Globe & Mail this morning... With its Kamoa-Kakula Copper Project exceeding his forecast and seeing a recently announced capacity upgrade as “extremely positive,” Citi analyst Alexander Hacking raised his recommendation for shares of Ivanhoe Mines Ltd. to a “buy” from “neutral.”
“More broadly, IVN offers investors easily the best growth profile in our copper equity coverage (and with chances of exploration upside at Western Foreland),” he said.
Mr. Hacking expects Kamoa-Kakula, a joint venture between Ivanhoe (39.6 per cent), Zijin Mining Group (39.6 per cent), Crystal River Global Limited (0.8 per cent) and the Government of the Democratic Republic of Congo (20 per cent), to become the seventh or eighth most profitable copper mine in the world by 2024.
“The main risks remain geopolitical (highly concentrated exposure to the DRC) and delivering on future growth (KK stages 3 & 4, Platreef, Kipushi and maybe Western Foreland – which together are 35 per cent of our NAV),” he said.
The analyst also emphasized Citi’s bullish view on copper, “seeing a multi-year, electrification driven bull market with prices around $10,000 per ton.”
“Citi is calling for a copper ‘Supercycle’ based on our expectation of strong producer margins over the next 5 years, relative to historical standards,” he said. “The key driver is by copper-intensive decarbonization related investments, including the electrification of vehicles and the build-out of the renewable energy grid; not China-led global growth like during the 2000s.”
Mr. Hacking raised his target for Ivanhoe shares to $15 from $9. The average target on the Street is $14.41.