When it comes to commodities and materials, it may be that oil and gas or gold and silver spring first to mind. And while these commodities have their place, there really is nothing like the future of copper, which is why today, we’re going to look at Lundin Mining (TSX: LUN). The company has seen massive growth in the last year, but more is likely on the way thanks to its investment into copper.
Copper outlook
First off, let’s look at why copper is of such interest in the first place. Copper is already in use by many industries, including construction, electrical wiring, and even renewable energy and electric vehicles. This diversification has provided high demand, while insulating from a downturn in any one sector.
What’s more, this looks like an even stronger investment given its finite resource. Mine development takes years, with disruptions such as closures tightening supply. And with more renewable energy projects leading to more demand, this could create a supply shortage that leads to a higher price.
In the short term, analysts believe there will be a price dip in 2024 from potential surpluses. However, this isn’t likely to last long, with long-term deficits developing. And that’s why Lundin stock could remain a strong buy.
Lundin stock’s investment into copper
For Lundin stock, copper its its primary mined resource. It accounts for 63% of total revenue, as of 2022, with several mines across the world. These include operations in Portugal, Brazil, the United States, and even in Sweden.
Analysts are quite positive when it comes to Lundin stock, with its growth potential looking strong. And that comes right down to its heavy investment into copper. With copper as their primary mined resource and prices expected to rise long term, this will remain a strong strategy for Lundin stock moving forward.
This was likely the reason the company did so well during its latest earnings report, with shares climbing even higher after its report. So let’s take a look, and see what the company believes will come next.
Earning those earnings
To be fair, Lundin actually missed earnings estimates for its fourth quarter. So, why did shares climb to 52-week highs? It likely comes down to the full-year report, in which Lundin stated it achieved record copper production. This was led in part by its strategic acquisition of Chile’s Casseroles copper mine.
There was also more expansion in the Neves-Corvo project, contributing record fourth quarter zinc production as well. Going forward, Lundin believes they will continue to provide a disciplined growth plan, to optimize assets and operations to drive down costs.
Overall, the company saw growth across the board, though it saw a heavy increase in debt. Yet when it comes down to the strength of this company, copper is the future. And that’s exactly what they outlined in their future outlook.
Lundin stock believes it will achieve between 366,000 and 400,000 tons of copper in 2024. Meanwhile, it would see total expenditures of $1.1 billion and $48 million in exploration expenditures. This outlook is incredible, given production of copper hit 314,798 in 2023. So with more growth on the way and a dividend of 2.65%, Lundin stock is still a strong stock to buy like there’s no tomorrow.
