With the flip of a switch, electrons race through copper wires to light up your home. With the stroke of a pen, a Latin American miner just sent a similar surge of current into a sector that needed the energy.
Taking a page from Freeport-McMoRan’s
One development that surely generated little excitement among shareholders was the 66% reduction to the company's quarterly dividend. To ease the pain of a still-respectable 3.1% yield, however, the company repurchased nearly 30 million shares for an average price of $13.52 each; effectively increasing each shareholder's stake by 3.5%.
Anyone still feeling shortchanged might consider that Southern Copper perceives tremendous opportunity in the presently depressed copper market, and indicates an appetite for more deals like the Frontera purchase. Frontera's Piedras Verdes Mine, after all, will produce about 32,000 tonnes of copper annually for at least 11 years.
Given the historical uniqueness in scale of the recent reversal from commodities boom to global bust, it is important not to overstate the significance of this one deal. Southern Copper sees demand beginning to stabilize near mid-2009, but only after further mine closures bring oversupply into balance. BHP Billiton
For exposure to copper plus a whole lot of gold, I still believe Yamana Gold
The insightful investors over at Motley Fool CAPS have refused to give up on Southern Copper. More than 4,000 CAPS members, including 881 All-Stars, expect this five-star pick to outperform the S&P 500. I updated my pitch in November to reflect changing circumstances. If you think Southern Copper is ready to shine, rate it as an outperform. If not, call underperform. Either way, come over to CAPS and tell us why.
Fool contributor Christopher Barker is the commodore of copper, and the Colonel Klink of zinc. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Aluminum Corp. of China, BHP Billiton, Freeport-McMoRan, and Yamana Gold. The Motley Fool's disclosure policy is worth way more than $1.50 per pound.