3 Ways to Invest in the 'Metal of the Future'
Palisade Research December 7, 2017 Category: Research
There’s no secret that copper supplies will continue to struggle over the next few years.
Probably even longer.Why? Because most of the world’s current copper producers are aging. They can’t keep running forever. Eventually they will exhaust themselves of resources.And there have only been a handful of new major copper discoveries in the last 20 years. . .This has caused supplies to steadily decline in a time where copper demand is ramping up.Especially over the next several years. . .What’s causing this? The explosion in Electric Vehicle (EV’s) production.EV’s will need four times the amount of copper compared to fuel vehicles. The demand for Electric Vehicles is growing so fast that the tight copper market will get even tighter. “2017 is the revolution year we have been speaking about. And copper is the metal of the future,” said Chief Commercial Officer of Mining Giant BHP Billiton.
Mining giant BHP Billiton expects 140 million new EV's to be on the road by 2035.To put that in perspective for you, there are only about one million driving out there today.
That's 139 million more. . .
This sudden spike in copper demand will send shockwaves through the mining industry.
The future of EV's is nothing short of exceptional. . .
And the metals needed to build them are going to be the most important part.
That's why you want to position yourself in mining stocks that will benefit the most from this event.
Here is what is currently in Palisade's copper portfolio. . .
Kincora Copper Ltd (CVE:KCC, FRA:BS4B) - The Next Mega-Copper Discovery
Kincora Copper is a cornerstone of our copper portfolio.
Kincora has established one of the largest packages in Mongolia, on strike from the two existing copper mines in the Southern Gobi: Oyu Tolgoi and Tsagaan Suvarga.
Oyu Tolgoi is a US$14 billion mega project - home to reserves of 32.4 million tonnes of copper, 34.0 million ounces of gold, and 262.2 million ounces of silver.
Tsagaan Suvarga is a $1 billion project owned by Mongolyn Alt (MAK) Corp., it's home to a total proven reserve of 230 million tonnes of primary sulphide ores, equivalent to 1.5 million tonnes of copper.
Kincora's portfolio contains 10 existing licenses and 2 further applications, which cover an area over 1,560 km2.
The company recently raised $5.92 million, including a $1.4 million investment by the European Bank for Reconstruction and Development (EBRD).Kincora has wasted no time and is already drilling - looking for more minerals. . .
A maiden RC and diamond drill program is comprised of 2,870 meters is currently underway at the East TS target. And another 2,000 meters has been planned at the Argalant, Central West and Ulgii Khud prospects located on the margins of the Ulgii Khud massif.
Kincora is armed with extensive data, modern exploration techniques, and hard-hitting management.
The technical team already has multiple world class discoveries under their belts, and are convinced Kincora is sitting on the biggest one yet.
A discovery of Kincora's proposed magnitude will significantly reward investors. . .Gold Reach Resources (CVE: GRV)
The newest addition to our copper portfolio.
And one of the most exciting. . .
Gold Reach Resource's flagship project is the 100% owned Ootsa property.
It's located in central British Columbia.
Ootsa is an advanced stage exploration project located adjacent to the open-pit Huckleberry copper mine.
And just like the old saying goes. . .
"The best place to find a mine, is next to a mine."
The property contains an M&I resource of 224 million tonnes with contained metals of 1.1 billion pounds of copper and one million ounces of gold.
Gold Reach is to the point of a preliminary economic assessment:
? Initial capex: C$64 million (including contingency)
? NPV5% (after-tax): C$186 million
? IRR (after-tax): 81.0%
? Payback (after-tax): 1 year
? Mine life: 12 years
? Metal Price (US$): $3.00/lb Cu, $1260/oz Au, $10.30/lb Mo, $17/oz Ag
? Production: 324 M lbs Cu, 185 K oz Au, and 15.8 M lbs Mo, 3 M oz Ag
These are robust economics. . .
And at a C$10.7M market cap - this is a steal of a deal.
We appreciate both the resources in the ground and the potential profitability of the mine.
However, its important to note that the Ootsa's PEA contemplates contract mining and toll milling.
This means if management cannot get a deal done with Imperial Metals' Huckleberry Mine, the copper, and gold, silver stays in the ground.
We believe it will get done.
A new investor group has taken a substantial piece of the recent financing, and they are known to get things done.
The downside is protected by the sheer amount of resources in the ground - the only thing that might change is the holding period of the investment.
Carube Copper (CVE:CUC)
We have covered Carube Copper extensively in the past, and it remains in our portfolio as an exciting exploration play.
The company's flagship project is the Bellas Gate Copper Porphyry Belt, located in Jamaica.
Carube owns 100% of eleven licenses that encompass 535 km2 of the most prospective ground for copper and gold in Jamaica.
Over $18 million has been spent on drilling and exploration over the last five years.
This has led to some prolific holes, including. . .
? Connors - Hole DDH-CON-14-005: intersected 294 meters of 0.56% CuEq (0.41%Cu, 0.27 g/t Au); including 96 meters of 1.00% CuEq, (0.67%Cu, 0.58 g/t Au);
? Connors - Hole DDH-CON-14-003: intersected 297 meters of 0.53% CuEq, (0.40%Cu, 0.24 g/t Au); including 55 meters of 1.00% CuEq (0.67%Cu, 0.59 g/t Au);
? Provost - Hole PVT-16-002: intersected 339 meters of 0.34% CuEq (0.28%Cu, 0.12 g/t Au); including 10 meters of 1.79% CuEq (1.28%Cu, 0.90 g/t Au).
There is no arguing Bellas Gate is indeed a genuine discovery.
And the company is just beginning. . .
There are 13 high priority porphyry target areas for exploration:
Carube just finished its 2017 program, which focused on the Provost, Hendley and Provost Southeast targets.The drilling intersected copper mineralization in all three targets.
This means copper mineralization encompasses 26 km2 at Bellas Gate.
That is almost 5,000 football fields. . .
This is a very large system with the potential to host multiple copper-gold porphyries.
Carube is currently raising money which will dampen the stock short term.
The company plans on testing other targets in the belt, and follow up the higher-grade intersections with some infill ground geophysics and more drilling.
Palisade Global Investments Limited holds shares of Kincora Copper, Gold Reach, and Carube Copper. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report is obtained from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence.