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Ivanhoe Mines maintains Outperform rating from BMO Capital

EditorTanya Mishra
Published 10/08/2024, 08:30 AM
IVPAF
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BMO Capital Markets has sustained its positive stance on Ivanhoe Mines (OTC:IVPAF) Ltd. (IVN: CN) (OTC: IVPAF), reiterating an Outperform rating alongside a Cdn$24.00 price target.

The firm's optimism follows Ivanhoe Mines' announcement of robust third-quarter production results, which included a record copper in concentrate production of 116,313 tonnes from its Kamoa Kakula project.

The company's year-to-date production has reached 303,328 tonnes. Despite a slight decrease in annual guidance to 425-450,000 tonnes from the previous range of 440-490,000 tonnes, this revision is attributed to earlier grid power issues. These issues have since been addressed with backup and imported power solutions.

BMO Capital Markets anticipates no lasting effects from the reduced guidance on Kamoa Kakula's long-term prospects. The firm expects Ivanhoe Mines to deliver record performances in the upcoming fourth quarter as the Phase 3 concentrator continues to advance towards steady operation.

In other recent news, Ivanhoe Mines has been making significant strides in its operations. Morgan Stanley recently upgraded the company's stock from Equalweight to Overweight, reflecting confidence in Ivanhoe Mines' progress towards its expansion goals.

The firm anticipates a compound annual growth rate of approximately 16% in the company's copper volumes, from an estimated 440 kilotons in 2024 to 680 kilotons by 2027. This growth is attributed to the nearing completion of Kamoa-Kakula's phase 3 concentrator and the forthcoming "Project 95", which is expected to increase copper recoveries to 95% from the current 87%.

Additionally, Ivanhoe Mines reported a record Q2 production and profits, with a record production of over 100,000 tons of copper, a profit of $67 million, and a record adjusted EBITDA of $203 million. The company has also commissioned its Phase 3 plant, designed to process 5 million tons per annum. Ivanhoe Mines has increased capital guidance for Project 95 at Kamoa-Kakula by $300 million, and has secured additional power supply to ensure grid stability and reliability.

InvestingPro Insights

Ivanhoe Mines Ltd.'s (IVPAF) recent production achievements align with several key metrics from InvestingPro. The company's stock has shown strong performance, with a 78.1% price total return over the past year and a 25.67% return in the last month. This robust performance is reflected in an InvestingPro Tip noting that the stock is trading near its 52-week high, currently at 93.85% of that peak.

Despite the slight reduction in annual guidance, Ivanhoe Mines remains profitable, with a basic EPS of $0.12 over the last twelve months. This profitability is highlighted by another InvestingPro Tip indicating that analysts predict the company will be profitable this year.

However, investors should note that the stock is trading at a high earnings multiple, with a P/E ratio of 120.18. This valuation metric suggests that market expectations for future growth are high, which aligns with BMO Capital Markets' optimistic outlook on the company's future performance.

For readers interested in a deeper analysis, InvestingPro offers 12 additional tips for Ivanhoe Mines, providing a more comprehensive view of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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