New York-based Jefferies, which also highlighted MMG's operational risks in a weekend note on the 75%-China Minmetals Corp owned company, said its high level of exposure to a weaker copper price was one concern, but probably not as big a problem as its "relatively high operating risk [Las Bambas and Kinsevere] and a levered balance sheet".
"Net debt was reduced by $226 million to $7.47 billion at the end of 2019 but is still high, especially in light of the new, unprecedented macro risks," the bank said.
The outlook for 2020 was "softer than expected".
"MMG now expects between 418,000-445,000t of copper production and 225,000-245,000t of zinc production in 2020. This is slightly below 2019 output due to lower grades at Las Bambas and Rosebery," Jefferies said.
"Cost guidance also rose across operations, with Las Bambas cost guidance rising from US80c-90c/lb to 95c-$1.05/lb.
"Rosebery is expected to produce only 55,000-65,000t of zinc in 2020, down from 83,500t in 2019.
"While further deleveraging would help, growth is likely to remain the focus for MMG moving into 2020."
MMG said last week this year was likely to be its peak capital spend period with $650-700 million earmarked for expansion projects. In 2021 capital expenditure was likely to be $500 million.
Chief financial officer Ross Carroll said at current commodity prices, MMG would be unable to make a $700 million loan repayment due in 2021. Discussions were underway with lenders.
MMG's share price was down another 11% today at HK$1.38, capitalising the company at HK$11.12 billion. The shares are around their lowest levels in 12 months and well off the peak for the period of HK$4 reached last April.