: Analyst (March 24, 2015)


– by Michael Chu, Producer, BNN

With rumblings in the market that Teck Resources Ltd. (TCKb.TO -2.33%) could be on the prowl for acquisitions–especially on the copper front–could HudBay Minerals Inc. (HBM.TO -0.95%) be square in the sights for the Vancouver-based base metals giant?

Analysts at National Bank Financial outline the perfect storm of events that could bring Teck and HudBay Minerals together.

“The combined company would provide; near-term growth, long-life diversified operations, and carry less financial risk. In our opinion, the possible combination of these two companies is intriguing and would result in an improved outlook for Teck Resources,” wrote Shane Nagle, metals and mining analyst at National Bank Financial in a note to clients.

Coking coal represents approximately 40 percent of Teck’s total valuation, and the lack of coal price support is hurting Teck’s bottom line despite the stock’s rebound in 2015.

And how does HudBay Minerals come into the picture?

“Copper and Zinc have more favourable fundamentals than metallurgical coal,” Nagle tells BNN.

Combining the copper growth profile of Teck and HudBay could potentially grow copper sales by 5 percent for a combined company.

National Bank Financial has a “Sector Perform” rating on Teck Resources, with a price target of $17.50, and an “Outperform” rating on HudBay Minerals with a $11.50 price target.

For the original source of this article, click here: http://www.bnn.ca/News/2015/3/24/Teck-Resources-should-buy-HudBay-Minerals-Analyst.aspx