Recording date: 23rd October 2023
Copper Bottomed, Episode 2. Our latest addition to the Crux Investor Batteries thematic.
The copper price has shown resilience in recent weeks, trading around $3.60/lb, despite bearish predictions of a 467,000 tonne global surplus in 2024 from the International Copper Study Group (ICSG). Major new mines are slated to ramp up production, potentially outpacing demand growth. However, early drilling results from junior explorers around the world offer a glimmer of hope that new discoveries could help fill future supply gaps. While not without challenges, leading juniors have reported impressive early-stage intercepts, contingent on further delineation.
Double View Gold generated substantial investor enthusiasm with reported copper-equivalent grades up to 1.09% over 552 meters at its British Columbia project. However, with the actual copper grades quite modest, the company likely erred in publishing the misleading equivalents without an initial resource estimate as required by regulators. While gold, silver and scandium offer additional upside, metallurgical recoveries are still unknown. Double View also likely faces delays in its planned Q1 2024 maiden resource. More transparency around timelines and contributory metals would serve investors better than flashy copper equivalents.
Peru-focused DLP Resources fell into the same trap, touting 0.81% copper-equivalent grades that proved unsupported once underlying assays showed just 0.7% copper. By factoring in minimal credits from silver and molybdenum too early, DLP inflated perceptions of the potential copper resource. Investors should remain focused on actual metal grades rather than homogenized equivalents when reviewing early-stage exploration results.
In contrast, Hercules Silver executed an exemplary drill result release after intersecting 185m of high-grade copper at its Idaho project. Rather than wrap the results in a copper-equivalent bow, Hercules simply reported the outstanding 1.9% copper intercept transparently alongside modest silver and gold byproduct credits. Combined with releasing exceptional visual core photos, Hercules gave investors an accurate and exciting view of the discovery's world-class potential, powering a doubling of its share price.
C3 Metals also impressed by transparently outlining both significant upside and technical challenges from early drilling at its Jamaica project. Highlighting issues reaching target depth shows leadership and provides a balanced perspective. While grades currently seem modest, C3 systematically outlined an impressive scale copper-gold porphyry system with ample room for growth through further delineation.
Conversely, Aston Bay Holdings faces extreme challenges advancing a very high-grade copper-zinc discovery in remote Nunavut, Canada. The region's lack of infrastructure means only massive, exceptional deposits have hope of feasible development. Thus, impressive initial assays are currently insufficient to attract investor attention absent a dramatic increase in delineated tonnage.
Similarly, Turmalina Resources requires further drilling to prove continuity before its narrow but exceptionally high-grade Argentine copper-gold intercepts can be considered a valid development target. Promising results must evolve into contiguous, mineable mineralization to upgrade speculative appeal.
In summary, disciplined explorers with a track record of transparent reporting and communication stand the best odds of attracting investor capital amid sector volatility. While analysts call for copper market surpluses, exciting junior exploration results provide optimism that the next generation of deposits can offset the impending supply growth challenge.
Learn more: https://cruxinvestor.com/commodities/copper
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