As part of the ongoing commodities investment opportunities series, today we focus on copper. Copper is a soft, malleable, and ductile metal with very high thermal and electrical conductivity. Due to its soft nature, it is most often used as an alloy. An alloy is a material made up of a metal and a non-metal or two metals which are typically stronger than single metal materials. Two of the more common copper alloys are bronze, which is a mixture of copper and tin, and brass, which is a mixture of copper and zinc. Copper is also an excellent conductor of electricity which is why it is most commonly used in electrical wiring, electronics and renewable energy technologies which are on the rise as the world converts to cleaner energy.
The uses for copper don’t stop there though, other uses include instruments, jewelry, water pipes and fungicides to name a few. What you may not know is that copper also has many health benefits as it promotes healthy connective tissue and supports the immune system. Now, I am not going to go into the details here but one last point I will make is that Copper has unique antimicrobial properties which continuously kill bacteria that cause infections. When installed on high touch surfaces copper will eliminate 99.9% of harmful bacteria and is the only solid metal touch surface registered as a public health product by Health Canada.
The average single family home has approximately 300 lbs of copper in electrical wire, plumbing, and built in appliances to name a few uses.
So now that you understand copper and its uses, let’s have a look at the market demands and why we believe copper miners are ones to watch moving forward despite the fact copper has taken a recent hit.
According to an article written by Forbes in collaboration with Frank Homes and Great speculations on Feb 19, 2019…
“Last year global demand for the red metal stood at 23.6 million tons, and by 2027, it is projected to reach just under 30 million tons, representing an average annual growth rate of about 2.6 percent.”
Two driving factors for this demand are the previously mentioned renewable energies and the emerging Electric Vehicle sectors. These sectors will be key factors that drive demand for copper in the coming years. This is good news for investors because world production is set to peak in 2020 and then steadily decline unless new discoveries are found.
Moving forward it will be important to identify new deposits that can be exploited to meet the rising demand, and that is why we will focus on junior mining opportunities that can be accelerated by the growing surplus deficit as we move into a bull market for metals.
Top producers account for more than 40% of the worldwide production with the largest being in Chile and Peru. South America, China, Australia and the United states are the top producing regions. Recently there has been more emphasis placed on finding new resources and over the last few years many Canadian companies are actively searching for new deposits both, here at home and abroad in search of this coveted commodity.
If you are interested in the top 5 copper producing companies and looking for more information on copper markets, have a look through their presentations as I am sure you will find great information that will help you in sorting out where to invest your money. Juniors are vastly different from majors but understanding how they operate will ultimately help when identifying new prospects.
-Codelco – State owned https://www.codelco.com/
-Freeport-McMoran Inc – FCX https://www.fcx.com/
-BHP Billington Ltd – BHP https://www.bhp.com/
-Glencore – GLEN.L https://www.glencore.com/
-Southern Copper Corp – SCCO http://www.southerncoppercorp.com/ENG/Pages/default.aspx
Now let’s have a look at some juniors either focused on copper or have copper as a secondary asset. I am sure you have noticed by now that I like companies with exposures to multiple commodities. With copper dropping of late this may be an opportune time to take a chance on a junior and wait for the copper market to turn.
Sun Metals Corp TSX.V-SUNM
Sun Metals is located in North Central British Columbia in a reliable mining district with established infrastructure. Their Stardust project, formerly known as Lustdust, is a project with a rich exploration history dating back to 1941. Previous exploration work at Stardust heavily de-risks the project and maximized the potential for success on the property.
Sun Metals holds a 100% interest in the Stardust project which has had approximately $25 million invested in exploration efforts prior to them taking ownership. Around 80,000 m of drilling in over 390 holes, 5,800 soil samples, two airborne magnetic surveys, and extensive mapping and prospecting have been performed on the property.
Stardust is a large, coherent, integrated porphyry-skarn-CRD-epithermal system. Regional geophysical and geochemical data indicate the system extends well beyond the identified mineralized zones. As shown in regional magnetics, a large, obvious intrusive complex is revealed that has been sparsely drilled. And when soil geochemistry is layered on, it reveals vast prospective areas that are untested. Compiling a database of 70 years of data, Sun Metals is creating the first comprehensive and modern exploration program undertaken at Stardust to create value at a large scale.
The Company believes the 2018 program was successful in identifying a major mineralized pathway leading toward the heart of a high-grade system with their intersection in drill hole DDH18-SD-421, which returned a 100.00m interval of 2.51% copper, 3.03 g/t gold, and 52.5 g/t silver for a 4.99% Copper Equivalent. After hitting this high grade area it carved out the path for exploration for the 2019 campaign which started on June 3rd.
In conjunction with the diamond drilling, large loop ground EM surveys will be conducted along strike of the phyllite/carbonate contact in the Canyon Creek, Skarn zone to determine if the EM response observed in the BHEM survey can be detected and if other conductors are present at this contact.
-Results from the 2019 drilling campaign and further geophysical testing results
For more information visit:
Nevada Copper Corp, TSX-NCU
Nevada Copper Corp.’s Pumpkin Hollow project is host to an underground and an open pit development copper project that aims to commence production by the end of 2019. Located in Yerington, Nevada, the project has substantial reserve and resource which include copper, gold and silver and is host to multiple other, undeveloped deposits. With global mine supply declining and demand increasing, the company feels like this is the right project at the right time.
The company is on pace to start production mining in Q4 of 2019 after closing a deal for $115 million dollar credit agreement with KfW IPEX-Bank that would see them also acquire a $35 million dollar working capital facility.
“This substantial new financing package marks an important further step in the growth of Nevada Copper.”
CEO, Matt Gili
Since the financing agreement, there have been several development updates on construction and the project seems to be moving along nicely. Their most recent update was August second and can be seen here
“Nevada Copper’s skilled team continues to execute the Company’s underground project at Pumpkin Hollow with an exceptional level of efficiency, and I am delighted to confirm once again that we remain on track to enter production in Q4, 2019.”
CEO, Matt Gili
With such a large deposit and production about to commence I see a great opportunity for a long term investment. Copper will not stay at these levels for long and beyond 2020 there will be plenty of money to be made…
-Completion of construction and commencement of their mining operation
For more information visit:
Spruce Ridge TSX.V-SHL
Spruce Ridge Resources Spruce Ridge holds a 100% interest in the Great Burnt Copper-Gold Property in Central Newfoundland which covers a series of copper & gold rich VMS deposits. Also, Spruce Ridge and its joint venture partner (a private investor group), are currently drilling magnetic and EM anomalies in a complex of ultramafic and mafic intrusive rocks that have been interpreted as prospective for nickel mineralization, on the optioned Crawford property 45 kilometres north of Timmins, Ontario.
I first wrote about SHL with regards to their nickel exposure but it’s their Mining operation in Newfoundland that might be their ace in their back pocket.
A 43-101 technical report was filed on September 4th, 2015, by P&E Mining Consultants Inc. They estimated mineral resources for the Great Burnt copper deposit as well as the South Pond “A” copper-gold zone.
The Great Burnt copper deposit is divided into three zones: the Main, Lower and North Stringer Zones.
In the 2016 drilling program, four closely spaced holes (GB16-08 to 16-11) were drilled into the Main Zone to obtain core samples for a proposed program of metallurgical test work prior to a contemplated Preliminary Economic Analysis (PEA). Three of the four returned much higher copper grades than expected. Therefore, the grades of the core samples were not representative of the deposit as a whole, and the metallurgical work and PEA were postponed.
In the 2018 drilling program, six holes were drilled on the Main Zone. Four of these holes also returned good grades and widths. Split core from these drill holes was preserved in vacuum-sealed bags, and will be added to cores preserved in deep-freeze from the 2016 drilling, to be used in planned metallurgical testing.
In yellow are the results from their 2016 and 2018 drilling campaigns
As you can see they are finding good grades and the Newfoundland asset looks very promising… Now combine this with their Nickel project in the Timmins area and you have a two headed beast of an explorer. Spruce ridge like many others I have written about hold great long term potential as both of their assets are poised for success as both copper and nickel demands increase while supplies diminish.
-Continued exploration efforts and metallurgical testing on both of the aforementioned properties
For more information visit:
Max Resources Corp TSX.V-MXR
Max Resources is a mineral exploration company focused on development and expansion of its landholdings in the rich Choco mineral belt of Colombia. The Company has established significant exploration infrastructure and local community support for the Choco Gold-Platinum project and their Galchala copper project. Max properties encompass 14 historic gold mines, 4 historic gold anomalies and holds exclusive rights to exploration and exploitation over a 72.5 sq. km mining area. The Company is led by a seasoned management team with a record of significant discovery and exploration success.
The company stirred up the investing community with pans full of visible gold back in February which caused the stock price to surge up into the high .40’s. However recovering the gold has been a challenge, and instead of hanging their hat on this project they opted to expand their footprint into North Choco and Galchala. Being that Colombia is among the most under developed mining jurisdiction in South America and has potential to host very significant deposits, Max has been actively forming relationships with locals in order to ensure their success in the region.
For this article, we will cover some of the copper showings on the property and some of the surrounding area operations in order to highlight the potential of Colombia and it’s under developed mining sector.
The 100% owned 13,677 hectare Gachala Copper Project is located 60kms east of Bogata, Colombia, and covers an aggregate total of 39-line kms of the 250km by 120km belt of Devonian through Cretaceous age rocks in a geological setting conducive to hosting sedimentary copper deposits, believed to be analogous to the Zambian Copper Belt of Africa. The Gachala mineralization appears to be localized at the contact between the Devonian-Permian red beds overlying Cretaceous reducing black shales, one of the settings typical of these copper deposits.
The 4 license applications are contiguous to three of the earlier license applications southwest of the Cano Negro area, where historic sampling has identified a 25-kilometre strike length of copper enrichment with grades ranging from 0.6% to 13% copper. Composition of historical data and the Long wave infrared (LWIR) survey have identified copper/cobalt occurrences over significant areas, these are in process of field visits and of staking with several exploration results pending.
If the company can prove out a resource, this land package may become rather attractive to local mining companies who are already focused on gold, silver, and copper in the area. Colombia’s mining sector is currently expanding and is looking to continue to develop their resources.
“Colombia is looking to become a notable producer of copper within the next few years”
Silvana Habib, Head of national mining agency
This bodes well for Max Resources as they continue to build on their land package and continue prospecting with success as they have over the last few months. Their share price has been suppressed due to the ongoing gold recovery from their pit samples on the Choco property, but don’t let that distract you from everything else they have going on right now because the company has great potential, all things considered…
-TSX approval of the land transfer
-Results from their prospecting efforts on all their projects
-Closure of the second half of their private placement
For more information visit:
Kincora Copper Ltd, TSX.V-KCC
Kincora Copper’s main focus is their Gobi copper-gold belt of Mongolia. The Company’s wholly owned district-scale portfolio has been refined from over 1400km2 at the time of the IBEX merger to less than 800km2 and is the dominant position along strike and in between two large-scale, world-class porphyry projects – the Oyu Tolgoi mine and the Tsagaan Suvarga Serven Sukhait development project.
Copper porphyries occur in clusters focused on key geological structures within established belts; they do not occur in isolation. There is increasing recognition of the Southern Gobi’s copper potential, being one of the last under-explored known copper frontiers with various analogies in terms of legislative roadmap, existing producing mines/development projects, limited exploration activities and understanding of geological potential to the development of Chile’s copper industry in the early 1970’s.
In terms of landmass size and important geological structural features/controls, the Devonian belt in the Southern Gobi is particularly comparable to Northern Chile, where there are over 15 current large mines producing ~2Mtpa Cu (>10% of global production).
The region is sparsely populated, generally flat open desert, enjoys existing and rapidly improving infrastructure, is not at altitude, and is within trucking distance to China which is a favorable location for exploration and mine development.
On June 26th, Kincora announced that drilling had commenced at its 100% owned Bronze Fox copper-gold porphyry project in the Southern Gobi in Mongolia. They also noted that the recent $6.25 million capital raising supports a maiden target testing, drilling for discovery program ramping up and an acceleration of their project generation expansion strategy.
- Multiple rig program for up to 18,000 metres commenced
- 5 independent and large scale targets at two projects, plus project generation
- The largest drilling for discovery program this field season in Mongolia
- Drilling underway at new high priority, high-grade target at Bronze Fox
- Previous intersection of 13 metres of 1.15% Cu or 1.41% CuEq within 794 metres at 0.40% CuEq on margin of target zone1
- Bronze Fox drilling program for up to 8100 metres to test two large scale target zones
- Limited drilling already supports one of largest copper-gold systems in Mongolia within the smaller of the two target zones
-Drilling results from their drilling campaign
For more information visit:
This article was meant to focus on junior mining companies with potentially large untapped resources of copper that have potential future growth in an environment where copper spot price is increasing due to demand. Copper has not been as strong as other commodities of late but being able to identify opportunities while the market is down will maximize gains when copper starts to run. I hope you all find value in this article
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Disclosure: Max Resources is a client of Insidexploration
Disclosure: This article was not sponsored or a paid service and are the views of the author. This article may contain forward looking statements and should not be considered investing advice as we are not financial advisors. We recommend seeking professional advice prior to making any investing decisions and always complete your own due diligence.