QMines Poised for Re-Rating as Copper Prices Soar

QMines is an undervalued junior copper stock that could be poised for a re-rating, according to Garimpeiro columnist Barry FitzGerald.

The recent surge in copper prices and subsequent takeover activity has highlighted the growing demand for copper and the scarcity of quality junior copper stocks on the ASX. Big premiums are being paid for companies with copper reserves, with takeovers including Evolution's $213m/60% premium acquisition of Carnaby, Aeris' $214m/46% premium acquisition of Peel, and Austral's $81m/70% premium acquisition of Hammer.

QMines, a central Queensland-focused copper-gold developer, has a market cap of $52m or $37.6m after deducting its cash of $14.4m. The company is led by chairman and managing director Andrew Sparke, who is likely scratching his head over the stock's undervaluation despite the recent copper price surge.

A definitive feasibility study into the development of QMines' Mt Chalmers project, expected to be released in the first quarter next year, could be a trigger for a re-rating. The project is expected to produce between 10,000 and 15,000t of copper equivalent annually, with construction likely to start towards the back end of next year.

QMines has assembled 10 deposits in central Queensland, with an initial 1Mtpa processing rate at Mt Chalmers to be stepped up over time as satellite deposits are developed. The company's resource base is expected to continue growing ahead of production and after first production is achieved.