There’s no shortage of hot stocks on the TSX right now. Investors love talking about artificial intelligence (AI), green energy, and the occasional gold surge. But sometimes, the most compelling opportunity is the one hiding in plain sight, and in this case, it’s a copper stock most people are sleeping on.
Lundin Mining (TSX:LUN) is not the buzziest name on Bay Street. But if you’re looking for a bold contrarian pick with a long runway for growth, this one deserves a closer look.
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About Lundin
At the time of writing, shares are trading around $14.35, with a market cap of nearly $11.9 billion. Despite its size, it’s often overlooked in favour of flashier peers. That’s a mistake. Lundin is making strategic moves that could position it as one of the biggest winners of the next decade.
Start with the first-quarter (Q1) 2025 results. Revenue hit $963.9 million, up 18.7% year over year, fuelled by strong copper and gold prices. Adjusted earnings before interest, taxes, and amortization (EBITDA) from continuing operations came in at $388 million, while net earnings hit $138.1 million, a huge jump from just $38.3 million the year before. Adjusted earnings per share (EPS) from continuing operations were $0.11, nearly double the $0.07 posted in Q1 2024.
More to come
What’s more, Lundin isn’t standing still. It recently sold its European assets for $1.4 billion, allowing it to wipe out a massive $1.15 billion term loan. That kind of balance sheet clean-up isn’t just cosmetic; it gives the company flexibility to double down on its highest-margin operations and fund future growth.
One of those growth areas is the Vicuña project, a new joint venture with mining giant BHP. The combined Filo del Sol and Josemaria deposits are now considered one of the largest copper, gold, and silver resource bases in the world. The resource update released on May 4 shows Lundin has positioned itself right at the heart of a potential tier-one discovery.
If you believe copper is the future, Lundin is a direct way to invest in it. The copper stock produced 76,774 tonnes of copper last quarter and is on track to meet its full-year guidance of 303,000 to 330,000 tonnes. Importantly, it’s doing this at a consolidated cash cost of $2.07 per pound, right at the low end of guidance.
Candelaria and Chapada are pulling their weight, too. Cash costs at Chapada came in at just $1.47/lb in Q1, thanks to high gold by-product credits. Candelaria, the company’s flagship operation, is seeing higher mill throughput due to softer ore. This helped it deliver cash costs of $1.75/lb while producing over 37,000 tonnes of copper.
Considerations
Some might point to the dip in free cash flow at just $21.6 million from continuing operations in Q1, down from $66.5 million the year before. Yet that figure was hit by $214 million in negative working capital as shipments went out late in the quarter. With those receivables expected to reverse, cash flow should normalize quickly.
Lundin’s new $220 million shareholder return policy is also a welcome shift. At today’s price, the forward yield is a modest 0.79%, but management clearly has room to grow it. The focus on rewarding shareholders, while maintaining capital discipline, is refreshing in the resource space.
Now, there are risks. The copper stock still carries about $1.7 billion in net debt, and while the Vicuña project looks promising, it’s early days. Mining in jurisdictions like Argentina and Chile also comes with regulatory and social uncertainties. But this is where being a contrarian pays off. Copper prices are volatile with ongoing trade wars, and sentiment toward base metals stocks can swing quickly. With electrification and global infrastructure needs ramping up, the long-term demand picture for copper remains bullish.
Bottom line
In short, this isn’t a short-term trade. But for investors willing to look a few years ahead, Lundin Mining could be one of the most compelling value plays on the TSX. That’s why it’s my contrarian pick of the decade.
