Yes this is a difficult industry! The stock market just sees risk- vs the potential big income.
Amongst the issues are the following;
- uncertainty re future commodity prices ( unfortunately many remember the period from the 1960's to 2000 when copper traded between less than 70 cents to $1per lb) The "uncertainty" of the revenue line has put the mining and oil industry in the corner!
- inability to appreciate that the increase in demand is a permanent - China will continue to grow as also the rest of the BRIC countries and as Teck pointed out - % increases are not the relevant measure rather # of tons!
-a very very short time horizon thus the reversion to "payack" vs "IRR", vs "NPV"
- concerns re country risk, environmental risk, and extraction/recovery risk
- difficulty in keeping costs under control when there is a large profit potential ( ie others want a larger share of the "profit" from the resource.)
However on the Positive side HBM has the following Pluses
- excellent management- and note that the CEO is a financial man with significant experience and understanding of the game. While it is a mining company the stock price moves on the ##"s
- a very experienced board- with a good mix of mining and financial backgrounds
- a very well thought out plan- which includes locating in "elephant " country where other mining deposits "Will" be found in close proximity, building larger longer lasting processing assets such that the cost per lb will be very low over the longer term
- investing in a portfolio of juniors such that HBM has an "in" re the prospects of these juniors. Remember one has to be planning for production 5 to 10 years out- waiting till one sees close down in 2 yrs is just too too late!
The Result - will be that in 2 years I fully expect that HBM will be generating profits 3-5X current earnings.
Hopefully once such profits are present the company will adopt a policy of higher dividends.
I think that HBM has the potential to follow a growth curve similar to Barrick ( assuming the CEO isnt enticed away to a rival!)
HBM will be appreciated= it will just take time!
- a very very high probability that more ore will be produced from current production and development properties= this is a big plus for this industry= your inventory is always understated!