Peter Kennedy | May 1, 2018 | SmallCapPower: It is not every day that a junior exploration company stumbles on a major copper porphyry deposit. Currently the world's largest source of copper ore, porphyry deposits are traditionally the domain of major multi-national mining companies like Rio Tinto Plc (NYSE:RIO), BHP Billiton Ltd. (NYSE:BHP).
But confirming the existence of a copper porphyry is what Bell Copper Corp. (TSXV:BCU) is hoping to do at its flagship Kabba property in northwestern Arizona.
The 100%-owned Kabba project is located about 150 miles northwest of Phoenix on a land package that covers 12,840 acres, or 5,200 hectares.
The project is located on a productive porphyry copper trend between Freeport McMoran Corp.'s (NYSE:FCX) Bagdad mine and Origin Mining Company LLC's Mineral Park mine in northwestern Arizona, a state that has produced 10% of all the world's copper.
On April 24, 2018, Bell Copper shares were trading at $0.09 in a 52-week range of $0.23 and $0.04, giving the Company a market cap of just $6.1 million based on 67.4 million shares outstanding.
Investors who have bought into this story are betting on the determination and expertise of BCU Chief Executive Officer Timothy Marsh. Mr. Marsh is a 53-year old Stanford University PhD graduate and former chief geologist with Rio Tinto subsidiary Resolution Copper, who took control of Bell Copper in December 2012, with the singular aim of proving that the project contains the copper porphyry that he believes is there.
Under Mr. Marsh's leadership, Bell Copper has been focused on pursuing the faulted-off top of a potential major porphyry copper system, the bottom of which is exposed in foothills roughly eight kilometres west of the Kabba property.
Essentially the Company is attempting to outline a copper porphyry that appears to have been cut in the middle and moved eastward by geological forces over millions of years. The roots of the system are exposed at surface and show a pyrite shell measuring three kilometres by five kilometres.
Mr. Marsh said he is reasonably certain the upper portion of the porphyry that he is looking for remains intact.
Bell Copper has been able to hang onto the project despite daunting hurdles, including a deep slump in the mineral exploration sector that prompted Mr. Marsh to option the property to Kennecott Exploration Co., a unit of the Rio Tinto Group.
The April 2016 agreement gave Kennecott the right to earn a 51% interest in the property by spending US$3 million on exploration over five years. If Kennecott had earned 51% in the first option, it had a second option to earn additional 19% interest by spending another US$10 million in the eight years, following the first option period.
However, after spending about $3.4 million on exploration, Kennecott recently terminated its exploration program and announced that it was returning a 100% interest in the project back to Bell Copper.
To Bell Copper's benefit, during the option period, Kennecott completed seven drill holes, including holes K-18 and K-19, which were drilled late in 2017 to test the northerly extent of a strong IP chargeability anomaly identified by their geophysics program.
"They have left us a gift and a great opportunity, we are anxious to get back out on the ground and get to drilling again," said Mr. Marsh during a telephone interview from Arizona. He said the work completed by Kennecott produced a treasure trove of new, high-quality subsurface information that builds on the copper porphyry target that Bell has been pursuing.
The Company has said it will return to Kabba for further drilling within the next 30 days, when drilling is expected to focus on the ovoid copper porphyry target.
In an update issued Wednesday, April 25, Bell Copper said it received a permit from the Arizona Department of Water Resources to complete its initial 2018 drilling campaign. The Company reduced the permitting time to approximately two weeks by securing access to private land located inside the target area, which Bell Copper plans to drill initially.
In keeping with that goal, the Company said recently it is proposing to raise $500,000 from a non-brokered private placement of units priced at $0.10 per unit. Under the terms of the private placement, each unit will consist of one common share of Bell Copper plus one common share purchase warrant. On March 16, 2018, Bell Copper closed the first tranche, generating proceeds of $256,000.
Drilling will be performed by Godbe Drilling LLC, Bell Copper's biggest shareholder, with an approximately 20% interest in the Company.
As exploration crews gear up for the upcoming drill program, Mr. Marsh said the Company expects to quickly determine whether or not it is on the right track.
Meanwhile, If Bell Copper can come up with the porphyry copper deposit it is seeking, the Company will likely find a receptive market.
A critical component of the global infrastructure sector that is used for metal wire, plumbing and hardware, copper is the most liquid of the base metals. As the world's leading economies continue to urbanize and industrialize, refined annual copper demand is expected to increase from 19 million tonnes to more than 25 million tonnes by 2020, according to Wood Mackenzie, a U.K. metals and mining research group.
In its monthly commodities update ABN-AMRO is forecasting that the price of copper will average US$7,350 per-tonne in 2019, up from a forecast average of US$7,200 in 2018.
"I think the world has dug itself a very big hole in terms of future copper supply," Mr. Marsh said. "The majors laid off their exploration teams. They failed to find a new Escondida [the world's largest copper mine] every year, which is what you need to replace existing copper supply, let alone account for copper growth,'' he said.
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