Maintaining strong operational momentum
MMG Ltd (HK:1208) reported positive Q315 production results, with total copper and zinc output rising 8% and 6% year-on-year. Despite the recent social unrest near Las Bambas, we currently view the risk of the project being affected as very low. MMG’s strong operational performance warrants a moderate valuation upgrade to HK$3.1/share. In our view, the stock continues to represent an attractive investment opportunity.
Positive Q315 production results
In Q315, MMG’s overall copper output rose 8% both q-o-q and y-o-y. While copper sales slightly undershot production, they jumped 14% vs Q314. Both Kinsevere and Sepon delivered strong results, with copper cathode output rising 20% and 11% vs Q314 and 9% and 3% vs Q215, respectively. Due to the strong performance at Kinsevere, the company increased the project’s FY15 copper production guidance by 3kt to 73-78kt and the overall copper guidance to 174-189kt. MMG's total zinc production was up 6% y-o-y to 130kt in Q315, but down 17% q-o-q due to a strong Q215 at Golden Grove. FY15 zinc guidance remains unchanged at 440-510kt.
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