Nov 21, 2022 17:06
It has never been a better moment to be a copper explorer due to high copper prices, a predicted supply shortage, a shift toward electrification worldwide, and a decade of low investment. This opportunity hasn't gone unnoticed by the mushrooming number of businesses in the industry.
Budgets for copper exploration sharply decreased as the super cycle ended ten years ago, and the little money spent on exploration since then has mostly been for brownfield projects. The purse strings loosen as the sector struggles with dropping grades and a lack of new finds as it experiences boom times. American Pacific Mining had an oversubscribed placement of C$10.1 million, Libero Copper an upsized C$8.3 million, Arizona Metals had an upsized C$49.8 million bought deal, Arizona Sonoran Copper's initial public offering on the Toronto Stock Exchange raised C$46.7 million, Hot Chili raised C$33.8 million with its Toronto Stock Exchange Venture IPO, and Solis Minerals completed its Australian Stock Exchange IPO and raised A$5.5 million.
At least three additional businesses are getting ready to go public. In San Juan, Argentina, CopperEx has the Exploradora North and Kia Buggy projects, Key Metals has Fiel Rosita, and McEwen Copper has Los Azules. "Copper is popular on the market, but consumers are picky. They are more demanding than before and consider the team and the resources. Despite everyone's eagerness, there is no easy money to be had. The focus is on the scale potential and the jurisdiction, "According to CopperEx's president and CEO, David Prins, Mining Journal.
Juniors' budgets across all metals increased 62% in 2021 to US$4.1 billion, thanks to easier access to capital. However, majors continue to be the top spenders and make up half the $5.6 billion worldwide exploration budget. According to S&P Global Market Intelligence, the global budget for non-ferrous metal exploration increased by 35% to $11.2 billion in 2021 from $8.3 billion in 2020. The company did point out that less funding is allocated to grassroots exploration, with allocations reaching an all-time low of 24% in 2020 and an all-time high of 41% for mine site allocations. "It's still a very small percentage, and that issue hasn't been resolved when you compare the exploration budgets allocated to precious metals vs. base metals and the real components of copper. Fundamentally, the supply of copper is insufficient and will be so for the ensuing ten years, "Royalty Generator Mundoro Capital's president and CEO, Teo Dechev, spoke to Mining Journal.
Mundoro Capital has also observed the purse strings loosening, which expressly denotes that funds are becoming more widely available for grassroots research focusing on porphyries and deposit types that have the potential to yield significant returns. "We started a $1.5 million campaign at the beginning of 2021 and finished at $3.5 million even though we had subscribers worth about $5 million. That serves as an illustration of the market's desire, "Dechev stated.
The kind of deposits investors fund exploration of, the enormous, long-like deposits that require years to drill and that the large companies drool over for their multi-decade production potential, is a key factor in this case.
"If you want to work in the copper industry, you must conduct porphyry exploration. The future of copper is not in skarns; it is in porphyries, maybe in IOCGs, and some sediment-hosted systems. Due to the size and complexity of porphyries—which are truly monstrous—you might spend $20 million on one and yet not know where you are in the system, "Dechev remarked.
The CEO and president of Barksdale Resources, Rick Trotman, concurs. With billions of tonnes of copper resources above 0.4% or 0.5% copper, he said, "those very large, very coveted projects that the major mining companies would be interested in are incredibly difficult for juniors to push forward, so they need very high quality committed capital sponsors like the Lundin's and Ross Beaty's of the world," or, in the case of Mundoro, finance partners among the biggest miners in the world.
Trotman believes that the smaller, higher-grade resources have room as well. "The higher-grade, smaller-scale projects with reasonable capital expectations that a junior business might advance and secure the money to develop on its own are the second category of projects that tend to do well. San Javier is one of those projects, one that could be completed for less than $150 million, and they can have quite a bit of torque, "said he. Ero Copper, which has amassed a market capitalization of C$2 billion based on its output in Bahia, Brazil, is the poster child for this strategy.
Lower grades are less of an issue now that copper prices have stabilized over US$4 per pound for the past two years thanks to higher prices allowing for lower cut-off grades, with the caveat that developers increasingly must take into account the carbon emissions generated by moving an increasing volume of rock. As the average manufacturing grade has decreased from roughly 1% a decade ago to 0.69% currently, with cut-offs increasingly around the 0.2% or even 0.15% mark, what were poor grades a decade ago may now be deemed excellent grades. Long sub-1% hits can significantly affect explorers, as Solaris Resources and Filo Mining demonstrated in 2021.
We begin 2022 with the fool's errand of attempting to make sense of the abundance of pre-resource copper explorers, given that the nascent copper cycle is anticipated to have long legs and investors increasingly want to finance junior exploration. This review will primarily cover the Americas, even though it aims to be comprehensive and in detail.
Huge porphyry deposits helped Chile establish a dominant position in the copper market, which is the goal newcomers like CopperEx and Key Metals are pursuing. Because of the emergence of new explorers, concerns about the effect of a Gabriel Boric presidency on mining investment may be overstated. Or, at the very least, explorers are confident that given the 10–20 years it takes to bring a copper exploration project to an investment decision, a more mining-friendly president will likely take office in La Moneda.
"People know that a Boric government will increase Chile's cost structure, but there won't be any appropriation. Peru and the US are both experiencing tax rises. Boric has abandoned his extreme leftist viewpoint and chosen the path of commercial success because he needs money, primarily obtained from mining in Chile, to implement the social programs he promised. He is aware that his ambitions would fail if he crashed the mining business, so he understands he cannot do that, "explained CopperEx's president and CEO, David Prins.
Prins, who previously oversaw the construction of the Brucejack mine for Pretium Resources in British Columbia, Canada, formerly worked at the Chilean copper mine Zaldivar. At CopperEx, he is joined by fellow Pretium alums Joe Ovsenek and Bob Quartermain. The company aims to start drilling at Exploradora Norte this year in preparation for an IPO after raising C$6.3 million in the middle of 2021.
Along with Exploradora North, it also possesses the Kia Buggy project, and both are located in the massive Chuquicamata and Escondida copper mines' Eocene-Oligocene porphyry copper belt.
"Our drilling at Exploradora is aimed at an initial open pit deposit with a minimum 100Mt grade of 0.7% copper equivalent. The project can be built since we are in a neighborhood with scale and slope, easy access, and not too steep terrain, we have access to saltwater, and there is a transmission line close by, "Prins added.
At the Fiel Rosita breccia-skarn-porphyry project, it optioned from lithium producer SQM, which finished 52,238m of drilling in 175 holes; Key Metals is starting with a 362.8Mt indicated resource grading 0.4% copper. This project is located further south in Region III.
More notable mines like Candelaria from Lundin Mining and Manto Verde from Mantos Copper might be found in Chile's IOCG belt in the coastal cordillera. At the Algarrobo project, where drilling previously produced 2m grading 1.28% copper, Nobel Resources has started a 10,000m drilling program to test five magnetic and coincident IP anomalies in this area. It also owns the nearby La Salvadora IOCG project, where it initially plans to drill 2,000 meters on three targets.
Companies like Chakana Copper have drilled their Soledad breccia pipe project in the Miocene copper belt in Ancash, demonstrating that junior exploration in Peru has perhaps been stronger in recent years than in Chile. It has so far drilled more than 60,850m, but when it announced its first indicated resource in January, its stock took a beating and fell 11%. The 130Mlb copper, 190,000oz gold, and 11.75Moz silver are included in the underground resource of 4.8Mt grading 0.72g/t gold, 61g/t silver, and 0.97% copper and the open printable resource of 1.9Mt grading 1.29g/t gold, 37.1g/t silver, and 0.65% copper caused a market yawn.
At its Jasperoid project in the Andahuaylas-Yauri porphyry/skarn belt in Cusco, C3 Metals drilled 23.5m grading 1.86% copper along strike from the main skarn, where earlier drilling yielded up to 24.3m grading 5.76% copper and 0.09 grams per tonne gold. 53.24 m of intercepts grading 3.11% copper and 0.46 g/t gold are part of a secondary copper enrichment zone.
At its San Martin project in San Martin, Hannan Metals possesses a sediment-hosted copper-silver system with basin-scale potential. Hannan and Japan Oil, Gas and Metals National Corporation (JOGMEC) engaged in a joint venture and option agreement, which allows JOGMEC to earn up to a 75% interest by investing up to $35 million until the fulfillment of a feasibility study. Highlights of the channel sampling include a 1m sample grading 2.1% copper and 29g/t silver. With its Cesar project in Cesar, Colombia, MAX Resource has a comparable sediment-hosted target with sample highlights of 14.8% copper and 132g/t silver at Uru and 12.5% copper and 84g/t silver at Conejo. In 2022, MAX intends to start drilling at Cesar.
A promising location for copper exploration in Ecuador. From its El Palmar porphyry, Australia's Sunstone Metals produced 480.85 million with a grade of 0.41g/t gold, 0.15% copper, 3.4% molybdenum, and 0.74g/t silver.
Several variables, including views of political risk, government messages about critical commodities, and already-built infrastructure, have rekindled interest in copper exploration in North America. British Columbia is quickly becoming a sought-after location for copper exploration due to its political stability and accessibility to hydroelectric power. Projects in British Columbia have the potential to have the lowest carbon footprints in the sector, which will be favorable when trying to attract development funding. "Because of claims that BC porphyries are always the 0.3% copper, 0.3g/t gold variety, everyone has written off BC copper. I wouldn't be shocked if copper reached $10 a pound; in that case, 0.3% BC porphyries would profit greatly, "Skeena Resources' president and chief executive officer Walter Coles told Mining Journal.
"In British Columbia, there are a ton of attractive exploration projects that have been abandoned for five to fifty years. An example is Carruthers Pass, where the first work was completed in 2011, and it is now necessary for new eyes to review the project to determine if there are any potential issues, "Vizsla Copper's executive chair, Craig Parry, said Mining Journal.
The Carruthers Pass copper-zinc-silver-gold-cobalt massive volcanic sulfide (VMS) project, where historical drilling intercepted 3.1m grading 6.2% copper, 5.8% zinc, 2.37g/t gold, and 192g/t silver, is under option by Vizsla Copper, which was spun-out from Mexican silver explorer Vizsla Silver in 2021.
The Blueberry project, which Vizsla also owns, is situated next to Aurwest Resource's Stars porphyry copper-molybdenum project. Vizsla consolidated this property in December 2021 by agreeing to purchase M3 Metals' 50% holding. Due to Stars' proximity to Aurwest's Stellar project, it consolidated control of a potential porphyry camp covering 28,294 hectares. Stars have produced results comparable to MPD, with the standout 204m grading 0.45% copper. Our west stated that it plans to construct an exploration program and budget by conducting a 3D modeling of all previous exploration data currently accessible on the two assets. The company's current priority is Canadian Newfoundland gold exploration.
"In a district that is just beginning to take shape and is a part of a larger district around Huckleberry, Aurwest made a really solid decision. The M3 Metals finding hole was 204m long and graded 0.45% copper and 0.5g/t gold, which indicates some rather impressive intercepts. We have some excellent targets at Blueberry, but consolidation is needed in that region, "Parry remarked.
The MPD project of Kodiak Copper, a member of the Discovery Group, more than meets the criteria for the typical BC deposit. It is situated between the Highland Valley and Copper Mountain mines and produced a 535-meter intercept grading 0.49% copper and 0.29 g/t gold for a 0.76% copper equivalent, which may be why BC heavyweight Teck Resources paid C$8 million for a 9.9% share in the business. Kodiak increased the Gate Zone's mineralized footprint from 125m to 950m by drilling 21,675m in 2021. For 2022, drilling of 25,000m is anticipated at Gate and other locations.
Thorn, a district-scale porphyry copper-gold-molybdenum exploration project by Brixton Metals in Northern British Columbia, produced drilling results of 554.7m grading 0.57g/t gold, 0.24% copper, and 43.18g/t silver or 1.09% copper equivalent. Among its stockholders are Rob McEwen, Robert Friedland, and Eric Sprott. Additionally, Friedland's High Power Exploration has an earn-in agreement worth $44.5 million with Brixton's Hog Heaven property in Montana, USA, where a maiden drill program in 2020 produced 82m of sulfide grading 67.09g/t silver, 0.73g/t gold, and 0.23% copper.
The Libero Copper Big Red project has produced 21m grading 0.86% copper and 0.4g/t gold from near surface, and the adjoining Big Bulk project produced 97m grading 0.19% copper, 0.97g/t silver, and 0.18g/t gold for 0.34% copper equivalent. Both projects are looking for BC porphyries.
The USA's copper heartland, Arizona, also known as the Copper State, produces 74% of the country's red metal. It also serves as the foundation of Freeport-copper McMoran's operations. It is the location of several other major companies' in-development projects, including Rio Tinto's Resolution and Hudbay Mining's Rosemont. The revival of grassroots exploration is undoubtedly a result of government initiatives to wean the country off its reliance on importing vital metals like copper. In what Dechev claims to be the first coordinated generative exploration effort in the region in years, the newest participant, Mundoro, has branched out from the Western Tethyan belt in Eastern Europe to explore the Larimide copper belt with partner Vale " I've wanted to visit the southwest region of the US for the past five years. The amount of exploratory work for fresh copper finds hasn't increased.
Engineering studies do not imply investigation for novel discoveries, which Mundoro is eager to concentrate on in the southwest United States. That will be undercover exploration, which is what we've been doing for the past ten years in the Timok region of Serbia; as a result, we're transferring the same exploration methods, skills, and knowledge to a belt where most recent research has primarily concentrated on the near-surface "Dechev added.
The agreement between Mundoro and Vale will fund generative exploration projects under cover in Arizona and New Mexico, with each resulting project being covered by a separate option agreement. Under this agreement, Vale will have the option to acquire 100% of the projects through sole-funding exploration and will then pay Mundoro a total of $9 million over four milestones in cash and a 2% net smelter returns royalty upon option completion. Vale has already signed an option agreement on one of the properties that Mundoro has previously generated.
In Arizona, Mundoro is not the only junior. At its Kay VMS, Arizona Metals is now conducting a 75,000 m expansion drilling program, with the 54 m hole grading 1.9% copper, 2.9g/t gold, 5% zinc, and 29g/t silver being the highlight. The Perseverance porphyry, on which Cordoba Minerals has an earn-in agreement, and Big Sandy, a porphyry copper-molybdenum prospect, are both being investigated by Bell Copper, which is on the verge of increasing its interest to 51%. "We currently have a 25% interest rate, are in the project's second phase, and should reach the 51% milestone in December . We are drilling the first hole after the exploration team found anomalies, "Sarah Armstrong and the president of Cordoba Minerals, spoke to Mining Journal.
Barksdale Resources also plans to begin drilling in 2022 at the Sunnyside project, close to South32's Hermosa project and the Mexican border. However, San Javier, a shallow copper oxide property, is where Barksdale Resources' major interest lies and is located south of the border. Barksdale finished drilling there for 5,000 meters in 2021, and among the intercepts were 105 meters grading 0.63% copper and 0.4g/t gold. "The objective was to validate the historical resource and begin the growth process. We are aware that the area contains a deep oxide copper deposit. Our task was to enter the resource area, fill in some quite sizable gaps, and begin stepping outside. We've only disclosed the first 20 or so holes of a 36-hole program, but once [all the findings are back] and all that data is combined into the geologic model, we can begin to work on a resource estimate "According to Mining Journal, Rick Trotman, president, and CEO of Barksdale Resources.
Barksdale may be in a position to release a preliminary economic evaluation before the middle of the year thanks to the metallurgical testing that is being done to determine whether the copper can be recovered using straightforward and affordable recovery methods. To show investors that there would be a mine and a mine that is cashflow positive and can earn money, Trotman said, "We'll work quite swiftly to bring this to that place."
In Montana, also in the USA, American Pacific Mining purchased the Madison project in June 2020 along with an earn-in contract with Rio Tinto, under which the major can invest up to US$30 million to obtain 70% of the project. Madison is a porphyry-fed skarn that produces ore with a copper content of up to 25–35%. In 2021, 4,000 meters were drilled, and a magnetic survey was finished. In January, drilling was reported to have produced 6.5m with a 14.44g/t gold and 0.11% copper grade. "Rio Tinto is the expert on porphyry copper-gold models in the industry, and they know that this region of Montana is famous for its porphyry systems, including the highly productive Butte mine, which produced 23Blb of copper, 700Moz of silver, and 3Moz of gold. This enormous deposit is 48 kilometers north of Madison and follows the same structural trend. Rio is searching for a body of ore similar to this, "According to Mining Journal's Eric Saderholm, president of American Pacific Mining.
With several junior explorers funded and operating in the Americas, 2022 looks like a year with lots of drilling share price increases.
Nov 18, 2022 14:41
Nov 23, 2022 17:12