Having fallen nearly 50% from its 52-week high, Lundin Mining Corporation (LMC) currently stands at a level which we feel to be undervalued.  As a base metals provider specializing in the mining of copper, zinc, nickel, and lead, LMC serves as a mid-tier mining and exploration company suitable for a world growing in industrial output.  With six operational mines in Portugal, Spain, Sweden, and Ireland, the Company operates in some of the most stable political environments.  Yet it also balances its profitable investment interests in some of the most volatile regions with claims and holdings based in Congo, Iran, and Russia.

Understanding the economics of the base metals market is an important factor for evaluating this investment.  LMC primarily mines copper and zinc.  Copper faces a unique investment situation in such that demand continues to grow and supply faces upcoming production slowdowns.  Used for metal wiring and pipes, copper’s value has only increased in a globalizing world.  To date, the current amount of copper that goes into making a penny actually surpasses the value of the penny several times over.  Zinc on the other hand is used in steel production as a necessary component to protect the finished product.  Both metals can be marked as industrial growth components, already witnessed by the fact that China currently spurs the demand on the market.

Operations aside, LMC finds itself offering a higher risk for investors by its willingness to go into regions other companies dare not.  As a result, the Company sits upon some of the most promising deposits in the world including a minority stake in the world-class Tenke copper mine in Congo and the mammoth-sized zinc deposit in Ozernoe, Russia.  Yet both sites carry their respective challenges despite their foreseeable rewards.

LMC’s latest tumble in value comes at the heels of their recent write-off’s having overvalued their near $4 billion dollar cumulative acquisitions of EuroZinc Mining and Rio Narcea Gold over the last year.  Currently priced at $6.32/share with a $2.5 billion market capitalization, the Company trades on a forward P/E ratio of 5 as it hovers around a severely low RSI of 20.  As the market attempts to push below the previous lows of the past few months, the justification for such action looks to dissipate in light of stable operations.  While perhaps poorly managed in the not-too-distant past, the current valuation yearns for readjustment to a more suitable level.