Copper Exploration Co. Starts Trading on TSX
Meanwhile, the drill program continues at its flagship copper-gold project in Peru. Find out what one analyst said about this asset.
Coppernico Metals Inc. (COPR:TSX) began trading under the symbol COPR on the Toronto Stock Exchange (TSX), which should afford it greater exposure and access to investors and the financial markets, a news release noted.
"This is a significant milestone after nearly a decade of dedication to the Sombrero project," Chief Executive Officer and Chair Ivan Bebek said in the release, referring to the company's flagship copper-gold project in southern Peru.
Bebek and some Coppernico team members will ring the TSX's opening bell on September 30, 2024, in celebration of this company development.
Pursuing Possible Multi-Billion Dollar Idea
British Columbia-based Coppernico Metals Inc., spun out of Auryn Resources in 2020, is exploring for large-scale, high-grade copper and copper-gold projects in South America, the company said. It is in the midst of a 16-hole, 6,500 meter, phase one core drill program targeting the Ccascabamba skarn-porphyry system at Sombrero, fully permitted for drilling. Also being done are reconnaissance work and sample collection in the unexplored areas of the land package.
It would be "a billion-dollar-plus idea if it works," if the company has drill success and is able to prove up even just half the resource of this single target, Steven Therrien, senior mining analyst at 3L Capital, wrote in a June 5 research report.*
It would be "a billion-dollar-plus idea if it works," if the company has drill success and is able to prove up even just half the resource of this single target, Steven Therrien, senior mining analyst at 3L Capital, wrote in a June 5 research report.The conceptual exploration target modeled by Therrien, ranges from 10,861,000 tons (10.861 Mt), or 23,945,000,000 pounds (23.945 Blb), of copper equivalent at a 100% success rate to 2,715,000 tones (2.715Mt, or 5,986,000,000 pounds (5.986 Blb) of copper equivalent at a 25% success rate. The analyst calculated an estimated value at half of the modeled exploration target using an acquisition price range of US$0.025-0.10 per pound and concluded that "An acquisition of this scale would fetch between US$300M to US$1.2B,".
The Sombrero concessions span ~103,000 hectares and contain several copper-gold skarn and porphyry systems along with precious metal epithermal deposits. The property sits on the western extension of one of Peru's most prolific copper belts, Andahuaylas-Yauri.
"The Sombrero project represents a unique opportunity to extend a world-class belt and hosts the potential for multiple major discoveries," said Tim Kingsley, Coppernico's vice president of exploration.
The current focus at Sombrero is on the Ccascabamba and Nioc areas, the mineralizing intrusives of which occurred during the same Eocene era as the renowned deposits on the copper belt, such as Las Bambas. Sombrero is west of and analogous to Las Bambas, which, Therrien pointed out, produced 302,000 tons of copper last year alone.
For drilling at Sombrero, Coppernico has a renewable, three-year social access agreement with the local community, noted Therrien. As of May 24, the explorer had CA$18 million (CA$18M) in cash following a CA$19.37M raise in May that included an CA$8.77M investment by Teck Resources Ltd. (TECK:TSX; TECK:NYSE), acquiring a 9.9% equity stake in the company. Coppernico is well-funded for more than a year of exploration drilling, Bebek said in a June interview.
While advancing Sombrero, management continues to review additional projects in South America, aiming to expand its portfolio and thereby offer more value to shareholders and reduce risk, the company said.
Peru, as a mining jurisdiction, is the world's third leading copper producer, according to Red Cloud Research. The country is on track to invest more in mining this year than the government estimated, and the total could reach US$5.3B, according to Peru's largest commercial bank, Banco de Cr?dito del Per?.
"We are seeing the pace of permit approval increase and major permits being issued, such as the February 2024 Modification of the Environmental Impact Assessment approval that allows for a US$2B Antamina copper mine expansion, a positive sign for mining and exploration in the country," Therrien added.
The Coppernico team boasts a successful track record in raising capital, making discoveries, and advancing and monetizing projects. CEO Bebek, for example, has more than 25 years of experience in the private and public mining and exploration sector. His three previous most notable companies are Auryn, Cayden Resources (sold to Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) for CA$205M) and Keegan Resources (now Asanko Gold Inc. (AKG:NYSE.MKT; AKG:TSX)).
Coppernico's board of directors includes two former BHP vice presidents, Keenan Jennings (metals and exploration) and Antonio Arribas (geosciences) and a third former BHP Executive MJ McQuhae has been nominated to the board.
"Having two former BHP executives on the board significantly validates the integrity and opportunity that lies ahead with Coppernico," noted Therrien. "Additional project validation is supported by Teck's participation in the most recent financing."
"Commodities Setting Up For a Big Rise"
Commodities, including copper and gold, are "setting up for a big rise," purported MP Securities' Barry Dawes on Aug. 13.
"This is the time for all those forgotten, despised, hated, and ignored small-cap resource stocks to be bought for this very significant cyclical upturn," he wrote.
With respect to the strategic metal, copper, the long-term fundamentals remain strong, Investing.com reported UBS Global Research as saying on Aug. 12, and should support higher copper prices over an extended period.
Copper supply cannot keep up with demand due to minimal future growth of mine supply and a limited pipeline of new projects. According to an Aug. 6 Fastmarkets article, other contributors include minimal investment in major new mines throughout the past decade, higher capital costs, falling average ore grades, and policy risks.
The copper supply will peak at some point in the next two years then start to decline, according to the International Energy Agency (IEA), reported Chaikin Analytics Senior Analyst Joe Austin. The IEA estimates a copper shortfall of about 7,000,000 metric tons by 2035, about a third of output forecasted for that year.
"By 2040, the available supply of copper will be roughly two-thirds of what we produce today. But by then, the demand for copper will have soared far higher than where it is today," Austin wrote in the August 6 article, "Get Ready for a Boom in Copper."
Economic growth is expected to drive about half the future copper demand, noted Austin, and green energy expansion and investment in power grids, the remaining half. Fastmarkets predicts copper consumption from energy transition industries, encompassing solar energy, wind power, electric vehicles (EVs), and EV charging infrastructure, will rise at a compound annual growth rate (CAGR) of 11.2% by 2034 versus the projected 1.4% CAGR for copper consumption from traditional energy. Demand for the red metal for grid lines alone is expected to more than double in the next 10-plus years, according to the EIA.
Austin added that a rebound in China's manufacturing could accelerate a future copper deficit.
"Putting it all together, copper demand is set to take off in the years ahead," he wrote. "And from an investing standpoint, we can't ask for a better outlook."
These supply-demand factors are expected to support higher copper prices for an extended period, UBS analysts told Investing.com. The Economy Forecast Agency predicts a copper price of US$4.552 per pound (US$4.552/lb) by year-end 2025 and US$5.211/lb by year-end 2026. (The price today is US$4.0595/lb.)
Further, the copper price recently underwent a heavy correction, spurred by "speculative unwinding," UBS noted, but this likely has run its course.
Other analysts purport the copper price is ready to move higher. Technical Analyst Clive Maund, for one, indicated that if the charts are to be believed then "we are at or very close to the perfect entry point for copper and all things copper like copper stocks."
Similarly, gold also has been consolidating over the past four months but has been rallying recently. Its advancements despite headwinds of a stronger dollar, higher yields and reports of improving economics, wrote Gary Wagner with Kitco News, demonstrate the gold market's "underlying strength and resilience."
Dawes asserted the technicals support a breakout for gold soon, with the price heading to new highs. The spot gold price is US$2,475 per ounce (US$2,475/oz), compared to the peak of US$2,484/oz.
"There is every reason for [the] gold price to move higher, and the current issues with Ukraine/Russia and Israel, Hezbollah, Hamas, Iraq and Iran seem to be ready to seriously escalate higher," Dawes wrote.
Indeed, geopolitics will play a key role in driving up the gold price, noted an Aug. 9 Seeking Alpha article. These also include tensions between the U.S. and China, the U.S. presidential election in November, and the expected interest rate cut by the U.S. Federal Reserve. Buying by central banks should also support a higher price. The Seeking Alpha writer projected the gold price will reach US$2,450/oz in Q4/24.
"Gold is still up about 15% so far this year and is one of this year's best-performing commodities," they added.
Looking beyond 2025, analysts' price forecasts for gold vary, according to LiteFinance. On the conservative end, LongForecast predicts a gold price range of $2,163-2,800/oz in 2027-2028. CoinPriceForecast has the precious metal reaching $4,649/oz by 2030. A more bullish projection, from GovCapital analysts, has gold reaching US$11,644/oz in May 2029.
The Catalyst: Insights From Drilling
Coppernico Metals is financed through 2026 and is drilling for new significant copper discoveries at Sombrero. Thus, as far as upcoming catalysts, "Investors can expect a steady flow of discovery drilling news going forward, the type of catalyst that drives significant value," Therrien wrote, starting with those from phase one, now underway.
Streetwise Ownership Overview*
Coppernico Metals Inc. (CPPMF:OTCMKTS)
*Share Structureas of 7/30/2024Source: Coppernico Metals Inc.On tap for 2025 is the second phase of drilling at Sombrero, to test more prospective targets and follow up on phase one's findings.
Ownership and Share Structure
Regarding ownership of Coppernico Metals, according to company estimates, strategic investors, including insiders, own 56%. Specifically, CEO Bebek holds 3.45%, management and directors have 1.6% and close associates own 34.23%. Teck owns 9.9% and Newmont Corp. (NEM:NYSE), 6.25%.
Institutional investors hold 17.75%, and retail investors account for 26.25%.
With respect to its capital structure, Coppernico estimates it has 177.2 million (177.2M) shares outstanding, 7.8M options outstanding and 36.2M warrants outstanding.
The company's market cap is about CA$88.6M. The stock closed its first day of trading on the TSX at CA$0.335 per share.
Sign up for our FREE newsletter
Important Disclosures:
Coppernico Metals Inc. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Coppernico Metals Inc. and Agnico Eagle Mines. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.
* Disclosure for the quote from the 3L report published on June 5
3L Capital Inc. is retained by Coppernico on a non-exclusive basis to provide financial advisory and capital markets services.
3L Capital has prepared this report for informational purposes only. It is intended to provide general information and should not be interpreted as a solicitation to engage in securities transactions, a recommendation to buy or sell securities, or investment advice. The opinions expressed in this report reflect the author's views as of the report's date. It is strongly advised that recipients conduct their independent investigations and seek professional advice before making any investment decisions. While the information contained in this report is derived from sources believed to be reliable, its accuracy cannot be assured. It should be noted that 3L Capital, along with its affiliates and associates (collectively known as "3L Capital"), may have provided financial advisory and other services to the companies mentioned in this report in the past or may do so in the future. As a result of rendering such services, 3L Capital may receive financial and other incentives from these companies. 3L Capital employees and affiliates may hold positions in and may buy or sell securities of companies mentioned in this report. For a detailed discussion of company-specific risks, please refer to the "Risk Factors" segment in the company's AIF or MD&A section.