Celfin Capital said Friday that it has started coverage of Peruvian copper miner Sociedad Minera Cerro Verde SAA (CVERDEC1.VL) with a "buy" recommendation and a year-end 2011 price target of $50.55 per share.

The company's stock closed at $42.00 per share on the Lima Stock Exchange on Thursday.

The brokerage said it expects a large-scale expansion to be approved in 2011, adding that Cerro Verde is conducting a feasibility study for an expansion of its concentrator plant that could double or even triple its mill throughput capacity.

"Since we expect that global copper market supply constraints, and increasing demand from emerging markets, will continue to sustain copper prices, we believe the expansion is highly likely. In our forecast, we assume that Cerro Verde will invest $2.5 billion to increase mill throughput from 120,000 (tons per day) to 220,000 tpd," it said.

"We expect Cerro Verde's total annual production to rise, with the expansion, to approximately 1,160 million pounds (528,000 tons) by 2014," it added.

Cerro Verde is majority-owned by Freeport McMoRan Copper & Gold. (FCX)

Compania de Minas Buenaventura SAA (BVN) and a subsidiary of Sumitomo Corp. (8053.TO) also have equity stakes in the company.

-By Robert Kozak, Dow Jones Newswires; 511-99927 7269; peru@dowjones.com
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