Desjardins - Jan 30The Desjardins Takeaway
China reported zinc (refined plus alloy) net exports of 26.7 KMT in December 2006. After unexpectedly becoming a net
importer of zinc metal in February 2004, China returned to zinc net exporter status in November 2006. Recently,
Chinese refined zinc exports have been on the rise due to the country selling zinc to the Western World to capture high
LME zinc prices. We expect Chinese exports to remain strong through 2007 as the country ramps up production. We
reiterate our C$27.30/share target price and Top Pick–Above-average Risk recommendation for HudBay Minerals.
Recommendation
We reiterate our Top Pick–Above-average Risk recommendation and C$27.30/share target price for HudBay
Minerals shares. Our principal valuation approach remains earnings based. We derive our 12-month target price by
applying a 6.5x multiple to our 2008 EPS estimate of C$4.20/share (fully diluted) based on an estimated 2007 average
zinc price of US$1.80/lb and an average copper price of US$3.00/lb. We reiterate our 12-month target price of
C$27.30/share and Top Pick–Above-average Risk recommendation for HudBay shares.