This Canadian Mining Stock Is a Hidden Gem

Ivanhoe Mines Ltd. (TSX:IVN) is a Canadian mining stock that looks underrated, as we kick off the 2023 summer season.

Ambrose O'Callaghan ❯

Ambrose O'Callaghan graduated with a BA in Political Science from McMaster University. After that, he jumped into the banking world. He worked from the front line to an investment associate role. After that, he found a way to marry his experience and knowledge in the world of banking and finance to his love and passion for writing. Ambrose is a passionate believer in Warren Buffett's value investing model.

Published June 21, 2023 4:15 pm EDT

The S&P/TSX Global Base Metals Index was down marginally in early afternoon trading on June 21. Base metals stocks have broadly bounced back since the end of May. In this piece, I want to target a Canadian mining stock that looks like a hidden gem in the beginning of the summer season. Let’s jump in.

How has this mining stock performed over the past year?

Ivanhoe Mines (TSX:IVN) is the Canadian mining stock that I want to focus on as an under-the-radar opportunity in the final weeks of June 2023. This South Africa-based company is engaged in the mining, development, and exploration of minerals and precious metals in Africa.

Shares of this mining stock have jumped 15% month over month at the time of this writing. That has pushed the stock into positive territory so far in 2023. Its shares have surged 47% in the year-over-year period. Investors who want to see more can play with the interactive price chart below.

Here’s why I’m looking to base metals to start the summer of 2023

The U.S. dollar has built momentum in late May and early June, putting some downward pressure on base metals. Commodities have also been battered by negative economic expectations.

Ivanhoe Mines runs one of the world’s largest copper mines at the Kamoa-Kakula copper projects. The spot price of copper has built nice momentum in the face of tight supply in recent weeks. Stimulus measures in China, a nation that is historically a large buyer of copper, has also provided a boost to the global copper market. Indeed, this industry is expected to see massive investment inflows in the months ahead.

Should investors be pleased with Ivanhoe’s recent earnings?

This company unveiled its first-quarter fiscal 2023 earnings on May 3. Its Kamoa-Kakula location sold 86,777 tonnes of payable copper in the first quarter. Meanwhile, Ivanhoe Mines achieved record revenue of $689 million and a record earnings before interest, taxes, depreciation, and amortization (EBITDA) of $452 million.

Ivanhoe Mines’s profit was reported at $82 million for the first quarter of 2023 — up from a profit of $22 million in the first quarter of fiscal 2022. Meanwhile, adjusted EBITDA climbed to $168 million compared to $145 million in the previous year. The company finished the quarter with a strong balance sheet that included cash and cash equivalents of $497 million. Moreover, it expects that the cash flow from its Kamoa-Kakula phase one and phase two progress should generate cash flow that will fund its phase three expansion.

Why this mining stock is a hidden gem right now

Shares of this Canadian mining stock currently possess a solid price-to-earnings ratio of 24 at the time of this writing. Meanwhile, Ivanhoe Mines is geared up for strong earnings growth going forward. This mining stock has attractive growth potential and a rock-solid track record that should attract prospective investors in the final days of June 2023.