Glencore (GLEN:LN), one of the world’s largest producers and marketers of copper, produced 1.26 million tonnes and sold 3.4 million tonnes through its marketing business in 2020. Their copper production is so large that the company is also a major producer of cobalt, a byproduct of copper. Most of their cobalt product comes from the Democratic Republic of Congo.

The Start of an Upward Trend

While 2020 was a good year for Glencore (GLEN: LN), 2021 began to set the trend for production increases. On Thursday, the company reported 301,200 tonnes produced in the first quarter of 2021, 3% higher YoY from Q1 2020. While the reopening of production and the lifts of restrictions for miners contributed to this bump, productivity improvements also lent a hand to the increase. 

“The group’s overall production was broadly in line with our expectations for the first quarter. Production in Q1 2021 reflects that many of our operations continue to maintain thorough Covid-safe working practices, as appropriate for each specific country and region. Full-year production guidance has been maintained for our key commodities,” according to CEO Ivan Glasenberg.

Big Influence

Glencore’s business is one of the most diversified, comprising more than 60 commodities. The company has operations at approximately 150 mining and metallurgical sites in more than 35 countries. Employing 135,000 employees and contractors, where Glencore goes, significant employment number improvement often follows, and the company holds so much sway in many commodities that it is often responsible for price changes as a direct result of supply and demand. 

Copper’s in-demand status continues to increase, and Glencore’s production increase is just a piece of what will be necessary over the coming years to meet the massive demand coming. As one of the largest producers and marketers of copper in the world, Glencore (GLEN: LN) will need to take a lead position in the market and help balance the supply issues facing the industry right now. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

The Paris climate goals and the transition away from fossil fuels toward electrification are set to create an unprecedented surge in copper demand, according to Goldman Sachs’s new report on copper. The global investment bank is forecasting a long-term supply gap of 8.2 million tonnes of the metal by 2030, “twice the size of the gap that triggered the bull market in copper in the early 2000s.” This would be the “highest on record” and would set the tone for the 2020s making this period the strongest phase of volume growth in global copper demand in history. 

Copper’s Importance

The world isn’t just moving away from fossil fuels, but it is actively working on reducing and reversing some of the warming effects of greenhouse gases. The impact of climate change costs the global economy hundreds of billions of dollars. Investing in clean technologies is the antidote. The investment in technologies like carbon capture and storage technology, renewable energy, and electrification of everything from cars to manufacturing means that copper will have a critical role to play in this new economy. 

The centrality of the red metal makes it a critical component for strategic investments both from private businesses and governments. The countries willing to invest in the infrastructure and support for mining companies now will have profits coming in steadily over the next decade. Some have even called copper a national security issue due to its strategic value. 

A Shortage That Threatens National Security

The high value, current under-investment, and lack of tier one mines makes it a potentially destabilizing force as many countries classify certain metals as strategic. For context, one only needs to look at history. 

The wars of the past 50 years have been fought for several reasons, but one of the prime motivators for conflicts in the Middle East was oil. Winning the war meant rebuilding the infrastructure in the region and therefore gaining a foothold in the supply. This was highly valuable to foreign countries and the mining companies extracting these extremely strategic resources.

The countries with abundant copper deposits sitting within their borders may ultimately come to realize that the global demand and urgency of the commodity will drive its importance for the largest economies in the world. As the scramble continues and even accelerates as demand multiplies, those countries may find themselves standing between powerful corporate interests and the governments fighting to secure the supply required for their needs. A shortage of copper would mean a fierce fight for the material that is certain to play a significant role in the large and developed economies accelerating toward net-zero emissions right now. With most countries targeting 2050 for this goal, copper’s demand will likely grow fastest in the first half of the century and continue into the second. By the middle of the century, it will be necessary for a plethora of manufacturing, products, and energy supply and storage. 

Each of these functions could easily fit under the national security blanket, pushing countries to nationalize supply or even move aggressively, as happened during the Iraq wars.  The good news is that copper mining companies are exploring and developing those projects now and are setting themselves up to be right in the middle of this boom, taking advantage of a supercycle that will drive profits for decades. 

Goldman Puts Things Into Perspective

Goldman’s prediction that the copper price would reach $6.80 per pound by 2025 is a significantly bigger statement, demonstrating that the investment bank believes that copper will not need to wait until 2050 to see new peaks in demand spiking regularly. According to their recent report, prices will also spike regularly, breaking highs and setting new records within as little as four years from now. This past February, copper hit a multi-year high, foreshadowing a sliver of what is to come. 

Analysis

The authors of the report, Nicholas Snowdon, Daniel Sharp, and Jeffrey Curries estimate that demand from electrification “will grow nearly 600% to 5.4Mt (million tonnes) in our base case and 900% to 8.7Mt in the case of hyper adoption of green technologies” by 2030. In the conservative base case, copper miners would see a massive demand to be filled surge faster than current production and production plans can accommodate. In the case of “hyper adoption of green technologies,” the world is likely to see a problematic copper shortage that is certain to push the price higher and faster.

The authors continued: “Crucially, the copper market as it currently stands is not prepared for this demanding environment. The market is already tight as pandemic stimulus (particularly in China) has supported a resurgence in demand, set against stagnant supply conditions. Moreover, a decade of poor returns and ESG concerns have curtailed investment in future supply growth, bringing the market the closest it’s ever been to peak supply.”

Steep Trendlines

The report forecasts a copper price of US$15,000 per tonne by 2025, up from today’s price of around $9,000 per tonne today. To get a sense of the trend, the report included estimates of the average price by year: 

  1. 2021: US$9,675/t
  2. 2022: US$11,875/t
  3. 2023: US$12,000/t
  4. 2024: US$14,000/t

The culmination in 2025 at $15,000 would mean huge profits for miners as well as a need for new greenfield project approvals. 

Driving Prices

The demand driving the copper price stems from three main drivers of green copper (copper mined cleanly):

  • Electric vehicles (EVs)
  • Solar power 
  • Wind power

Goldman estimates a 2021 sales volume of 5.1 million EVs in 2021, with that number rising to 31.51 million in 2030. Just to meet that demand, current copper production might need to double or triple. Including charging units (of which Goldman estimate 30 million will be installed by 2030), accessories, batteries, and other power storage needs, copper demand seems to be almost incalculable. Conservative estimates make it seem like production is far behind, and the top end of the range requires unprecedented investment in the industry for new projects.

How is it Going?

Right now, the copper market is not prepared for this demand. The massive copper deposits to be found in the Andean Copper Belt, being discovered and explored by miners like Solaris Resources, EcuaCorriente, and SolGold are set to become some of the most valuable projects in a high-value copper region. 

Some analysts disagree with the borderline alarmist analysis in the report, with opinions often coming down on the side of caution where prices are concerned. According to TD Securities, “Commodity demand is being supported by a weakening dollar amid a consolidation in U.S. interest rates and fiery risk appetite. Demand continues to pick up, but as the world exits the pandemic and begins to ramp up production, “…metals supply risk is likely to subside from here, adding some pressure to industrial metals prices.” 

It seems that for now, there is no perfect consensus as to where the copper market might end up. While demand is guaranteed to increase, the scale of supply risks and production worries are still speculative and do not add up to a definitive answer on where the balance lies. There will no doubt be an imbalance as demand outstrips supply for the next decade, but analysts are still split on how big that gap might be. In either of Goldman’s scenarios, the situation seems quite dire, with the price ending up in the stratosphere. TD Securities seems to temper that outlook somewhat, without disputing the key point here that copper prices are set to rise no matter what. 

No matter which side of the spectrum you might fall, the next decade is sure to be a wild ride for everyone with a piece of this cake, and is guaranteed to bring a sugar high for decades to follow. 

Open-pit copper mine, Peru.

Peru is one of the prime copper mining destinations for miners from every corner of the globe. Some of the largest deposits of the red metal are sitting in the ground in this mining-friendly country. For Anglo American, the Quellaveco Mine presents an opportunity to add another world-class cost-efficient mining operation to their diversified portfolio. 

A Hotbed

Anglo American is part of a group of miners that contributed 58% of mining investment in Peru in January. While mining investment in Peru slumped because of the pandemic and remains below pre-pandemic levels, investment in infrastructure and planning has restarted in earnest now. The Quellaveco Mine is a significant focus of capital expenditure for the company, and it’s pretty easy to see why.

A Hot Commodity

According to Bloomberg, “Within a decade, the world may face a massive shortfall of what’s arguably the most critical metal for global economies: copper.

The copper industry needs to spend upwards of $100 billion to close what could be an annual supply deficit of 4.7 million metric tons by 2030 as the clean power and transport sectors take off, according to estimates from CRU Group. The potential shortfall could reach 10 million tons if no mines get built, according to commodities trader Trafigura Group. Closing such a gap would require building the equivalent of eight projects the size of BHP Group’s giant Escondida in Chile, the world’s largest copper mine.”

Copper miners are scrambling to keep up with demand, and for the time being, prices continue to climb due to the supply shortfall. In the coming years, companies will need to manage their projects to avoid overproduction and a glut of the valuable metal, but for now, there are plenty of opportunities to ramp up production and get more copper into the market. 

This is great news for companies that are developing and investing in new projects right now, 

Quellaveco Mine

The mine is one of the largest copper deposits in the world and is located in Peru’s most established copper-producing region. Due to the skilled workers and established infrastructure, the project is likely to be a big winner for the company when it begins. 

Anglo American expects the mine to be ready for 2022, at which time the first copper production will begin. This project seems to be coming at just the right time to take advantage of a confluence of events and circumstances in the global economy and the process of electrification worldwide. For now, investors will be watching for any sign of the Quellaveco Mine proceeding according to plan, and Anglo American will need to deliver on many of their promises to deliver this project on time and on budget. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

Kincora Copper [TSX-V: KCC] fell off investor’s radar screens due to an extended period of inactivity in 2018, but now the Company is cashed up, team in place, and ready for extensive drilling at 5 independent, large-scale porphyry targets with a 12-month funded budget for up to 18,000 m of drilling.

Kincora has been operating in Mongolia for > 8 years. In 2016, the Company secured unencumbered access to its promising Bronze Fox project and consolidated the dominant landholding in the Southern Gobi copper-gold belt, between and on strike with Rio Tinto’s Oyu Tolgoi (“OT“) copper-gold mine, and the Tsagaan Suvarga porphyry project, via the merger with IBEX, a private vehicle indirectly controlled by Robert Friedland.

This attracted a world-class technical team, credited with multiple discoveries of Tier 1 copper deposits, looking to repeat such successes. Since then, the Company has been executing the first modern systematic exploration program across a district-scale landholding in a highly mineralized, but vastly under-explored copper-gold porphyry belt. Now, drilling is just days away.

These are exciting times for Kincora, the most exciting in the Company’s history. The Company is in a prime position in the copper sector where new discoveries are being well rewarded and successful juniors acquired at significant premiums. For example, just this week Australian-listed MOD Resources was taken out by a billion-dollar market cap Sandfire Resources.

A new cornerstone investor, HK-based New Prospect, now the 2nd largest shareholder with about 12% of the Company, is a natural resource specialist fund with an extensive global network. LIM Advisors remains the largest investor, one of the longest operating alternative investment managers in Asia, they invest across the capital structure in deep value & special situations.

Investors in small cap natural resource stocks know that the best time to be in a junior is right before a BIG discovery. That’s the time we could be at right now with Kincora. Management just raised $6.25M. Will there be a new discovery! More than one!! None!!! Yes, there could definitively be zero new discoveries…. This is a highly speculative situation, but backed by a team that has an excellent track record of large discoveries.

Even without blockbuster discoveries, the Company has planned a very detailed and well thought-out drill program that’s sure to cover a lot of bases and provide a pipeline of news flow over the next 12 months. Raising $6.25M in a very tough market at a $7M pre-money valuation was a BIG success in and of itself, demonstrating the strength of management, the projects / targets and the massive opportunity.

The de-risking capital raise is strong evidence of the belief by cornerstone investors & seasoned management that Mongolia is a great place to, potentially, make the newest globally significant copper discovery since 2014. To learn more, please continue reading this Interview of Sam Spring, President & CEO of Kincora Copper [TSX-V: KCC].

Can you talk about how we got to the point of a substantial drill program starting very soon?  

After 2018 being a transitional year of setting the right corporate foundations for success, we are entering an exciting period where the drill bit will drive Kincora’s valuation once again. This month we will commence an aggressive, multiple rig, fully-funded drill program. The focus is discoveries on 5 large, independent copper porphyry targets on our 100%-owned Bronze Fox and East Tsagaan Suvarga (“East TS”) projects.

This will be the first drill program conducted by our industry-leading technical team, who have found multiple Tier 1 copper assets. For the last 3 years, we have undertaken the first modern, district-scale, exploration across this vastly mineralized, but significantly under-explored Southern Gobi copper-gold belt.

As readers may know, there are 2 large-scale porphyry projects in this region. Rio Tinto / Turquoise Hill Resources’ Oyu Tolgoi open pit mine and underground development project, and a privately-held open pit development project called Tsagaan Suvarga. We believe there are more globally significant copper discoveries to be found.

Limited drilling supports our Bronze Fox project potentially hosting an independently defined, conceptual exploration target of 1.3 to 1.5 M tonnes (midpoint = 3.086 billion Cu Eq. pounds). That would be an in-situ value of $11 billion (1.32 CAD/USD, US$2.70/lb. Cu).

The first hole of the program will, for the first time, correctly test a very large zone (previously drilled in the wrong direction). However, prior drilling still managed to intersect 37 m at > 1% Cu Eq., within 864 m of 0.38% Cu Eq.

Our East TS project sits in the shadows of a billion-dollar open pit construction project at Tsagaan Suvarga (“TS”). Within this brownfield setting, we’re drilling 3 separate targets that are the closet analogues to the high-grade ore bodies at OT…. since OT! While just targets, readers should understand that what we’re exploring for is large and in a very favorable location and geological setting. OT’s ongoing underground expansion is the largest hard rock mining project in the world. It could become the 3rd largest copper mine on the planet, with a 100-year+ mine life.

Kincora was formed in 2011, but we are in the strongest position today that the Company has ever been in. Yet, our current market cap of $12M, (with $6M cash!) is a fraction of our peak valuation of nearly $50M. At that time, we had attracted a buyout offer for the Company and had signed 14 NDA’s with interested parties.

While naturally I’m biased, I think it would be hard to find many juniors with similar risk/return profiles and multiple near-term catalysts, backed by a world-class management, Board, Technical team, Advisors and key shareholders, trading at such a low valuation.

With the Company shortly ramping up drilling of our existing exploration portfolio, and focused on ongoing expansion opportunities, Kincora is the most active foreign-listed junior seeking to make the next Tier 1 discovery in Mongolia.

You just closed on a $6.25M capital raise in a very difficult market. Who were the key investors in this very important round? 

~60% was taken up by 2 large natural resource funds and associated groups, who will represent > 40% of Kincora’s shares going forward. These groups, LIM Advisors & New Prospect Capital are both Hong Kong based funds and have a track record investing in Mongolia.

In total, there were > 30 investors in the deal, with strong Board / management participation and good support from high-quality sophisticated investors. As you can imagine, given current market conditions, a lot of work went into this raise. We truly appreciate the vote of confidence from those who invested.

How much of that $6.25M will go towards exploration? Please describe the upcoming drill program.

The vast majority will support Kincora undertaking the most aggressive exploration & discovery drill program anywhere in Mongolia this year. ~$5M will cover up to 18,000 m of drilling at Bronze Fox & East TS, plus project generation activities and advancing earlier-stage exploration targets.

Mongolia has unique geological potential to host globally significant discoveries, and that is what we are focusing on. This raising, with the accompanying warrant package, aligns our capital markets strategy with our exploration & expansion plans and gives us a good shot (but no certainty) at making new discoveries.

We are on record stating that these drill targets are, ‘as good as you get within a global setting for their respective stages’. The key driver in the next 12 months is proof of high-grade & our geological concepts, to confirm our models & interpretations with positive drill results.

In addition to your management team & Board, please describe recent due diligence done by independent advisors, consultants & analysts. Didn’t your largest shareholder also commission a study? 

Our drill strategy is the culmination of almost 30 years’ copper exploration experience in this belt by senior members of our team, 5 years of exploration work and model refinements by ourselves and previous owners (including Ivanhoe Mines and IBEX) that provide us with strong conviction to focus on the selected 5 targets.

Kincora has been through 5 technical reviews since mid-2017, including from 1) a leading natural resource private equity group, 2) the EBRD, 3/4) LIM Advisors (twice) and 5) New Prospect Capital, all of which have resulted in capital being invested.

As you have picked up on Peter, our largest shareholder commissioned an independent technical review of our targets, work programs and strategy before becoming a cornerstone investor in our latest offering. This review suggested a, ‘discovery’ had already been made at Bronze Fox within the under-explored target zone to the west of a key regional fault in an area we are calling West West Kasulu. This is where the first drill hole will go. In the independent consultant’s opinion, this target area has been significantly upgraded by recent exploration activities.

While we are optimistic, and management participated in the recent raising, and have undertaken detailed systematic exploration, there’s nothing left to do but drill these targets. Please let me reiterate that Kincora is a high-risk, exploration play. Hence, there are high rewards for success.

A risk is that it might cost tens of millions to delineate an attractive NI 43-101 compliant resource. What is your team’s goal for the upcoming drill program, can you articulate what success might look like? 

Absolutely. We appreciate the fact that porphyries are capital intensive, and that exploration is very risky. More meters of drilling provide us a better chance of confirming our geological concepts and riding the value creation curve for shareholders.

The best recent example of a large-scale copper porphyry discovery is that of SolGold at its Alpala project in Ecuador. The deposit at Alpala is deep, so drilling costs there are significantly more than in Mongolia. In March 2016, SolGold raised A$5.7 million at 2.3p/share, having drilled 13 promising holes and seeking to confirm its discovery. An equivalent drill program to what Kincora is now looking to complete at our 2 projects. They had fantastic results…. Over the course of 31 months, SolGold drilled a further 54 holes, attracted both Newcrest and BHP as strategic investors, and re-rated 20x for shareholders.

That’s what success at the target-testing phase of drilling can result in, even in difficult capital markets and a flat/decreasing copper price environment, which we believe is temporary.

At Bronze Fox, our drill campaign is designed to advance the strike potential away from the fault to the west, demonstrate the interpreted, significant increase in tonnage & grade potential, and confirm a new discovery.  Prior higher-grade intersections include 3 of 4 holes drilled by Kincora that returned > 1% Cu and/or Cu Eq., incl. the best hole, F62, which hosted 13 m of 1.15% Cu / 1.41% Cu Eq., within 37 m at 0.83% Cu / 1.04% Cu Eq. and 864 m at 0.38% Cu Eq.

At our East TS, the geological concept we are seeking to confirm is that OT-style mineralization is present. Each of the 3 targets at East TS have large-scale potential, with individual coincident geophysical anomalies equivalent in size to ore bodies at OT and SolGold’s Alpala project.

While more conceptual and risky than the 2 targets at Bronze Fox, such a setting and scale of targets is unique – if located in more established copper districts around the world — it’s likely the area around TS & East TS would have already seen extensive drilling.

A rule of thumb for porphyry discoveries is that ~50,000 m of drilling generally provides visibility for ~5M tonnes Cu Eq. metal. Exercise of the warrants that were part of the recent offering would bring in an additional $15M (2.5x the recent raising), and enable another 100,000 meters of drilling.

There are many Copper bulls, yet the price at US$2.70/pound is half of what some bulls think is coming. Do you have a view on the Copper price? 

A good question, we get asked that a lot. I will leave the forecasting to the experts, but we’re noticing that most investors see the writing on the wall. Like us, they believe the supply side will at some point (perhaps soon?) struggle to meet even average-trend demand growth, let alone any acceleration from increasing global electrification. This theme is being picked up by generalist investors as well, who have noticed what an unexpected supply shock has done to the iron ore price this year.

Regarding the industry players (mid-tiers & Majors), there has been a notable, but quiet, shift towards looking at new growth projects again over the last 18 months. BHP & Rio Tinto are even talking about organic exploration success stories, focusing on copper as a preferred commodity for expansion. That said, we are just starting to see more of the traditional miners expand into earlier stage projects to rebuild their pipelines.

Time will tell, but I certainly think that even at current copper prices, if we find what we’re looking for, there will be significant interest in Kincora. A tailwind from rising copper prices would of course be welcomed, but given the lack of exploration success industry-wide, globally, for many years now, the project pipeline is in great need of new, sizable discoveries. That is what we believe Mongolia and our targets offer investors.

Please talk about Mongolia, some readers probably won’t invest there. What do you tell investors, shareholders, prospective investors — about Mongolia country risk?

At the time I joined Kincora in 2012, Mongolia was the fastest growing economy in the world. This was driven by the first phase emergence of delivering previously untapped resources to international markets.

This emergence meant that at the time it was almost mandatory for coal & copper Majors to be seeking entry into the southern Gobi regions, with product trucked to the world’s largest consumer of both commodities. We are 5 Prime Ministers, 2 governments, a number of high profile disputes and reversals to unfavorable investment laws later, but the rocks and big picture potential remain unchanged.

In a landscape of few significant greenfield projects recently being commissioned, OT is proof of concept that Mongolia is a mature mining jurisdiction. OT is the largest development project in Mongolia’s history. It’s expected to account for up to a third of Mongolia’s GDP by the mid 2020s. It paves the way for companies like ours by lowering barriers to entry and we and others greatly benefit from newly built regional infrastructure.

When one looks at other copper jurisdictions, it’s becoming harder and more expensive to operate. Chile’s 2018 copper output was greater than the 2nd, 3rd & 4th largest country producers combined. The multi-billion-dollar cap-ex profile for Chile’s Codelco, just to keep production flat, shows the increasing challenges regarding water, community relations & high altitude, not to mention a declining copper grade!

Many other large copper supply regions are also difficult and/or increasingly difficult to operate in; look at recent developments in the DRC, China, Panama, Russia, Zambia, Indonesia, PNG, etc.

Given the team and operational track record we have at Kincora Copper [TSX-V: KCC] we are eyes wide open to the risk/reward scenario in Mongolia, which we find compelling, exploring for the next globally significant copper discovery.

Your readers should stay tuned for drill results, which should start arriving in 5-6 weeks’ time. We expect results to be ongoing for the rest of the year.

Thank you Sam, I think we covered a lot of ground. Bottom line, drill results will define Kincora Copper going forward, and a lot of smart money is betting on good drill results between now and year end.

Peter Epstein

Epstein Research

June 27, 2019

Disclosures: The content of this interview is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Kincora Copper including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Kincora Copper are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this interview was posted, Peter Epstein owns shares in Kincora Copper, and it was an advertiser on [ER]

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Rockridge Resources (TSX-V: ROCK) / (Frankfurt: RR0) is an exploration company focused on acquiring, exploring & developing mineral resource properties in Canada. Its focus is copper & base metals; more specifically — base, green energy & battery metals — of which copper is all three. Not just in any place, only top-tier mining jurisdictions such as Saskatchewan. And, only in mining districts that have had significant past exploration, development or production. And, only projects in close proximity to key infrastructure. Rockridge’s management team, Advisors & Board expertly and methodically eliminate many of the risk factors, early on, that can kill projects. This is a tremendous team for a company with a market cap of just C$5.6M / US$4.2M.

New CEO Bolsters Already Strong Team

Late last month, Rockridge appointed Grant Ewing, P.Geo to be its new CEO. Jordan Trimble remains as President & a Director. Grant has more than 25 years’ experience in the Metals & Mining space. His expertise covers the mine development cycle, from early stage exploration through to production. I spoke with Grant last week and was impressed with his very extensive knowledge of base metals and his understanding of the district that hosts the Company’s Knife Lake project. Grant seems to be an ideal person to help advance the Project and make new discoveries. Please see more about CEO Grant Ewing, P.Geo here.

The Company’s flagship project, Knife Lake, is in Saskatchewan, Canada, (ranked 3rd best mining jurisdiction in the world) in the Fraser Institute Mining Company Survey. The Project hosts a near-surface, (high-grade copper) VMS copper-zinc-silver-gold-cobalt deposit, open along strike and at depth. Management believes that there’s strong discovery potential in and around the deposit area, and at additional targets on roughly 85,200 hectares of contiguous claims. As a reminder, Rockridge has an option agreement with Eagle Plains Resources to acquire a 100% Interest in the majority of the Knife Lake VMS deposit.

Flagship Project, Knife Lake, 12 Drill Hole Results Now in….

The Project is within the famous Flin Flon-Snow Lake mining district that contains a prolific VMS base metals belt. Management believes there’s tremendous exploration upside. The goal? High-grade discoveries in a mineralized belt that could host multiple deposits, as VMS–style zones often contain clusters of mineralized zones. Of course, the trick is finding them.

However, no modern exploration, drilling method or technology has been deployed at Knife Lake. It was discovered 50 years ago and last explored in the late 1990s. Airborne geophysics, regional mapping & geochemistry was done, but technologies have improved. Management believes that modern geophysics; high resolution, deep penetrating EM & drone mag surveys to cover large areas in detail, could make a big difference.

Earlier this year, Rockridge drilled 12 holes for a total of 1,053 meters. Importantly, this represents the first significant work on the property since 2001. Readers may recall from reading past articles & interviews on Epstein Research & Equity.Guru & Aheadoftheherd, and viewing videos of then CEO Trimble, that the Company’s primary goal is to explore districts that have been under-explored, never explored, or not recently explored. Management’s highly skilled & experienced technical team & advisors deploy the latest exploration technologies & methods. A lot has changed in 18 years; a simple example would be the use of lower-cost, high resolution drones to fly various surveys.

These 12 assays, added to the historical database, will generate a new NI 43-101 mineral resource estimate in late July or early August. This will be a major milestone that will hopefully draw the attention of prospective strategic partners. Subsequent to that de-risking event, Rockridge is funded for a Summer exploration program, that will likely stretch into Fall. The goal is to identify & refine targets at depth and regionally. Modern vectoring techniques will be deployed, using metal ratios & structural interpretation to identify “primary” VMS deposits.

Other modern methods include high-resolution geophysics, deep penetrating EM to identify conductors, and drone mag surveys to cover large areas in detail. Finally, ground work & sampling will be conducted, analyzing rock geochemistry to identify prospective VMS style hydrothermal systems. Importantly, very limited previous drilling was done below 100m, but of the deeper holes, several intersected mineralization at around 300m. Could they be mineralized lenses?

Last month Rockridge reported additional results from its Winter diamond drill program. The first 5 holes are shown in the chart above. Readers may recall that a key takeaway was that holes KF19001 & KF19002 largely confirmed historical grades, intercept widths & geological conditions. Hole KF19003, reported on May 7th, was a blockbuster, 37.6m of 2.42% Cu Eq., significantly better than the first 2 holes. KF19003 had a grade (Cu Eq.) x thickness (in meters) value of 91, compared to 41 & 49. Importantly, it confirmed high-grade mineralization up-dip of KF19002 in an area where no historical drilling is known to have been done. Therefore, this assay, and perhaps nearby assays to follow, could potentially increase the size & grade of the upcoming mineral resource estimate.

Best Intercept in Last 7 Holes: 15.2 m of 2.45% Cu Eq.

In a press release June 10th, holes KF19006 thru KF19012 did not contain any blockbusters, but 6 of 7 were nicely mineralized with Cu Eq. values ranging from 0.46% to 2.45%. The interval widths averaged nearly 8 meters. The best intercept was 15.15 m at 2.45% Cu Eq. in hole KF19006. This intercept is a good one, like those found in holes KF19001 & KF19002, reported in the April 30th. press release. Importantly, KF19006 tested the up-dip extension of the Knife Lake deposit in an area that had not been previously tested. Likewise, hole KF19007 tested the down-dip extension of the deposit near KF19006. KF19007 intersected a solid 2.95 m of 0.82% Cu Eq. grade. The latest property map provided from today’s press release is too large to fit comfortably within this article, please click on link here.

Rockridge’s CEO, Grant Ewing commented:

The Knife Lake property package is highly prospective for new discoveries using modern exploration techniques & methods given the lack of recent field work. The known deposit is thought to be a remobilized portion of a presumably larger primary VMS deposit, and there is excellent potential for deposit expansion at depth which we plan to test in future programs. Furthermore, there are several high quality targets to test on the expansive landholding, and there have yet to be satellite deposits discovered in the vicinity as VMS systems often host clusters or stacked deposits.

Something I found interesting was the 2 portions of the 15.2 m intercept in KF19006 that assayed 7.25 m of 0.72 g/t Gold, (from 8.75 to 16.0 m), and 5.0 m of 0.93 g/t Gold, (from 11.0 to 16.0 m), both within 16.0 m of surface. Those 2 grades (true widths undetermined) are the highest Gold values reported to date. The 0.93 g/t showing is nearly 50% higher, and 1.0 m longer, (5.0 vs. 4.0 m) than the next highest grade Gold showing, in blockbuster hole KF19003. While intriguing, these values in isolation may not amount to much. Still, they’re worth keeping an eye on.

Rockridge’s President & Director, Jordan Trimble commented:

The results from this first-pass drill program have exceeded our expectations with almost all drill holes having intersected high-grade copper mineralization, and in doing so, we have successfully confirmed the tenor of mineralization reported by previous operators, while expanding known zones of mineralization. We are working towards issuing an NI 43-101 compliant resource estimate as well as planning a regional summer field program, both of which will provide steady news flow and catalysts over the near term. We will continue to execute on our value creation strategy of going into overlooked but prospective projects in prolific mining jurisdictions and using modern exploration methodologies to test new ideas and make new discoveries.”

The deposit remains open at depth. Additional discoveries are very possible as the property is nearly 85,200 hectares in size and vastly under-explored. The Winter drill program gives the Company’s technical team valuable information about geology, alteration & mineralization that will be applied to regional exploration targets. The Company is now working towards completing an NI 43-101 compliant resource estimate for Knife Lake with the results from this drill program. A summer exploration program is also being planned, details to follow.

Conclusion

As mentioned, Rockridge Resources (TSX-V: ROCK) / (Frankfurt: RR0) has a tremendous team — Management, Board & Advisors — for a company with a market cap of C$5.6M = US$4.2M. Readers should take just 5-10 minutes to review the Company’s new June Corporate Presentation. And, the latest press releases can be found here. The flagship Knife Lake project is large enough, at ~85,200 hectares, to keep the Company busy for years to come. Even if management were to farm out (get free-carried) a portion of the Property, there would still be tens of thousands of hectares remaining to explore in a top mining district in Canada.

Copper prices are down into the US$2.60’s/lb. from close to US$3/lb., but near-term fluctuations in the price are meaningless for anyone who believes that copper is needed for, 1) clean-green energy storage, 2) the global electrification of passenger & commercial vehicles, and 3) the surge of infrastructure building needed to accommodate a growing global middle-class population migrating to ever-larger cities. Not to mention the re-building of old and destroyed infrastructure like buildings, roads & bridges. Everything uses copper, everything will continue to use copper. The price of copper has to rise, or there won’t be enough copper, it’s that simple. Several experts believe that the copper price is headed to US$4-$5/lb. by 2020 or 2021. If so, a company like Rockridge Resources has a lot of leverage to that outcome.

Peter Epstein
Epstein Research (ER)

June 13, 2019

Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER] about Rockridge Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Rockridge Resources are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this article was posted, Peter Epstein owned stock in Rockridge Resources and the Company was an advertiser on [ER]

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic. 

Glen McKay, Co-Founder Newfoundland Hard-Rok Inc.

It takes hard work and perseverance to succeed in the mining industry. Glen McKay, the chairman of the board of directors and founder of leading explosives manufacturer, Newfoundland Hard-Rok Inc, has both these qualities, starting his career as a deckhand in the fishing industry in Newfoundland and Labrador before leading businesses in a range of industries, including finance, construction and, yes, mining.

Motivation and determination are essential attributes of any successful entrepreneur,” Glen McKay explained in a recent interview. “These are attributes that can be unlocked only from inside a person, not by external influences. A desire to learn and cultivating the ability to be insightful are necessary in assessing business opportunities.”

Newfoundland Hard-Rok Inc.

In 1985, McKay became the Dupont Explosives distributor in Newfoundland and Labrador and used the Newfoundland Hard-Rok division of his company MRO Supplies Ltd. to operate the explosives business. In 1987 Newfoundland Hard-Rok Inc. was incorporated as a separate entity by McKay, who then sold part of it to two employees of MRO Supplies Ltd., Carl Foss and Keith Phelan, who were then looking after the explosives division of the company. The drilling, blasting and explosives company has grown since then. In 1994 Newfoundland Hard-Rok Inc. built an ANFO manufacturing plant near Corner Brook, NL and acquired a fleet of hard rock drilling rigs. In May of 2009, Newfoundland Hard-Rok Inc. commissioned its newly constructed, state of the art Bulk Emulsion explosives manufacturing facility west of Corner Brook. It is now the premier supplier of explosives and drilling blasting services in the region.

Newfoundland Hard-Rok Inc. formed wholly owned subsidiary Dyno Nobel Labrador Inc. in 2004, and wholly owned subsidiary Dyno Nobel Baffin Island Inc. in 2013, with McKay serving as the Chair of the Board of Directors of Newfoundland Hard-Rok Inc. and managing the company’s finances and administration.

Dyno Nobel Labrador Inc. was awarded the contract from Vale (formerly Voisey’s Bay Nickel Company) in 2005 to design, build and operate a bulk emulsion (blasting agent) manufacturing plant supplying the needs of the open pit mine at Voisey’s Bay. Recently, Dyno Nobel Labrador Inc. was awarded an additional second contract for the underground delivery of loading equipment and related services at the mine. Vale’s mine site is in Northern Labrador along the coast near the community of Nain. The mine primarily produces nickel ore with some copper and cobalt and is accessible via air and sea only.

As Newfoundland and Labrador Premier Dwight Ball explains, a five-year construction project at Voisey’s Bay will extend the mine’s life by 15 years. Once operational, Ball estimates the underground mine will create an additional 1,700 jobs both at the mine and at the Long Harbour, NL, processing plant. The mining operation in northeastern Labrador opened in 2005 and currently employs about 500 people, Canadian Press reported.

Dyno Nobel Baffin Island Inc. is a wholly owned subsidiary of Newfoundland Hard-Rok Inc. and was formed in 2013 to service the Baffinland Iron Mines, Mary River Project. Dyno Nobel Baffin Island Inc. has been awarded a multi-year contract to supply explosives for the construction and mining phases. A state of the art modular emulsion manufacturing plant was constructed on site in 2014. The operations involve the manufacturing of bulk emulsion, loading, and firing the blast holes. The Mary River Mine is in the remote northern part of Baffin Island within the Arctic Circle. This remote cold location poses many challenges to shipping and logistics, equipment operation and working outdoors.

Cornerstone Capital Resources

But Dyno Nobel Labrador Inc was not Glen McKay’s first foray into the mining industry. In 1997, he co-founded Cornerstone Capital Resources Inc, a mineral exploration company best known for its Cascabel copper-gold project in Ecuador, which was acquired in 2011 during his tenure. While McKay was with Cornerstone, he served as president, chief executive officer and vice chair. He still owns shares in the company and keeps a close eye on its activities.

On July 13, 2018, Cornerstone released an update on the exploration program at its Cascabel copper-gold porphyry joint venture exploration project in northern Ecuador, in which the company has a 15% interest financed through to completion of a feasibility study. Cornerstone has several other projects in Ecuador and Chile.

The Cascabel project increases in size with each round of drilling and an aggressive drilling campaign continues,” McKay posted on LinkedIn. “I think that they are probably 18-24 months away from a feasibility study, but I also expect that one of the majors will buy out the current owners (SolGold and Cornerstone) before then.”

SolGold owns the other 85% of Cascabel and is funding 100% of the exploration as the operator of the project. Cornerstone is spinning off its assets (except for its interest in Cascabel, shares of SolGold and the joint venture with the Ecuadorian state mining company) into a new company called Cornerstone Exploration, which will own several drill ready projects in Ecuador and Chile. Cornerstone will be re-named Cascabel Gold & Copper.

Apex Construction

That’s not the end of McKay’s entrepreneurial resume. In 1987, he provided the capital for Apex Construction Specialties Inc, which grew to become the largest supplier of commercial construction products in Newfoundland and Labrador. McKay remained as a shareholder and board member until the company was sold in 2017.

In his 40 years of business experience, McKay has learned a lot about people. In his own businesses, he looked for self motivated, bright, hard-workers who had the ability to be a part of a team. The simple but effective premise is that if you really value your people, they in turn will increase the value of your business.

On April 20th, Centenera Mining [TSX-V: CT, OTCQB: CTMIF] reported a strong partial drill hole result at its Esperanza Copper-Gold porphyry project in San Juan Province, Argentina.  Excitement over this assay was running high.  Management believed that the core looked good, so they rushed the top 166 meters to the lab.

Sometimes when expectations are elevated, actual news can disappoint…. not in this case!  The plan was to punch down to 500 m, but drilling difficulties ended the hole at 387 m.  Importantly, Esperanza remains open at depth and in all directions.

Mineralization was excellent through the top 166 m.  On May 8th, Centenera put out the full drill hole assay, covering 387 m (from surface).  Before jumping into the details, let me put into perspective historical work that Centenera has access to.  Prior drilling returned the following highlights:

Mineralization outcrops at surface with a pyrite halo extending over a 1,400 m x 850 m area, drill holes generally intersected mineralization at surface, and the deposit is open in all directions.  The majority of holes terminated in mineralization, the deposit is open at depth.  Several holes demonstrated increasing grade with depth.

These are solid numbers, the best interval was 88 m, weighing in at 0.69% Copper (“Cu”) Equivalent (“Eq.”).  The goal with this year’s drilling is to find more results like these through prudent step-out drilling.  When exploring porphyry targets, one needs to find both wide intervals — 100+ meters, plus high-grade — say 0.60%-1.00% Cu Eq.

Having said that, the depth of a porphyry target matters a lot.  All else equal, near-surface deposits can be viable at lower grades because pre-stripping (mining waste rock, or overburden, to reach an orebody) is expensive and time consuming.  That’s why this first full assay from Centenera’s 2018 drill program is so exciting; a wide interval, plus strong grade,plus continuous mineralization from surface.

Drill hole 18-ESP-025 collared in mineralization that continued to the bottom of the hole at 387 m (hole abandoned due to drilling difficulties).  Mineralization remains open at depth.

There is a number of porphyry exploration and development projects around the world with 0.30%-0.40% Cu Eq.orebodies.  The lower the grade, the smaller the margin for error and the greater the need for abundant size.  Centenera’s May 8th announcement places it well on its way to establishing economic grade, now it’s a matter of delineating a large-scale deposit.  A surface expression of 1,400 x 850 meters is a good start.

East-west cross section showing complete results from 18-ESP-025 and a few previous drill holes.  The exploration vector to higher grade Cu & Au is interpreted to be west, where 2 targets are highlighted.  All drill holes are open at depth, and there’s significant untested ground to the west & east.  Green = Cu grade / Red = Au grade.

By large-scale I mean > 3 billion pounds Cu Eq.  This year’s drilling will be testing for bulk tonnage potential.  Readers please note, the Company might not be able to identify muti-billions of pounds in a maiden resource estimate, but perhaps management can do so over time.

According to the Company, drill hole #: 18-ESP-025 would have ranked #3 among top global Cu intersections drilled in q1 2018.  Drill intersections ranked by [the Cu portion only, multiplied by interval width (in meters)].  Despite a very promisingCu-Au project, and several other projects / properties in Argentina, Centenera’s market cap remains fairly low at justC$10.2 M / US$ 7.9 M.  Shares are at C$0.14.

The above ranking is of projects where Cu is the primary metal and does not take into account other commodity credits.  For example, Esperanza has meaningful gold credits that are not included.  In addition to being at surface, (vs. an avg. depth to top of interval of 437 m) the Esperanza project is in a favorable mining province in Argentina, in fact the single best province — San Juan — (as measured by the latest annual Fraser Institute of Mining Survey).

0.40% Cu Eq. NI 43-101 compliant resource estimate would mark a robust outcome.  Although there’s limited evidence of large scale to date, management’s goal is to find at least 500 million tonnes of mineralization (by no means a sure thing).  500 million tonnes at a grade of 0.40% would equate to nearly 4.5 billion Cu Eq. pounds.   Management’s stated goal for its projects is to, “drill, add value and advance to JV or sale.”  

I expanded the above chart from a prior article I wrote about Centenera Mining to include higher grades along the left side. This does not mean I believe that the overall mineralized grade will be up to 0.70%-0.75% Cu Eq., but in a constrained open-pit scenario (a subset of the entire deposit), perhaps Cu Eq. of 0.45%+ could be achieved.
Near-term catalysts
Centenera has several catalysts worth watching for. First and foremost — another drill result in June.  That hole was completed to a depth of approximately 450 m.  Also, a possible update on its 100% owned Organullo epithermal gold project in Salta province.  {2nd best province in Argentina– see brief overview of Organullo on left}

A study conducted in 2012 (using historical drill data) resulted inpotential tonnages & exploration target grades of gold.

** These potential exploration target quantities & grades are conceptual in nature, insufficient exploration & geological modelling has been done to define a mineral resource.  

The conceptual (initial) target is between 600-960k ounces gold, grading between 0.92-0.94 g/t Au.  Management acknowledges that Organullo will require a lot of drilling.

Another important catalyst is the upcoming closing of Centenera’s C$3 million capital raise.  Once fresh capital has been banked, investors will stop worrying about that perceived overhang.

In the second half of 2018, there’s a decent chance cash burn will decrease as management finds partner(s) on one or both main projects.  Partnerships typically involve giving up partial ownership in exchange for being free-carried(partner pays 100% of project costs) for a number of years [through key exploration (and possibly development) milestones].

It’s not hard to speculate on prospective partners.  For instance, below a list of 20 companies that are Major or mid-tier Copper & Gold miners / project developers, with assets in Argentina and/or Chile, Peru, Ecuador.  The top 9 players by market cap would not look at Centenera without evidence of the possibility of finding > 10 billion pounds Cu Eq.  The bottom 3 are small compared to the others, but could certainly come up with a relatively modest amount ofupfront funding required to get the Esperanza project into more robust, steady, active exploration.

I believe that Centenera Mining’s valuation at C$10.1 M / USD$ 7.8 M is too cheap given its portfolio of projects & properties in Argentina.  Savvy natural resource stock investors point out that there are dozens of copper-focused porphyry targets in the hands of juniors that have > 1 billion pounds Cu Eq.  That’s true, I’m tracking about 3 dozen.

However, there are red flags associated with many of the other prospects.  For example, several projects are in higher-risk (than Argentina) or even dangerous jurisdictions in countries including the Philippines, Russia, Mongolia, Indonesia, the DRC & Namibia.  Even Peru, the 2nd largest Cu producing country in the world, a jurisdiction with at least 5 major Cu projects held by juniors, is facing increasing challenges on the community relations front.

And, the largest Cu producing country by far, Chile, has prospective projects at elevations above ~4,000 meters that introduce a whole new set of risks, expenses & challenges.  In part due to high altitude, Chile is much more sensitive to water issues.  I’ve been told that Chile has become considerably more expensive to operate in than most other S. American countries.

Other potential red flags…. some projects have PEAs or PFSs with mediocre-to-poor economics; cap-ex figures twice or more the size of a project’s after-tax NPV.  Or, IRRs below 15%, assumed Cu prices above US$3/lb., payback periods > 6 years, grades < 0.35% Cu Eq., strip ratios > 3:1.

Finally, infrastructure & project logistics– bulk mining operations require favorable access to transportation, roads, rail, port, power, water, a reliable work force and mining services / equipment providers.

Centenera Mining’s [TSX-V: CT, OTCQB: CTMIF] Esperanza project is probably in the middle of the pack on this score compared to the 3 dozen global juniors I’m tracking, but better than that among assets in S. America due to it being in San Juan province, having a very low strip ratio and being high grade.  Esperanza is just 35 km from power lines and enjoys year-round road access.  NOTE:  {we still need to see further evidence of large-scale potential….}

Disclosures: The content of this article is for information purposes only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein, about Centenera Miningincluding but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further, nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. The content contained herein is not directed at any individual or group. Peter Epstein and Epstein Research [ER] are not responsible, under any circumstances whatsoever, for investment actions taken by the reader. Peter Epstein and  [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Peter Epstein and [ER] are not directly employed by any company, group, organization, party or person. The shares of Centenera Mining are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this article was posted, Peter Epstein owned shares and stock options of Centenera Mining and the Company was a sponsor of Epstein ResearchReaders understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

Last week index score: 45.59 (updated)

This week: 37.75

Oreninc: Interview Session with Mickey Fulp – Episode 22 now live

The Oreninc Index fell in the week ending April 27th, 2018 to 37.75 from an updated 45.59 a week ago as the number of deals fell despite some broker action returning.

A calmer and less volatile week all round with the presidents of North and South Korea meeting for the first time in decades, thawing tensions over the north’s nuclear ambitions, whilst in the US, president Donald Trump eased his position on sanctions against Russian aluminium producer Rusal. Maybe spring is in the air and the world is feeling more positive.

Another range-bound week for gold, this time ending in negative territory as the US dollar strengthened, although there are signs that gold stocks are starting to strengthen.

On to the money: total fund raises announced more than quadrupled to C$96.3 million, a four-week high, which included one brokered financing, a four-week low, and one bought deal financing, also a four-week low. The average offer size also more than quadrupled to C$4.8 million, a four-week high. However, the number of financings decreased to 20, a four-week low.

Gold closed down at US$1,324/oz from US$1,336/oz a week ago. Gold is now up 1.63% this year. Meanwhile, the US dollar index continued to strengthen and closed up at 91.54 from 90.31 a week ago. The van Eck managed GDXJ gave up ground and closed down at US$33.03 from US$33.49 last week. The index is down 3.22% so far in 2018. The US Global Go Gold ETF also fell to close down at US$12.99 from US$13.04 a week ago. It is down 0.12% so far in 2018. The HUI Arca Gold BUGS Index closed down at 182.04 from 184.18 last week. The SPDR GLD ETF saw a growth week as its inventory grew to 871.20 from 865.89 tonnes where it had been for nine-days straight.

In other commodities, silver’s recent growth spurt deflated and closed down at US$16.51/oz from US$17.11/oz a week ago. Copper also gave up a lot of ground as it closed down at US$3.06/lb from US$3.15/lb last week. Oil consolidated despite a slight loss on the week to close down at US$68.10 a barrel from US$68.40 a barrel a week ago.  

The Dow Jones Industrial Average lost some ground and closed down at 24,311 from 24,462 last week. Canada’s S&P/TSX Composite Index put in a strong growth week as mining stocks showed growth to close at 15,668 from 15,484 the previous week. The S&P/TSX Venture Composite Index closed down at 783.76 from 804.96 last week.

Summary:

  • Number of financings decreased to 20, a three-week low.
  • One brokered financing was announced this week for C$15m a three-week low.
  • One bought-deal financing was announced this week for C$15m, a three-week low.
  • Total dollars nearly doubled to C$96.3m, a three-week high.
  • Average offer size grew to C$4.8m, a three-week high.

Financing Highlights

SilverCrest Metals (TSX-V: SIL) announced a C$15 million bought deal financing

Syndicate of underwriters led by PI Financial and Cormark Securities for 7.1 million shares @ C$2.10.

  • 15% over-allotment Option.
  • Net proceeds will be used to continue exploration and drilling to deliver an updated resource estimate and maiden Preliminary Economic Assessment for the Las Chispas project in Sonora. Mexico.

Major Financing Openings:

  • Africa Energy (TSX-V: AFE) opened a C$57.98 million offering on a best efforts basis. The deal is expected to close on or about May 4, 2018.
  • Silvercrest Metals (TSX-V: SIL) opened a C$15 million offering underwritten by a syndicate led by PI Financial on a bought deal basis. The deal is expected to close on or about May 18, 2018.
  • Pacton Gold (TSX-V: PAC) opened a C$4 million offering on a best efforts basis.  Each unit includes a warrant that expires in 36 months. The deal is expected to close on or about May 22, 2018.
  • Max Resource (TSX-V: MXR) opened a C$3.75 million offering on a best efforts basis. Each unit includes half a warrant that expires in 24 months.

Major Financing Closings:

  • Nemaska Lithium (TSX-V: NMX) closed a C$99.08 million offering on a best efforts basis.
  • Trilogy Metals (TSX-V: TMQ) closed a C$31.48 million offering underwritten by a syndicate led by Cantor Fitzgerald Canada on a bought deal basis.  
  • Stina Resources (TSX-V: SQA) closed a C$12.5 million offering on a best efforts basis. Each unit included half a warrant that expires in 36 months.  
  • Ashanti Gold (TSX-V: AGZ) closed a C$2.64 million offering on a best efforts basis.

Company News

Prospero Silver (TSX-V: PSL) provide an update on planned exploration work on its Mexican projects for 2018.

  • The key objective is to complete first-pass, proof-of-concept drill testing of three projects in the Altiplano belt of northern Mexico: Bermudez, Buenavista and Trias. Neither Trias or Bermudez have been drilled before.
  • About 6,000m of diamond drilling is planned.
  • A 4th hole for Pachuca SE project may be drilled once drilling is complete at the projects above.

Analysis

Having recently announced a fund raise, the work plan shows that Prospero will continue to drill test the targets it has identified via its geological hypothesis for discovering large, blind silver deposits. Whilst the news release did not explicitly state that its strategic partner Fortuna Silver (TSX:FVI) would co-fund this exploration program, that seems likely given the technical success of the 2017 exploration program and that Fortuna has yet to select a project to joint-venture under its strategic agreement with Prospero.

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I recently returned from a hectic trip to Toronto for an annual mining industry investment conference known as PDAC.  I met with 28 companies and spoke to dozens of investors.  I expected to talk a lot about Lithium & Cobalt— how the sell-off in those sectors could be close to over, how demand forecasts keep rising in the face of uncertain long-term supply, etc.

Although there were plenty of discussions on the, “battery metals,” I was surprised by the universal excitement over a metal that’s old school, but also indispensable to the future of electric vehicles & renewable energies….  A metal that needs no further introduction…. #Copper

One of the best stories I heard at PDAC was an update from Keith Henderson M.Sc., CEO & Director of Centenera Mining Corp. [TSX-V: CT / OTC: CTMIF], an Argentina-focused company with attractive Copper (“Cu”) & Gold (“Au”) exploration projects.  Upon a positive change in Argentina’s government in 2015, Centenera was quick to move more actively into the country. 

Drilling is underway at the Company’s flagship project, and management believes that it’s going quite well.  The first assay is expected around the end of March.  

The crown jewel asset and primary focus of Centenera this year is the 100% controlled, near-surface Esperanza copper-gold project — (formerly known as the Huachi project) — an outcropping CuAu porphyry system with a blockbuster discovery that included a drill hole intersection of 353 meters grading 0.49% Cu Eq., (incl. 243 m at 0.57% Cu Eq. & 88 m at 0.69% Cu Eq.).  Mineralization outlined at surface and found in shallow drilling is open in all directions and at depth.  {see Corporate Presentation}

Assays from the discovery drill campaign included:

Esperanza is in San Juan province in northwestern Argentina, sitting at an elevation of between 2,800 and 3,250 meters.  That’s relatively low compared to work being done in the high Andes.  The project is 35 km from existing power lines.  Proximity to key infrastructure is absolutely critical for mining bulk tonnage porphyry deposits.  

Exploration can be performed year-round in San Juan, ranked in the 2017 Fraser Institute of Mining Survey as the #1 province in Argentina, and 3rd best mining jurisdiction in all of South America.  Despite well-known players like Barrick (Veladero mine in San Juan) & Yamana Gold (Gualcamayo mine in San Juan) being active in the Province, the Esperanza project remains remarkably under-explored.  Only 7 drill holes (2,011 m) have tested this extensive, outcropping copper-gold porphyry system.



After several weeks of delay due to unseasonal storms and flash flooding across multiple northern provinces, drilling is well underway at Esperanza.  Interestingly, while repairing road access to site, new mineralization was exposed at surface in an area thought to be barren.  Mineralization is now interpreted to extend significantly further to the southeast than previously known.  Some of the best mineralization to date has been intersected in this area.

The Phase I drill program is investigating the potential for a bulk-tonnage copper-gold porphyry-style deposit.  Management is currently drilling 4 step-out holes, ~2,000 m in total, of at least 100 m away from historical holes, aiming to reach deeper, (500 – 600 m), than prior efforts.  Deeper drilling was called for because several assays from 2006-7 showed grade increasing at depth. 

Some drill core from the first hole is about to be sent out for assay.  I’m told that upon visual inspection, the technical team felt that the core looked really good, but readers will have to wait along with management until the end of March for lab results.

Upon success in Phase I, a Phase II program would include 4 additional step-outs of 100 – 150 m, plus 2 IP targets 500 m to the east, for a total of 6 holes. 

Based on exploration to date, the significant grade, and thickness of reported intervals, management believes there could be hundred(s) of millions of metric tonnes of mineralization.  The area of interest is already 1,400 m by 850 m.  If strong grade and wide intervals continue to be found, the deposit could host billion(s) of Copper Equivalent (“Cu Eq.“) pounds.  Make no mistake, it’s still early days, but there’s a real possibility for substantial scale to be unearthed here.  

It’s worth reminding readers that McEwen Mining’s (NYSE: MUXLos Azules project is also in San Juan province.  McEwen’s website describes Los Azules as follows; 962 million tonnes containing 10.2 billion pounds Cu in the Indicated category, plus 2.666 billion tonnes containing 19.3 billion pounds Cu Inferred, with (Cu only) grades of 0.48% & 0.33%, respectively.  That’s a combined 3.6 billion tonnes of mineralization, containing 29.6 billion pounds Indicated & Inferred Cu, at an average grade of 0.37%. 

Delineating hundred(s) of millions of tonnes is not a sure thing, and it won’t necessarily come in the maiden mineral resource estimate.  However, historical exploration, combined with the current drill program, could provide further evidence of grade, scale & continuity that attracts considerable attention.  

Centenera has a tremendous management, Board & technical team for a company its size {72.4 M shares outstanding x C$0.165 = C$12.0 M = US$9.3 M market cap}.

 Centenera Mining Corp. [TSX-V: CT / OTC: CTMIF] is sitting on what could be a major copper-gold asset in San Juan, with important drill results coming out soon.  It also holds a portfolio of promising projects, also in Argentina, including a high sulphidation epithermal gold mineralization project and a hard rock lithium play, both in Salta province. 

Here’s a very good 4-minute video clip of CEO Henderson from PDAC in early March.

Readers would benefit from reading the March 2017 Esperanza Technical Report

Recent press release: February 21, 2018    Website    Twitter    Corporate Presentation

Disclosures: The content of this article is for information purposes only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein, about Centenera Mining, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further, nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. The content contained herein is not directed at any individual or group. Peter Epstein and Epstein Research [ER] are not responsible, under any circumstances whatsoever, for investment actions taken by the reader. Peter Epstein and  [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Peter Epstein and [ER] are not directly employed by any company, group, organization, party or person. The shares of Centenera Mining are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this article was posted, Peter Epstein owned shares and stock options of Centenera Mining and the Company was a sponsor of Epstein ResearchReaders understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

Tax loss season is upon us, and with it comes discounts on some of the best companies in the junior resource sector. In particular, Marathon Gold stood out for me; it just released a great update to its NI 43-101 resource estimate, moving a portion of its inferred gold ounces to the measured and indicated categories and increasing its gold resource by roughly 30% overall. The market reaction? “Yawn,” or basically no movement in the stock. This is music to my ears – I bought another tranche.

What’s my point? Sometimes, the market doesn’t see or understand the value proposition, especially when the sector for the given company isn’t in favour.

Today, I’m sharing my research on a copper company which is set to (very soon) finalize their acquisition of a major copper project in northern British Columbia (BC).  I think this should result in a re-rating in their share price, as their current MCAP is around 3 times less than the acquisition cost of the project. This company is Desert Star Resources.

Let’s take a closer look.

Desert Star Resources (DSR:TSXV)

MCAP – $8.5 million (at the time of writing)

Shares – 18,947,901

Fully Diluted – 26,169,901

Kutcho High Grade Copper-Zinc-Gold-Silver Project

On June 15th, 2017 Desert Star announced it had signed a definitive agreement to acquire 100% of the Kutcho high grade copper-zinc-gold-silver project from Capstone Mining Corporation. The deal was comprised of cash, $28.8 million CAD and, upon completion of the acquisition and concurrent financing, 9.9% of the issued and outstanding shares of Desert Star.

 Wheaton Precious Metals

On August 10, 2017, the purchase of Kutcho got a huge boost with the announcement that Desert Star had agreed to terms on a non-binding Early Deposit Precious Metals Purchase Agreement with Wheaton Precious Metals Corporation. The agreement will see Wheaton pay Desert Star $65 million USD for up to 100% of the payable silver production, and up to 100% of the payable gold production produced from the Kutcho Project.

Additionally, and in line with management’s goal for the project, if the processing capacity of the mine increases to 4,500 tpd or more within 5 years of attaining commercial production, a further $20 million USD will be payable to Desert Star.

Furthermore, on October 31, 2017, Desert Star announced it had entered into a non-binding Term Sheet for a $20 million CAD Subordinated Secured Convertible Term Debt Loan with Wheaton Precious Metals.  Bringing the total financing package to over $100 million CAD.

In my view, an investment by Wheaton Precious Metals speaks volumes about the quality of the people and the project. The Wheaton Precious Metals team, while not infallible, has a great track record for finding projects that are future mines. In saying this, be mindful that a stream on the project, while helping early on with the funding of the mine, does remove some of the potential future value. In the case of the Kutcho Project, the precious metals only account for 8% of the revenue, making it a small part of the overall Kutcho Project value.

Desert Star’s People – Built for Success

The acquisition of the Kutcho Project from Capstone and management’s ability to secure over $100 million CAD in funding via Wheaton Precious Metals, in my mind, speaks volumes about CEO and Director, Vince Sorace’s, ability to lead the company. Sorace has over 25 years of experience in international business and capital markets, and has held senior leadership roles in a number of other companies.

Sorace’s COO, Rob Duncan, has over 26 years of experience in mineral exploration and held senior leadership roles for a number of other mining companies. In particular, he has extensive technical experience with VMS systems such as Kudz Ze Kayah and Wolverine in the Yukon’s Finlayson District and Izok Lake in Nunavut.

Rory Kutluoglu, a professional geologist, has 10 years experience in the mining industry. His most recent success was with Kaminak Gold Corp., where he was the exploration manager and played an instrumental role in the Coffee Gold Project’s development, which was acquired by Goldcorp in 2016. Kutluoglu is Desert Star’s VP of Exploration and will be focusing on expanding Kutcho resources.

Also, Allison Rippin-Armstrong, formerly with Kaminak Gold Corp, brings her 20 years of experience in permitting, regulatory processes and environmental compliance for resource companies to the Desert Star management team.  Rippin-Armstrong will play an invaluable role as she leads relations with the First Nations Tahltan Central Government (TCG) and aids the company in the permitting process.

To note, there is one particular addition to Desert Star’s Board of Directors that I think will be an x-factor for the company as they develop Kutcho. The appointment of Bill Bennett, BC’s former Mining Minister, to the Board of Directors should pay major dividends, as he helps the company navigate the permitting process.

Additionally, on the Board of Directors, is Stephen Quinn and Jay Sujir. Also, Desert Star has three advisors; Peter Meredith, former Chairman of Ivanhoe Mines; Rob Carpenter, former CEO of Kaminak Gold; and Stuart Angus, former Chairman of Nevsun Resources.  This advisory board is another huge plus for this junior company, as each of these men have been successful in the mining industry.

Northern British Columbia

The Kutcho Project is made up of 46 mineral exploration claims encompassing 17, 060 hectares, and is located in northern British Columbia.

Kutcho Project BC Map

Source: Prefeasibility Study Technical Report on the Kutcho Project

As you can see on the map, Dease Lake is the largest community near Kutcho, sitting roughly 100 km west, and is cited as having a population of 335 people in the technical report.  As well, Dease Lake is about 400 km north of the Port of Stewart and 600 km north of Smithers.

Access to Kutcho is via a seasonal road from HWY 37 or gravel airstrip, which is located on the property at the junction of Kutcho and Andrea creeks.

Tahltan Territory

On October 26, 2017, Desert Star announced a communications agreement with the Tahltan Central Government (TCG).  The TCG is the governing body of the Tahltan Nation, which works to protect the Aboriginal rights and title, ecosystem and natural resources of the Tahltan community.

Tahltan territory encompasses 93,500 square kilometres in northwestern BC, running parallel to the Alaskan/Canadian border. Their three main communities are Telegraph Creek, Dease Lake and Iskut.

A good relationship with the TCG is integral to the future development of the Kutcho Project into an operating mine.

BC and its NDP Provincial Leadership

This past May, BC’s provincial election turned out the way many rural and business people had hoped, with the Liberals retaining control of the provincial government. This minority win, however, didn’t last long, as the NDP, the Liberals’ closet provincial leadership competitor, and the Green Party combined forces to displace the Liberals and took control of the province.

The NDP have a reputation of being bad for business – and with good cause. I cite Ontario in the 90s and, most recently, the NDP’s current control of what was formerly Canada’s richest province, Alberta. From a number of perspectives, but most importantly from a business perspective, these examples show the potential downside of the NDP ideology.

In saying this, however, it isn’t a done deal that all business is doomed because the NDP has taken over, just a higher probability, in my opinion. Further, I would be remiss if I didn’t point out that the Liberals and Conservatives aren’t without fault when it comes to bad policy decisions that have negatively affected business.

So what do I think about investing in mining in BC? Currently, I do see risk in investing in BC given the current political leadership. However, as I mentioned in the beginning of this article, investing in quality companies is the key to success in the junior resource sector.  Therefore, if I’m able to find a quality company at the right price, I’m willing to take on more political risk.

In the case of Desert Star, I think that the Kutcho Project is quality and worth the associated jurisdictional risk. Bill Bennett and Allison Rippin Armstrong will prove invaluable as they help the company navigate the permitting process to ensure that this project has the best chance of being approved in a timely manner.

Updated Prefeasibility Study

Upon signing the definitive agreement with Capstone to acquire the Kutcho Project, Desert Star approached JDS Energy and Mining Inc. to update their 2011 PFS on the Project. The update to the PFS is intended to show the project’s economics based on current costs, metal prices, exchange rates, mineral resources and metallurgical interpretations.

Kutcho Project 43-101 Reserves and Resources

Source: Prefeasibility Study Technical Report on the Kutcho Project

The Kutcho Project is made up of 3 mineralized zones: Main, Esso and Sumac. These 3 zones are Kuroko-type volcanogenic massive sulphide (VMS) deposits and are aligned in a westerly plunging linear trend. The PFS mine planning and economics only consider the Main and Esso zones, as the Sumac Zone only has inferred resources.

Kutcho Deposits

Source: Kutcho Project’s 3 Mineralized Zones

Currently, the mine plan calls for a starter pit to be constructed on the Main Zone, which will be used to mine roughly 0.4 Mt of preliminary mill feed. The pit will then give way to an underground portal which will be used to access the rest of the deposit.

As you can see in the image above, the Main Zone deposit is at surface, has a strike length of about 1.5 km, and extends approximately 260 m down dip.  The Esso Zone sits about 1.5 km away from the Main Zone, and is located roughly 400 m below surface, extending 240 m down dip, and has a strike length of 640 m.

The PFS estimates the mine to have the following production and economic statistics:

  • Production Rate – 2,500 tpd
  • Mine Life – 12 years
  • Average Annual Copper Production – 33 Mlbs
  • Average Annual Zinc Production – 42 Mlbs
  • After-tax NPV@8% – $265 million CAD
  • After-IRR – 27.6%
  • After-tax Payback – 3.5 years
  • Initial CAPEX Cost – $220.7 million

Kutcho Metallurgy

The biggest question mark surrounding the Kutcho Project, in my opinion, is its metallurgy.  JDS remarks,

“The mineralogy of the Kutcho deposits is complex and requires a similarly complex approach to produce copper and zinc concentrates at reasonable recoveries and concentrate grades.” ~ PFS 1-3

The PFS economic case is based off of a 84.7% copper recovery with a saleable concentrate grade of 27.6% copper, zinc content of 7.3%, gold content of 2.5 g/ton, and a silver content of 268.6 g/ton. The zinc recovery is expected to be 75.7%, with a concentrate grade of 55.1% zinc and 1.2% copper.

Deviations from the expected recoveries or further use of reagents and increased power consumption are concerns due to the complex nature of the mineralization. Further metallurgical work on the Project is scheduled for Q3 and Q4 of 2018, and will provide the company with a good chance to optimize the metallurgical process, which could have a positive impact on Kutcho’s economics.

Kutcho Expansion and Exploration Potential

The company has outlined a few scenarios for Kutcho’s upside growth potential, which are: Existing Resource Conversion, Down Dip Extension and project expansion through exploration.  Let’s go through each one briefly:

  • First, by lowering the cut-off grade from 1.5% to 1.0% copper, the reserve tonnage could grow roughly by 5.0 Mt. Secondly, with further infill drilling, the current inferred resource of 5.8 Mt @ 1.79% CuEq could potentially be moved into the measured and indicated resource category and, thus, be included in the economics of the project.

PUSH: Watch for infill drilling results on the deposit, which is scheduled to occur in Q2 and Q3 of 2018. Drill results showing continuity should be a sign that this deposit is going to get bigger.

PUSH:  A resource update will follow the infill drilling and should be completed by the end of 2018 or the first quarter of 2019.

Main zone Cutoff comparison

Main Zone Block Model Cut-off Comparison

Esso-Sumac Cutoff comparison

Esso-Sumac Zone Block Model Cut-off Comparison

  • Secondly, the Main and Esso Zones are open at depth and along strike. Desert Star estimates 60% of the Main Zone and 50% of the Esso Zone’s strike length is open down dip, with the potential to add 1 to 3 Mt in the Main Zone and 300 to 600 Kt in the Esso Zone.
  • Finally, the Kutcho Project has a large land package with multiple repeated VMS sulphide horizons that haven’t seen extensive exploration. In the image below, you can see the high priority targets outlined in blue. Currently, exploration drilling is set to occur in Q4 of 2018.

Desert Star Exploration Targets

Kutcho Project Exploration Targets

Concluding Remarks

There isn’t a mining project in the world that doesn’t have at least a couple of question marks. In Desert Star’s case, I see two main areas of risk; first, the metallurgical complexity of the mineralization, and second, BC’s NDP government. The company, however, has taken steps to address both of these risks. First, with further metallurgical work scheduled for Q3 and Q4 in 2018, and for the jurisdictional risk, they have appointed Bill Bennett, to the Board and Allison Rippin-Armstrong to the management team, whose combined experience in navigating the permitting process should prove to be invaluable.

For me, the investment case for Desert Star Resources is straightforward, and I have summarized what I think are the company’s strengths and, ultimately, the reasons I think Kutcho has the potential to become BC’s next producing copper mine in the years ahead.

  • Good management team and Board of Directors – In particular, Bennett has x-factor type experience and influence to move Kutcho to production in a timely manner.
  • Advisory Board which includes Peter Meredith, former Chairman of Ivanhoe Mines; Rob Carpenter, former CEO of Kaminak Gold; and Stuart Angus, former Chairman of Nevsun Resources.
  • Over $100 million CAD in funding via an agreement with Wheaton Precious Metals, paving the way to the final investment decision in 2020.
  • After-tax NPV @8% of $265 million CAD and after-tax IRR of 27.6% – Desert Star’s Kutcho high grade Cu-Zn-Au-Ag Project has an updated PFS which shows positive economics at current metal prices and exchange rates- $2.75 USD/lbs Cu, $1.10 USD/lbs Zn, $1250 USD/oz, $17 USD/oz.
  • Deposit growth potential through the reduction in the resource cut-off grade, which could see the reserve tonnage grow by roughly 5.0 Mt and the measured and indicated resource tonnage by roughly 5.8 Mt
  • The Main and Esso Zones are open at depth and along strike – If the continuity of the deposit continues, Desert Star estimates that the Main Zone could grow between 1 to 3 Mt, and Esso Zone could grow between 300 and 600 Kt.
  • Kutcho’s district scale land package could yield further mineralization via a few high priority targets that have been identified on the property.

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Until next time,

Brian Leni ,  P.Eng

Founder – Junior Stock Review

Disclaimer: All statements in this report, other than statements of historical fact should be considered forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often, but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Much of this report is comprised of statements of projection. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.  Risks and uncertainties respecting mineral exploration companies are generally disclosed in the annual financial or other filing documents of those and similar companies as filed with the relevant securities commissions, and should be reviewed by any reader of this newsletter.

Brian Leni is an online financial newsletter writer. He is focused on researching and marketing resource and other public companies. Nothing in this article should be construed as a solicitation to buy or sell any securities mentioned anywhere in this newsletter. This article is intended for informational and entertainment purposes only!

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Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction, and should only be made after such person has consulted a registered financial advisor and conducted thorough due diligence. Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that they are accurate or complete. Our views and opinions in this newsletter are our own views and are based on information that we have received, which we assumed to be reliable. We do not guarantee that any of the companies mentioned in this newsletter will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect.
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Desert Star is a Sponsor of Junior Stock Review. Brian Leni does not own shares in Desert Star Resources.

Remaining Superior Mill Foundation

The following interview of Stephen Dunn, President & CEO of Crown Mining Corp. (TSX-v: CWM) was conducted by phone & email over about a 10-day period ended November 21st.  Crown Mining has a NI 43-101 compliant mineral resource estimate of 2.1 billion Indicated & Inferred pounds Copper (“Cu“).  In about 4 months, management plans to deliver a Preliminary Economic Assessment (“PEA“) on a portion of its 2.1-billion-pound resource.

Steve, please give readers an overview of Crown Mining. 

Crown Mining Corp. (TSX-v: CWM) is focused on advancing its 100% controlled Moonlight-Superior Copper project in Plumas County, which is in northeastern California.  Moonlight-Superior has a NI-43-101 resource of 2.1 billion pounds Cu, 750,000 ounces Gold and 25,000,000 ounces Silver.  At today’s spot prices, the gold & silver ounces equate to more than 400,000,000 pounds Cu Eq.  Our property hosts 4 known Cu deposits.

The Moonlight deposit alone hosts a NI 43-101 Indicated mineral resource of ~161 M short tons at an average grade of 0.324%, equal to ~1 billion pounds Cu, and an Inferred mineral resource of ~88 M tons at an average grade of 0.282%, equal to ~ 500 M pounds Cu.  So, combined, the Moonlight deposit hosts 1.54 billion pounds Cu [Indicated (68%) & Inferred (32%)].

Two other deposits, Superior & Engels, have a combined NI 43-101 Inferred mineral resource of ~63 short tons at an average grade of ~0.44%, equal to ~ 550 M pounds Cu.

Crown recently had third-party metallurgical testing done and is awaiting final results.  Findings will be used in a PEA report that will be started soon and is expected to be finished by the end of March, 2018.

And, how about a brief summary of the history of your controlled property.

Copper was discovered in the 1880’s and the most prolific mining period took place from 1915 to 1930.  During that time, 4.7 million short tons of ore were extracted, yielding 161,500,000 pounds Cu, (Cu grade 2.2%), 1,900,000 ounces Silver, and 23,000 ounces Gold.  Recoveries were reportedly around 80%.

From 1962 to 1994, Placer AMEX drilled over 400 holes and calculated a (non NI 43-101 compliant) 4-billion-pound Cu resource.  We have a lot of the Placer data.  Even though our team is not relying on that 4-billion-pound figure, we think it speaks to significant exploration potential.

From 2004 to 2011, various juniors drilled 54 holes and conducted airborne geophysics, which supported a 2007 technical report containing a mineral resource estimate.  That report remains NI 43-101 compliant today.

From 2013-2017 we acquired 132 unpatented claims and a lease for the 36 patents covering the Superior and Engels mines.  In 2013 we published a third-party NI 43-101 compliant mineral resource report at Superior of about 500 M pounds Cu.  In March 2016, we option 300 claims covering the Moonlight deposit and started a scoping study and metallurgical tests this year.

Is Crown Mining’s 2.1 billion pounds of Indicated & Inferred Copper (“Cu“) resource NI 43-101 compliant?  

Yes, it is.  That 2 billion + pound figure comes from two reports, one from 2013 and one from 2007, but both are NI 43-101 compliant.  The reports cover 3 deposits, (Moonlight, Superior & Engels) but they are part of the same system, about 1.5 miles across as the crow flies.  There are 4 known deposits in an area of about 7 sq. miles (18 sq. kms) in northeast California.

We hope to find one or more new deposits before it’s all said and done.

We already know we’re sitting on a large, bulk-scale, open-pittible Cu resource that will likely have meaningful Silver credits.  We plan to publish a PEA in the first quarter of 2018 that will provide indicative answers to many important questions.

How much capital will you need to raise to deliver a PEA next year?  

We run a tight ship, our cash burn is quite manageable.  The avoidance of undue equity dilution is very important to us, that’s why we capped our recent capital raise at C$ 200k.  [NOTE:  Crown Mining has just 34 M shares outstanding].  That, along with cash on hand, will cover us through March or April.  So, we don’t need to raise capital anytime soon.  If all goes well, our share price will be meaningfully higher next spring after we release the PEA.

I believe we are in the early stages of a multi-year bull market in Copper that will be a tailwind for us next year.  Analysts and pundits seem to indicate that a sustained Cu price above US3.50/lb., is an important milestone; a price at which producers are willing to put money to work through investments in new projects and pursue outright acquisitions of juniors like Crown Mining.

In fact, just a few days ago, Copper Mountain Mining (TSX: CMMC) announced a takeover of Australian-listed Altona Mining Ltd. at a headline valuation of ~ C$0.024 per pound of Cu resource.  That valuation is 10x that of ours.  {See chart below}.  To be fair, Altona is well more advanced than we are, which accounts for some of the premium.

Large-scale, near-surface mineralization, in a safe jurisdiction, with good access to infrastructure is great, but poor metallurgy could end the story. What do you know about the project’s metallurgy?

That’s a good question.  We are very much aware of the critical importance of what are recoveries might look like, and how much processing the ore will cost.  Historical mining activity from 1915 to 1930 had recoveries around 80%.  Placer Amex did various studies in the 1960’s that pointed to recoveries closer to 85%.

Earlier this year we commissioned a round of metallurgical testing by a well-respected third-party.  We are awaiting the final detailed results, but I’m happy to report that, generally speaking, recoveries were approximately 85%, similar to the findings of Placer Amex.

Although the U.S. is obviously a safe jurisdiction with many mining friendly attributes, some readers will be concerned about “California permitting risk.” Are investor concerns warranted? 

You’re right, we do get asked a lot about permitting risks in California.  We believe that that once the permitting process starts, probably not before the 2nd half of 2018 at the earliest, we could be facing a timeline of roughly 3 years.

Most investors don’t understand the permitting process in California.  The way in which it proceeds can actually work in favor of a company.  The County is the lead agency to collaborate with in presenting proposed projects at the State level.  Moonlight-Superior is in a remote, low population density, mining-friendly County near the Nevada State line.

We’ve spoken with a number of people in the area and have received positive feedback, but our main focus is really on delivering a PEA and then attracting a strategic partner.

We covered these topics, but to reiterate, what are the near-term catalysts for Crown Mining over the next 3-6 months? 

Near-term catalysts include the release of a PEA around the end of March next year. Before then, we will be putting out a press release that details the results of third-party metallurgical testing done earlier this year.  Finally, we expect to be in the position next month to announce a prominent new addition to our team.

Underlying all of this is a strong Cu price, up about 50% from the summer of 2016’s prices near US$2/lb., and down about 4% from a high of US$3.24/lb. a month ago.

As the chart above clearly shows, Cu demand is very likely to be much stronger than anyone expected even just a year ago.  The electrification of the global transportation fleet, grid-scale energy storage and the ongoing transition to renewable energy sources, especially wind power, are Cu intensive.

Yet, global supply constraints — (decades of declining ore grades at existing mines, fewer large Cu discoveries and ever growing geopolitical risks) — suggest that prices need to move higher, possibly a lot higher, to entice companies to invest large sums of capital on big projects.

We think 2018 will be an exciting year for juniors like Crown Mining Corp. (TSX-V: CWM) as more and more investors realize how incredibly important Cu is, and will be, to the world economy over the next few decades.

Thank you Stephen, I think we covered a lot of ground here.  Good luck with the PEA! 

Disclosures:  The content of this interview is for illustrative and informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Shares of Crown Mining are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares in Crown Mining and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein is biased in his views on the Company.  Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

Kincora Copper Ltd (CVE:KCC, FRA:BS4B) – The Next Mega-Copper Discovery

Current Price: C$0.34

Shares Outstanding: 63.9 million

Market Capitalization: C$21.7 million

Cash: ~C$5.92 million (post-EBRD financing)

A discovery in copper of the proposed magnitude significantly rewards investors.

SolGold (TSX:SOLG, Mkt Cap: $1.1B), is a very comparable case study, sky-rocketing 19x with just 10 drill holes in between. Recent examples also include Camino Minerals (TSXV:COR, Mkt Cap: $27M), who’s stock jumped from $0.35 to a high of $2.23 in a matter of days upon announcement of their first two drill holes (106 meters of 1.3% Cu) at the Los Chapitos project in south Peru.

Kincora is armed with extensive data, modern exploration techniques, and hard-hitting backers such as Robert Friedland. The company will have the next significant copper discovery this cycle. The technical team already has multiple tier-1 discoveries under their belts, and are convinced Kincora is sitting on the biggest one yet.

Geopolitics

Mongolia is once again open to mining.

The Democratic Party, solely responsible for running the country into the ground, has been removed and the Mongolian People’s Party now control 85% of Parliament, wielding clear legislative power and authority. Their mandate from the get-go has been clear, turn the economy around.

In support of the newly-elected government’s Economic Recovery Plan, the IMF has approved a three-year, $434 million loan for Mongolia as part of a broader $5.5 billion financing package. In terms of GDP, this is the fourth-largest package in IMF history, stressing the international community’s commitment to Mongolia’s future economic success.

A large part of this reform and IMG financing hinges on the reform of the mining sector, which constitutes a large part of Mongolia’s economy.

These developments are significant, and for the first since 2012, Rio Tinto is now resuming drilling and revisiting corporate opportunities in the belt.

Mongolia’s saw significant exploration between 1996-2006, which included discovery of the Oyu Tolgoi deposits. Significant regional exploration continued through 2009 and included the joint-venture between Robert Friedland’s Ivanhoe (now Turquoise Hill Resources) and BHP Billiton. Robert Friedland was responsible for the lion’s share of exploration, and at Ivanhoe’s peak, it owned portfolio of assets encompassing over 126,000 km2 of prospective land.

The geological data collected gave incredible understanding of the regional geology and controls on mineralization. These included an understanding of the local geology of the Oyu Tolgoi porphyry systems, as well as other copper occurrences such as Tsagaan Suvarga, Kharmagtai and Bronze Fox.

When the windfall tax was announced in May 2006, Ivanhoe released the majority of its regional landholding, however, the tax was repealed in in August 2009. The best acreage was picked up again, this time by IBEX, an entity indirectly controlled by Robert Friedland’s by High Power Exploration Inc.

Kincora Copper was formed in mid-July 2011, and began the consolidation of the area. First was the RTO of the Bronze Fox license, originally part of the original Ivanhoe Bronze Fox project, which in 2005 was designated as one of four, alongside Oyu Tolgoi, Kharmagtai and Nariin Sukhait, high priority targets for large scale porphyry and skarn copper mineralization.

Previous drilling included 72 holes for over 12,000 metres confirming continuous mineralization on a 9-kilometer strike, mostly at the Kincora named “West Kasulu”, a large low-grade copper-gold feature from surface to depth (returning between 0.4% and 0.9% copper equivalent).

In 2012, Kincora acquired Golden Grouse LLC, to consolidate the rest of the original “Ivanhoe” Bronze Fox project, including the Western license and extension of the West Kasulu target.

Exploration on the Bronze Fox and Western license border returned over 800 meters of over 0.40% copper equivalent, including 37 meters at over 1% copper equivalent. Furthermore, 9 of the 15 holes drilled in 2012 at the Tourmaline Hills gold prospect in the Western license have returned intervals of at least 1g/t Au, up to 7.7g/t Au and with up to 75g/t Ag locally in the mineralization zone, often with elevated copper values.

In Q1 2016, Kincora secured a new exploration license, Ulaan Khudag (Red Well), located 15 kilometers along the mineralized trend from the Rio Tinto controlled, Oyu Tolgoi project. An identified contact one continues to the eastern and western sections of the license, the margin just to the east returning a previous 2% copper and 0.25g/t gold sample with anomalous values also to the west.

In May 2016, Kincora announced its agreement with IBEX, resulting in Kincora more than tripling its landholding in the Southern Gobi copper belt, totaling over 1,500 km2.

Kincora has two drill ready targets, which are analogies to the existing two large scale mines in belt. East TS is a “brownfield” Tsagaan Suvarga (TS) style target. TS is over a $1 billion project, owned by Mongolyn Alt (MAK). It contains 1.5 million tonnes of copper reserves, as well as 59,874 tonnes of molybdenum.

Bayan Tal is an “Oyu Tolgoi” style target, which of course is Rio Tino’s US$14 billion mega project, home to 32.4 million tonnes of copper, 34.0 million ounces of gold, 262.2 million ounces of silver, and 12,900 tonnes of molybdenum.

The company closed a $4.52 million in financing in August 2017, and recently announced the second tranche $1.4 million investment by the European Bank for Reconstruction and Development (EBRD), for a total of $5.92 million.

Kincora is currently drilling the East TS copper porphyry target. The maiden reverse circulation and diamond drill program at the East TS target comprises approximately 2,870 metres to less than 265 m depth for 12 holes. It is proposed that during a second phase Kincora will undertake infill geophysics and a follow-on 5,000-metre drill program.

Powerpoint: http://www.kincoracopper.com/sites/default/files/corporate_presentations/20170828_Kincora_Deck.v2.pdf

Cheers,

Sean & Palisade Global Investments

On April 18, 2017, Camino Minerals Corp. (TSX-V: COR) released drill results from its copper exploration project, Los Chapitos in Peru.   The company intersected in hole CHR-002 1.30 per cent copper over 106 metres, with the hole ending in mineralization, including a section of 2.12 per cent copper over 38 m and hole CHR-001 intersected 0.47 per cent copper over 76 m, including 0.67 per cent copper over 22 m.  These results put the company on the radar as a company to watch. On August 25th, John Kaiser of Kaiser Research Online appeared on the Discovery Watch to discuss Camino’s results, its market activity and future prospects.

According to Kaiser, there were good results but as he studied the data it became apparent to him and the company that there was a magnetic anomaly next to hole CHR-002 which suggested there might be a sulphide body at a 200-metre depth. Combined with the data that hole CHR-002 ended in mineralization, the hope was that once they get into the sulphide body that there would be high tonnage and high grade copper in this anomaly.   The next phase of drilling was designed to target this anomaly with drill hole DCH-012 (hole 12).

The results drove the company’s share price to an intraday high of $2.21 settling at $1.24 by the end of the day. However, since then the stock has retreated to 47 cents at time of publication, largely in part because the company did not find what it thought was there.

On Aug. 28, the company released results from the Adriana and Katty zones on the los Chapitos project, that included hole 12. Kaiser said that the results were not what the company was expecting.  Hole 12 was great until it hit the anomaly; the mineralization very quickly faded out and the company’s theory did not pan out.     As a result, the company is choosing not to use IP anomalies as a targeting-tool on this project.   Nonetheless, Kaiser and the company are still optimistic about the results and the project.

The company reported drill highlights for the Adriana zone from DCH-012 which intersected 0.93 per cent copper over 96.5 metres, including 2.03 per cent copper over 19.5 m and 5.01 per cent copper over 4.5 m and which DCH-019 intersected 0.97 per cent copper over 42.0 m, including 3.31 per cent copper over 7.5 m.  Some drill highlights from the Katty zone included DCH-010 which intersected 0.70 per cent copper over 43.5 m, including 1.85 per cent copper over 5.6 m and DCH-014 which intersected 1.20 per cent copper over 21.4 m, including 2.70 per cent copper over 7.9 m.  It is early in the exploration program and the company has plenty of work coming up.

Kaiser believes it is a still interesting project without the sulphide anomaly.  The company has about 8,000 to 10,000 metres of drilling planned at the Adriana Zone plus another 2,000 to 3,000 metres at the Katty Zone. Over the next two to three months as the company drills this trend, they will put together a resource estimate.  He feels it may not be that great unless they hit something different from the current trend.  In addition, the company is applying for permitting at the Atajo zone.

When Kaiser asked Ken McNaughton, President of Camino, why the company is moving forward so aggressively, McNaughton replied because they are seeing copper in all of the core.  Kaiser concludes that Camino results were not as spectacular as he had hoped but the company has the cash and is marching in the right direction.

Source: http://www.howestreet.com/2017/08/25/can-inzinc-get-back-in-sync/

***The author does not own any shares in Camino and provided this report for information purposes. The author was not compensated for this article.   

On Wednesday, Aug. 8, Nevsun Resources Ltd. (T:NSU) reported a loss of $0.15 earnings per share (EPS) for the second quarter of 2017 (all amounts are in U.S. dollars).   Revenues were down quarter on quarter (8%) on a decline in realized zinc prices (11%) and zinc concentrate sales (35%), but benefited from copper sales (7.7 million lbs).  EPS was impacted by a $70 million, write-down of long term stockpiles and mobile equipment, reflecting a revised  mine plan at Bisha  from 8 to 4 years.   Cash increased to $171 million from $169M in the first quarter of 2017, primarily the result of positive operating cash of $13 million, reduced taxes and a working capital release of $9 million.  Zinc production was down by 17% to 43 million lbs on lower throughput, grades and recoveries, and zinc and cash costs were up 1% to $0.92/lb.   However, copper production, though minor (5.7 million lbs), was up 36% for the quarter, maintaining cash costs of $1.59/lb.

Management revised production guidance to 190-210 million lbs of zinc, down from 200-230m lbs, while its outlook for copper improved with a guidance of 20-30 million lbs of copper, up from 10-20 million lbs. Revised production guidance reflects the fact that Bisha no longer produces bulk zinc concentrate.  In order to improve metal recovery and material movement, the company approved an additional $24 million in capital for Bisha.  A larger capital investment would have been required to maintain a longer mine life and could not have been funded by the internal cash flow from Bisha.   The Bisha operation now has a reserve mine life to mid-2021, down from approximately eight years at the last reserve estimate.

The company’s main focus is to bring the Timok project into production by 2021.  In 2017, the company has spent $14 million on the Upper Zone and has recently started a 10,000-metre drill program to search for additional high grade zones. Milestones achieved to date in 2017 include the completion of all planned infill drilling (30,000 metres) and the advancement of key technical mining, metallurgical and environmental studies. The company noted that it will begin a decline development to reach the ore body, rather than a shaft, in the fourth quarter of 2017.

The company delayed the preliminary feasibility study to the first quarter of 2018 and plans to deliver an update preliminary economic assessment in October, 2017.   After the delivery of a feasibility study on either the Upper Zone or the Lower Zone, Freeport McMoran (US:FCX) will increase its ownership in the Lower Zone to 54% and Nevsun will own 100% of the Upper Zone and the remaining 46% of the upper zone.

The negative news has sent the shares in the company down to a year low of $2.67 (CDN), from $3.39 before the second quarter financials were released on Wednesday. These are levels that have not been seen since 2010, and a far cry from its peaks in the seven dollar range back in 2010 when Bisha was moving to production and copper was cresting at $4.50/lb.

Backgrounder on Nevsun Resources CEO and President, Peter Kukielski

Nevsun Resources appointed Stanford-educated civil engineer Peter Kukielski, the former head of AcrelorMittal, as CEO and President of Nevsun in May, 2017.  He ruffled feathers at ArcelorMittal by suggesting it should spin-off its mining division, joined Warburg Pincus at the beginning of 2014. He also sits on the board of Perth-based South32.   At Warburg Pincus he was the executive in residence at the private equity firm,  where he wanted to create not a mining fund but an operating miner with physical assets.  This was back in 2014 at the bottom of the commodities downturn when several other mining executives, including former Xstrata boss Mick Davis, launched private equity funds hoping to get fire sale prices on assets as prices tumbled. Instead, they largely sat on the sidelines as prices rallied throughout 2016 according to the Global Mining Observer.  Warburg Pincus pulled the plug on the $1 billion fund at the end of 2016, having failed to land any deals. One mine his fund was looking at was Rio Tinto’s IOC (Iron Ore Company of Canada) operation in Canada, but complications included a $900 million lawsuit hanging over the asset, brought by Inuit groups. Don Lindsay, the head of Vancouver-based Teck, also looked at buying the mine under Rio’s former chief executive Sam Walsh.  Unphased by the closing of the fund he led, Mr. Kukielski landed at the helm of Nevsun as it is moving to its next project, Timok where he may get his wish to actually build an operating mine with assets, if he sticks around and no one pulls the plug.

The S&P/Venture Composite Index finished down 0.3% to 768.04 and the S&P/TSX Global Mining index was up 0.15% to 66.52 for the day as the summer doldrums roll on.  Gold closed up $1.50 at $1274.90 while silver closed down 9 cents to $16.70 and copper down 1.6 cents to $2.875. On the TSX Venture, 327 issues advanced, while 368 remained unchanged and 365 declined, 115,365,198 shares traded hands in 19,555 trades worth approximately $54,171,000.  On the day, 21 companies reached new highs while 69 reached new lows on the Venture Exchange and 8 venture mining companies released drill results and sample assays.

Precipitate Gold Corp. (PG)  released results that included the discovery of mineralization in a previously untested anomaly to the south of the main zone yielding a 1.1-metre interval of 2.59 grams per tonne gold (including 0.11 per cent copper, 0.6 per cent lead and 0.65 per cent zinc) (GR17-15) and a main zone drill intercept of 14.73 metres of 1.16 grams per tonne gold, including 2.67 metres of 2.23 grams per tonne gold (GR17-13). Laboratory results are pending for eight more holes.

Klondike Gold Corp. (KG) reported today results from its lonestar property in the Yukon with 30.7 m of 1.6 g/t Au at Lone Star in the Yukon. Thus far in 2017, the drill program has completed 35 holes. Assays for the earliest 11 holes have been received, including 9 holes released today. Twenty-four holes are still in the lab queue, while drilling continues.  The market response to the news was muted as shares in the company were down half a cent on 209,000 shares to 30 cents.

Panoro Minerals Ltd. (PML) provided an update of its exploration drill program at its Cotabambas copper-gold-silver project in Peru. Highlights of the program are from Drillhole CB-157, the first hole completed at the Maria Jose zone, intersected 195.2 m of copper mineralization grading 0.34 % Cu, 0.06 g/t Au and 1.6 g/t Ag.   Shares of the company remain unchanged at 15.5 cents for the day.

Altamira Gold Corp. (ALTA) identified two new zones of mineralization have been identified at both Baldo East and Toninho, at its Cajueiro Project, Brazil.  Results from the initial five trenches at Baldo East include 3m @ 6.54g/t gold including 1m @ 17.54g/t gold, and 6m @ 2.26g/t gold, and 3m @ 5.83 g/t including 1m @ 16.24g/t, and 1m @ 9.15g/t, and 9m @ 1.19 g/t including 1m @ 5.62g/t .  Shares in the company were down half a cent to 18.5 cents on 286,700 shares.

Aurion Resources Ltd. (AU) released 452 rock samples assayed from nil to 2,520 grams per tonne (81.4 ounces per ton) with 32 assaying greater than 31 g/t Au (one ounce per ton), 45 greater than five g/t Au and 70 assaying greater than 1.0 g/t Au from its  Aamurusko gold prospect, Finland.  Share price declined 3 cents to $1.78 on 436,000 shares.

Margaux Resources Ltd. (MGX) released the results from initial surface rock sampling on its Bayonne and Jackpot properties, in Southern British Columbia. The results include gold assays from grab samples of up to 27.5 g/t (grams per tonne) gold on the Bayonne and widespread zinc mineralization at Jackpot including 20.8 per cent zinc from Jackpot Main.  Shares in the company remained unchanged at 28 cents on 50,500 shares.

Galantas Gold Corp. (GAL)  reported grab samples of between 1.1 and 11.0 grams per tonne gold and between 1.4 and 7.0 g/t silver from its underground mine Omagh Gold Mine, Ireland. The share price remained unchanged at 8 cents on 20,000 shares.

Mexican Gold  Corp. (MEX) released its initial mineral resource estimate for the El Dorado/Juan Bran and Santa Cruz zones at its Las Minas project, Mexico. Total measured and indicated resource amount to 304,000 ounces AuEq contained within 4.97 million tonnes grading 1.9 g/t AuEq. The initial mineral resource estimate is for two of the eight known zones of mineralization at Las Minas.  The company was halted at remains so at the end of the trading day.

According to TMX earnings calendar for the TSX venture, Avino Silver and Gold Mines Ltd. (ASM) should be releasing its second quarter 2017 results after the close of the market on August 2, 2017.  Barkerville Gold Mines  (BGM), North Arrow Minerals Inc. (NAR), and Orsu Metals Corp. are expected to be publishing their earnings tomorrow as well.

© 2017 MiningFeeds.com. All rights reserved.

Here are your “Movers and Shakers” for the week ending September 16th, 2011 on the TSX and TSX-V Exchanges. In no particular order, these are the 10 mining companies that caught our eye this week.

1. Dalradian Resources Inc. (TSX: DNA)

Dalradian Resources was this week’s top TSX-listed mining stock percentage gainer posting a gain of 27.8%. Dalradian will be added to the S&P/TSX SmallCap Index on Monday, September 19th. Earlier this month, the company announced intersecting 3.2m grading 5.34g/t Au at its Curraghinalt Deposit in Northern Ireland.

2. TerraX Minerals Inc. (TSX-V: TXR)

On the TSX Venture board, TerraX Minerals posted a weekly gain of 37.9% which made it the number one mover this week. On Wednesday, September 14th, the company announced it intersected a porphyry-style alteration with significant sulphides at its Stewart gold-copper property in Newfoundland.

3. Aura Minerals Inc. (TSX: ORA)

Aura Minerals chalked up an 11.6% loss this week which marked the largest decline for a TSX-listed mining stock. Aura closed down $0.20 on Friday to end the week at $1.53. The company has faced a host of operational problems and the loss of its chief executive officer. In July, Dundee Capital Research analyst Ron Stewart noted, “No question in our mind, Aura has had the proverbial stuffing knocked out of it in the market.” At the time, Aura was trading at $2.13 and Stewart issued a $3.00 target on the company’s stock.

4. Copper One Inc. (TSX-V: CUO)

Copper One was off 17.5% this week which marked the biggest drop for any widely traded TSX-V listed mining stock. Volume was up considerably on Friday with over 1.4 million shares traded. The company’s stock was off $0.07 on the day to close at $0.33 on no news. On July 8th, Copper One annouced that exploration work on the Rivière Doré project in Quebec was being put on hold. At the time, the company’s shares were trading at $0.70.

5. Avion Gold Corp. (TSX: AVR)

Avion Gold was the most actively traded issuer on the TSX Exchange on Friday with over 33 million shares trading hands. The company was up $0.08 on the week to close at $2.54. Avion Gold is being added to the TSX Global Gold and Global mining Indexes effective Monday, September 19th, 2011.

6. Silver Wheaton Corp. (TSX: SLW)

Silver Wheaton was the second most actively traded stock on Friday on the TSX Exchange with almost 24 million shares traded. On Monday, September 19, 2011 Silver Wheaton will be added to the TSX 60 Index. Also upcoming, third quarterly cash dividend payment for 2011 of US$0.03 per common share will be paid to holders of record of its common shares as of the close of business on September 20, 2011.

7. Allana Potash Corp. (TSX:AAA)

This week marked the first full week of trading on the TSX for Allana Potash. The company graduated to the TSX on Friday, September, 9th. On Thursday, September 15, Allana Potash announced drill results from the company’s potash project in Ethiopia which included 8 meters of 18.54% KCl. About the news, Company President & CEO Farhad Abasov stated, “Allana management believes that the potash in this region may be amenable to mining by open pit methods and future studies will focus on this potential.”

8. Silvercorp Metals Inc. (TSX: SVM)

Silvercorp Metals was in the headlines all week after the B.C. Securities Commission announced last Friday it was conducting a regulatory investigation into anonymous allegations against the company. A second set of allegations were published on the internet this week and the company’s Chairman Dr. Rui Feng invited the authors responsible for the accusations to “come out of the shadows and participate with the regulators in their investigations“. This week the company bought back over $31 million of its own shares through a normal course issuer bid.

9. Copper Fox Metals Inc. (TSX-V: CUU)

B.C. copper miner Copper Fox intends to raise an additional $2-million via a private placement bringing the total private placement proceeds of its recently announced financing to $5-million. The offering is expected to consist of 3,333,334 units at a purchase price of $1.50 per unit. Each unit consists of one common share of Copper Fox and one-half common share purchase warrant of Copper Fox. Each whole warrant entitles the holder to acquire one common share of Copper Fox at an exercise price of $1.75 for one year.

10. Passport Potash Inc. (TSX-V: PPI)

Passport Potash was also in the B.C. Securities Commission spotlight this week when, on Monday, the regulator expressed concern that the company may be in possession of the results of an economic analysis for the Holbrook project that had not been disclosed through a news release and material change report. The company’s shares are down $0.09 on the week closing at $0.47.

Ivanhoe Mines executive Robert Friendland stikes a pose in the Mongolian desert.

Last night Steve Jobs announced his retirement from Apple stating that he felt he could no longer fulfill his duties as the head of what has possibly become the world’s most famous company. An announcement that was perhaps expected given his ongoing health issues and frenetic work schedule.

In response to the announcement, Steve Wozniak, Co-Found of Apple and longtime friend of Apple’s CEO said, “Steve Jobs is the greatest business leader of our time. He’ll be remembered for 100 years. To think that I knew somebody who became the most important person in the world. It’s actually — it’s kind of stunning.”

Robert Friedland, seemingly always living in the shadow of his old friend Steve Jobs, began to strike it rich in the mining business in the 1980s. He then expanded his wealth riding the economic wave created by an international boom in commodity prices over the past decade. Despite the commodities craze, Friedland had to work hard to keep pace with Steve Jobs as Apple emerged as one of the world’s most valuable and admired companies. Friedland also had to work hard to shed the nickname “Toxic Bob” coined by environmentalists from his “alleged role” in the contamination of a Colorado river in the 1980s. But in early 2011, during a media presentation in Cape Town, South Africa, having notched numerous wins in the resource business, Friedland brazenly compared himself to his old friend Steve Jobs.

When Robert Friedland first set foot in the Mongolia desert in 2001, the mining magnate saw the opportunity to turn a desolate windswept land in central Asia that held the Oyu Tolgoi deposit into one of the largest porphyry copper-gold mines in the world through his company Ivanhoe Mines (TSX:IVN). Mongolia’s response? Protesters have burned Friedland’s image in effigy in the capital city of Ulaanbaatar and in 2006 the Mongolian Parliament welcomed his efforts with a windfall tax on copper and gold exports. But after years of negotiations and changes in the law a special agreement was finally signed on October 6, 2009 to pave the way for the development of the project.

According to Mongolian law, the state may acquire up to a 50% share of a mineral deposit of strategic importance if the state has contributed to the exploration of the deposit at some point in the past. For all other mineral deposits of strategic importance, the state’s maximum share is set at 34%. Fortuitously, the Parliament of Mongolia is given the ultimate power to determine what qualifies as a mineral deposit of strategic importance. In general terms, “strategic importance” concerns a mineral deposit with a size that may have a potential impact on national security, the economic and social development of the country at the national and regional levels or that is producing or has a potential of producing more than 5% of total Mongolian GDP in a given year. Oyu Tolgoi certainly qualifies as having strategic importance to Mongolia, it is the largest development project in the history of the country. The total capital requirement for the project is estimated at over $4.5 billion.

On the same day when Steve Jobs told the world “iQuit”, Rio Tinto announced that they had further increased their stake in Ivanhoe Mines by 2 percent, and their respective stake in the Oyu Tolgoi, by exercising its right to acquire shares. Rio Tinto now owns 48.5% of Ivanhoe’s common shares and has the right to boost its stake in Ivanhoe to 49% under an existing deal. The company stated they would consider buying additional shares of Ivanhoe, depending on general economic conditions, Ivanhoe’s business prospects and other factors. Ivanhoe will issue 27.9 million new shares to a wholly-owned subsidiary of Rio Tinto. The British-Australian mining giant paid $18.98 for a total consideration of $529.5 million. At press time shares of Ivanhoe Mines are currently trading at $19.72; shares of Apple are being exchanged for $371.65.

Majors mining companies are rediscovering B.C. and targeting the province's large copper-gold porphyries.

The Province of British Columbia, Canada is experiencing a mining renaissance. What’s happening in the province, in regards to mining, should be on every investors radar screen.

Vancouver is undoubtedly one of the greatest mining centers in the world and British Columbia should be a mining powerhouse when one considers the province has favourable characteristics:

  • Excellent geology – British Columbia is mineral rich and hugely underexplored.
  • Good transportation system.
  • Reasonable mining regulations.
  • Competitive tax rates.
  • Strategic location with respect to Asian markets. Two modern ports, Vancouver – Canada’s largest and the Port of Prince Rupert which is the closest of any of North America’s West Coast ports to Asia – up to 58 hours of sailing time shorter.
  • High quality and easily accessible geological data.
  • Mining friendly provincial government.
  • Communities receptive to resource extraction as a livelihood.
  • Attractive exploration incentives.
  • BC is the third largest generator of hydro electricity in Canada – one of the lowest power costs in North America. Natural gas is plentiful, cheap and resources are growing.
  • Some of the most modern education and telecommunications infrastructure in the world.

Land claims of the First Nations remain a stumbling block in many areas – perhaps in part because so many claims overlap – but First Nations are now coming to understand and embrace resource development as a way to generate training, jobs and financial security for their people and their communities. While things are not always as smooth, dialogue is taking place and things are getting done – projects are moving forward.

About the sector, Gavin C. Dirom President and CEO of the Association of Mineral Exploration B.C., recently stated, “BC-based mineral explorers and developers appreciate the key measures that were announced in today’s federal budget. Maintaining the Mineral Exploration Tax Credit and reducing red tape will help sustain Canada’s mineral exploration and mining sector, encourage capital investment and ultimately benefit all Canadians well into the future.”

BC is taking the lead in regulatory reform – the largest cut in red tape could come from dropping the duplication of process in regards to environmental assessments. B.C. has taken the position that the province’s own process already takes into account the responsibilities of the federal government and that doing a second duplicate federal review forces a company to spend more money and time on needless duplication of process.

The process does work – three major mines are being constructed, six major mines are in advanced development, and over eighteen mining projects are in earlier stages of environmental assessment. In addition, there’s a very real trend by major mining companies towards making deals with junior resource companies that presently own copper-gold porphyry projects in BC:

  • Tiex/Newmont.
  • Novagold/Teck Resources.
  • Cariboo Rose/Gold Fields.
  • Terrane Metals/Goldcorp.
  • Kiska Metals (formerly Rimfire Metals)/Xstrata.
  • Serengeti/Freeport.
  • Strongbow/Xstrata.
  • Copper Mountain/Mitsubishi.

Copper-gold porphyries can offer both size and profitability. These kinds of deposits are one of the few deposit types containing gold that have both the scale and the potential for decent economics that a major mining company can feel comfortable going after to replace and add to their gold reserves.

Eritrea is emerging as a proactive African mining country.

Eritrea, a funnel shaped country that borders The Red Sea, was, because of its unstable political history, a bit of a mystery to the international mining community. But an unprecedented era of peace and stability is changing things quickly.

Eritrean society is ethnically heterogeneous. The Tigrinya people and the Tigre people together make up about 80% of the country’s total population. The rest of the country consists of various other Afro-Asiatic groups. Like its demographic makeup, mining deposits in Eritrea are also heterogeneous; since the Eritrean government embraced mining development in the 1990’s a number of unique deposits have been found in the country that consist of a combination of gold, silver, copper and zinc.

Eritrea’s government, however, is a stark counterpoint to the country’s diversity. Eritrea is a single-party state. The government is run by the People’s Front for Democracy and Justice (PFDJ). No other political groups are currently allowed to organize, although the Constitution of 1997, which has not been implemented, provides for the existence of multi-party politics. In 2008, the government of Eritrea made it more attractive for foreign companies to prospect and develop projects when they set their stake at 10 percent with an option to buy a further 30 percent. Industry analysts consider this to be a relatively small claim compared to other countries in North Africa like Egypt which mandates a 50 percent stake or Sudan at 60 percent. And as a result, some industry experts predicted an impending mining boom in Eritrea.

A video released in 2009 focusing on the Eritrean mining industry provides an excellent overview of the country and its approach to mining:

The bottom line for international miners? The Eritrean government is proactive and pro-mining. The Ministry of Energy and Mines carried out modern technology-backed study and exploration activities in 2010 with a view to reinforcing the ongoing mining endeavors in the country. Alem Kibreab, director general of the Mining Department, explains the mineral resources in the country are owned by the people themselves and that the Government shoulders the responsibility of their management. Since the 2008 policy that encourages mining investment in Eritrea, Mr. Kibreab notes that twenty foreign companies are now engaged in studying, exploring and mining in the country.

Eritrea’s most advanced project is the Bisha mine operated by Nevsun Resources (TSX:NSU). Its 27 million tonnes of ore reportedly contain 1 million ounces of gold, 11.9 million ounces of silver, 800 million pounds of copper and over 1 billion pounds of zinc. The Bisha mine went into full commercial production in February of this year and Nevsun recently reported the mine produced 105,000 ounces of gold from January to April. Within the deposit, gold and silver is found in the top 35 meters and will be mined over the first two years. During last week’s sell-off in commodities shares of Nevsun faired extremely well and were actually up $0.08 on the week closing at $5.25.

Another company developing gold, silver, copper and zinc projects in Eritrea is Sunridge Gold (TSX-V:SGC). Sunridge has four projects with a combined NI 43-101 resource of 1.05 million ounces of gold, 31.8 million ounces of silver, 1.28 billion pounds of copper and 2.05 billion pounds of zinc. The company’s Debarwa deposit has similar geology to Nevsun’s Bisha mine. The company has been relatively quite of late on the news front but drill results are expected soon from Emba Derho (one of the company’s three northern deposits); and, an updated resource calculation is expected this month from their flagship Debarwa deposit factoring in drill programs conducted in 2009 and 2011. Sunridge Gold also survived the recent correction unscathed closing the week unchanged at $0.95.

NGEx Resources (TSX:NGQ), a diversified international mining company that boasts Lukas Lundin as its Chairman, also has a foothold in Eritrea. NGEx’s Hambok project is located near the Bisha mine and in January, 2009 the company reported a NI 43-101 indicated resources estimated of 231 million pounds of copper, 530 million pounds of zinc, 2.3 million ounces of silver and 68,000 ounces of gold. The mini-mining meltdown was less kind to NGEx Resources, shares of the company were down $0.13 to close the week at $3.36.

The Northwest Transmission Line passes through seven different First Nations territories including the Gitanyow.

On May 8th, 2011, just two days after the federal government gave the environmental thumbs-up on the Northwest Transmission Line (NTL), two B.C. First Nations say they will join forces to fight against the major power line.

The NTL is slated to run through seven different First Nations territories, four of which have yet to sign agreements with B.C. Hydro. About one-third of the line would pass through territory belonging to the Gitanyow and Lax Kw’alaams, who claim that B.C. Hydro has been inflexible in negotiations about their participation and compensation. The bands, subsequently, are threatening blockades. The Chiefs of the respective bands have said they will not accept B.C. Hydro’s one-time cash offer, comparing the offer to “beads” in exchange for land.

On April 11th, after over a year of attempting to negotiate with BC Hydro regarding the proposed NTL to be constructed through Gitanyow Territory, the Gitanyow Chiefs received a “No” from BC Hydro’s representatives concerning the outstanding issue of revenue sharing. This response was delivered to the Gitanyow First Nations despite the directive from the BC Utilities Commission to BC Hydro in early February 2011 to engage in revenue sharing discussions with Aboriginal Nations whose rights will be impacted by transmission line projects.

In 2008, The Mining Association of BC commissioned a study that evaluated the economic benefits of establishing a high-voltage transmission line in northwest British Columbia. According to the study, the NTL would result in at least $15 billion in new investment in mining and power generation for the remote region. The study said the NTL has the potential to create more than 10,000 new jobs, allow new green power projects to link to the provincial transmission grid, and generate $300 million in new tax revenue annually.

Last year, the Northwest Powerline Coalition released a video highlighting the various benefits associated with the Northwest Transmission Line:

A number of mining companies have been patiently waiting for power in the region. Imperial Metals (TSX:III) is developing the Red Chris copper/gold project and the operation is dependent upon completion of the Northwest Transmission Line. Red Chris anticipates being able to connect to the NTL’s Bob Quinn hydro station approximately 120 km from the proposed mine site.

At least two other junior miners are also relying on the development of the Northwest Transmission Line. Copper Fox Metals (TSXV:CUU) and Hard Creek  Nickel (TSX:HNC) are also very much dependent on the project. In a recent interview with MiningFeeds.com, Copper Fox President & CEO Elmer Stewart noted, “The NTL is fundamental to the development of the large copper deposits located in northern British Columbia including Schaft Creek.  Without this supply of electricity, the capital and operating costs would increase which directly impacts the economics of these deposits.” And Mark Jarvis, President of Hard Creek Nickel, said the NTL was “the key infrastructure element we need to advance our Turnagain Nickel project to a reality.”

Copper Fox President & CEO Elmer Stewart believes the Northwest Power Line is a key component of the company's feasibility study.

You’ve probably heard or peak oil but have you heard of peak copper? The difference between peak oil and peak copper is that copper is recycled and reused. It has been estimated that at least 80% of all copper ever mined is still available above ground. Peak copper, in theory, is the point in time when the maximum global copper production rate is reached. Since copper is a finite resource, at some point in the future new production from the earth will diminish. When this will occur is very much a matter under dispute but, lately, the debate over peak copper has been adding fuel to the copper frenzy.  One Canadian listed company that plans on adding to the global supply of copper is Copper Fox Metals.

Copper Fox listed on the TSX Venture Exchange in June 2004 to explore the potential of the Schaft Creek deposit in Northern British Columbia, Canada. Schaft Creek deposit is an undeveloped copper-gold-molybdenum-silver that was owned by Teck-Cominico (now Teck Resources) that was optioned by Guillermo Salazar, the company’s founding president and CEO, in 2002. Pursuant to the option agreement, Copper Fox can earn a 78% interest (23.4 % of the deposit) in Liard Copper Mines Limited by completing a “positive” feasibility study. Teck maintains certain earn-back rights on receipt of a “positive” bankable feasibility study.

The recent approval of the Northwest Power Line by B.C.’s Provincial government was always considered a key component of the projects viability. BC Hydro performed technical studies on the project for years and advocated the new line would provide a reliable supply of clean power to potential industrial developments in the area. But, as is often the case with such mega-projects, environmental opponents were vocal.

Finally, on February 23rd, 2011 the BC Environmental Assessment Office announced that the Northwest Transmission Line was finally granted an Environmental Assessment Certificate. Copper Fox put out a press release applauding the decision and the company’s shares made a dramatic move from $.96 cents on February 11th to $2.70 a few months later. Shares of Copper Fox have subsequently pulled back from their April highs to the $2.00 range. MiningFeeds.com connected with Copper Fox boss Elmer Stewart recently to discuss the significance of the Northwest Power Line and the company’s future.

You joined Copper Fox as Chief Executive in 2009, when you were doing your own due dilligence what was it about the Schaft Creek project that caught your attention?

I joined Copper Fox as President and CEO in July 2009.  Prior to that I was a director of the Company and non-executive Chairman of the Board.  I have always been excited about the size of the resource, its polymetallic nature, metallurgical recoveries and the general setting of the deposit.  The reported low grade nature of the Schaft Creek deposit was clearly a function of the low cut-off used to report the resource which I saw as a positive.  Using a higher cut-off grade clearly reduced the resource, but provides higher average metal grades.  The ability to balance average grades and resources is fundamental in mine development.  Another aspect was that developing mines and specifically open pit mines in mountainous terrain depends on the ability to have space for the infrastructure and waste piles associated with mine development. Schaft Creek possessed all these features.

In February the British Columbia government approved the “Northwest Transmission Line” which, when completed, will provide you with the power reguired for the project – tell us a bit about what this means to Copper Fox?

The NTL is fundamental to the development of the large copper deposits located in northern British Columbia including Schaft Creek.  Without this supply of electricity, the capital and operating costs would increase which directly impacts the economics of these deposits.  The NTL is also good for the residents of northern British Columbia in that it brings environmentally friendly energy to the region and opens the area up to development for other business enterprises as well.

The company has a relationship with Teck, Canada’s largest diversified mining company, can you explain the significance of this relationship to our readers?

Teck has an earn-back right pursuant to the Option agreement entered into in 2002.  We have been working with the senior technical people from Teck since early 2010 when we announced that we were proceeding to complete a feasibility study on Schaft Creek.  The purpose of engaging Teck early on in the process of completing the feasibility study was to have their input into the feasibility study that is required to allow Teck to make their decision as to their participation in the Schaft Creek project.  Teck’s experience in operating open pit mines of the size of that contemplated at Schaft Creek is valuable information that helps makes the feasibility study a realistic and practical study in the contexts of developing the deposit.

In terms of comparables, are there other projects in Canada that compare to the Schaft Creek project in terms of size, grade and composition?

Schaft Creek is a very large project and possibly the largest one in Canada that is undergoing a feasibility study.  The work completed in 2010 suggests that a substantial portion of the Schaft Creek deposit has not been tested by drilling.  In addition the nature of porphyry deposits suggests that there should be other similar deposits within the same general area. The two large zones of copper mineralization exposed on surface and the large untested chargeability anomaly may represent one or more deposits.  Of course exploration will need to be completed to confirm this interpretation.  At this time, we do not know what the ultimate resource could be at the Schaft Creek property so it is difficult to make a comparisson with other deposits. But given the geophysical and geological information, I suspect that Schaft Creek may be much larger than the our resource estimation completed in late 2006 suggests.

With a deposit containing copper, gold, molybdenum and silver, please comment of the econimic associated with the project?

The preliminary feasibility study completed in September 2008 showed a -$0.32 to produce a pound of copper net of the sale of the gold-molybdenum-silver credits. This was based on metal prices of $3.12/pound copper, $692/oz gold, $33.00/pound molybdenum and $13.09/ozs silver.   The current metal prices for three of the four metals are substantially higher than those used in the 2008 calculations and this increase/decrease will be included in the feasibility study currently underway.  The sale of four metals from each tonne of rock processed show the economic impact on the cost to produce a pound of copper which substantially impacts the overall economic performance of Schaft Creek.

What major milestones is Copper Fox working towards completing in 2011?

Our near term major milestones are; to complete the updated resource estimation which is expected to be completed shortly, commence the 2011 program at Schaft Creek before the end of May and complete the balance of the work required to complete the feasibility study as soon as possible.  A substantial amount of work has already been completed on the feasibility study to date.  Due to the large amount of technical data and studies that need to be performed it’s not easy for the independent contractors working on the feasibility study to give Copper Fox a specific date on which the study would be completed.  One of our main objectives at Schaft Creek in 2011 is to test the three targets identified above – any one of which we believe could be another previously undiscovered deposit.

This interview appeared in 10 Base Metal Stocks to Watch – Part 4CLICK HERE – for the article.

Copper Mountain Mining is literally about to move a mountain.

What does an experimental electronic music band from the UK called The Shamen have to do with Copper Mountain? Admittedly, that is a very difficult question. The Shamen’s first (and only) top 40 hit in the U.S. was released during the summer of 1991 and could very well be the perfect theme song for Copper Mountain. That song was “Move Any Mountain” and that’s what Copper Mountain is about to do – all the way to Japan.

The company owns 75% of the Copper Mountain mine, and their Japanese partner, Mitsubishi Materials Corporation, owns the other 25%. The 18,000 acre mine site is located 20 km south of the town of Princeton in southern British Columbia. The mine has a resource of approximately 5 billion pounds of copper and the project is fully financed and nearing completion. Pre production mining activities are underway and the mine is set to enter production next month to produce approximately 100 million pounds of copper each year. Shares of Copper Mountain have performed well over the past 12 months moving from $2.70 last May to $6.78 per share today.

The mine will utilize conventional crushing, grinding and flotation processes and equipment. Once the copper concentrate is produced, it will be shipped to one of Mitsubishi Materials’ existing copper smelters in Japan: first, by rail to the port of Vancouver, and then by ship across the Pacific Ocean. B.C. Minister of Transportation and infrastructure Shirley Bond recently stated, “This really shows how the Pacific Gateway is the best transportation route for Asian businesses.” And, “Mitsubishi Materials Corporation invests in the B.C. Copper Mountain Mine to get the copper concentrate they need, knowing that the best way to ship it is through the Port of Vancouver.”

MiningFeeds.com connected with Jim O’Rourke, Copper Mountain’s President & CEO and 2005 recipient of the Edgar A. Scholz Medal for Excellence In Mine Development in British Columbia and the Yukon to find out more about the company as it nears production.

After years of development you are quickly approaching your June target to have the mine in production. What does the production schedule look like?

The commissioning of processing equipment is progressing well. The primary crusher and conveyor system to the coarse ore stock pile has been tested and is also operating well. The commissioning team is currently active in the concentrator building and the start up is on schedule for production in June.

Preproduction mining is advancing well with major equipment fully operational and stock piling ore for the concentrator start up in May. We are currently mining at a rate of 100,000 tonnes per day with the planned mining rate to increase to 160,000 tonnes per day.

Once the copper concentrate is produced you plan on shipping it to your partner Mitsubishi’s smelting operations in Japan – how does one go about shipping 100s of millions of tonnes of ore half way around the world?

Copper and precious metals are contained in a concentrate which are produced at the mine for shipping to Mitsubishi. The 185,000 (annual) tonnes of concentrate is trucked to the port of Vancouver at a rate of approximately 500 tonnes per day. The concentrate is then stored at the Vancouver Port and shipped in approximately 12,000 tonne lots to the smelters in Japan.

Have you determined the costs per pound of copper associated with shipping the concentrate?

Total offside cost for moving concentrate to the smelters in Japan is approx. $110 per 1 metric tonne of concentrate which equates to about $0.18 per pound of Copper.

What are your overall costs factoring in the silver and gold net precious metal credits?

Our published cost is estimated at $1.30 per pound of copper, net of precious metal credits which vary depending on metal prices and foreign exchange rates.

In what month will Copper Mountain see cash flow from operations?

Because of our favourable agreement with Mitsubishi Materials Corporation, we expect to have a shipment in late June or early July and receive a provisional payment for 90% of the concentrate shipped.

After you put your first and only project into production, what’s next on the horizon for Copper Mountain?

We continuously take an entrepreneurial approach to evaluate other potential projects, companies, and mergers and acquisitions that may add shareholder value.

This interview appeared in 10 Base Metal Stocks to Watch- Part 3 – CLICK HERE – for the article.

Barrick Gold's President & CEO Aaron Regent puts his stamp on the world's largest gold miner by diversifying into copper.

Copper record highs means the base metal is making headlines most every day; merger and acquisition mania is now in full flight. MiningFeeds.com takes a look at a couple of TSX listed junior copper miners that noted CIBC analyst Ian Parkinson says are ripe for takeover.

But first, let’s revisit the manic events from earlier this year that ultimately culminated in Barrick Gold’s (TSX: ABX) $7.8 billion takeover offer for Equinox Minerals (TSX: EQN).

  • January 12, 0111 – Lundin Mining launches a friendly takeover of Inmet Mining – combined transaction value $9 billion.
  • February 28th, 2011 – Equinox Minerals launches a hostile takeover of Lundin Mining – transaction value $4.8 billion.
  • March 21st, 2011 – Lundin rejects Equinox bid.
  • March 22nd, 2011 – Lundin/Inmet deal hits a roadblock when Panamanian government rejects Inmet’s plan to use coal-fired power at its proposed Cobre Panama mine site.
  • April 4th, 2011 – Minmetals Resources launches hostile takeover of Equinox Minerals – transaction value $6.3 billion.
  • April 11th, 2011 – Equinox rejects bid from Minmetals.
  • April 25th, 2011 – Barrick Gold launches friendly takeover of Equinox Minerals – transaction value $7.7 billion.
  • April 25th, 2011 – Barrick’s offer quashes Equinox takeover of Lundin Mining.
  • April 26th, 2011 – Minmetal Reources retracts hostile bid for Equinox Minerals.

Clear? In what has undoubtedly been one of the most interesting three and a half months in TSX history, investors and industry experts are still processing this flurry of events that have Barrick, the world’s largest gold mining company, making a move that will double its copper production. Some analysts feel, two years after taking the helm of Barrick Gold, President & CEO Aaron Regent has put his stamp on Barrick with a bold diversification that marks a return to his roots. Regent is former President of Falconbridge, which was acquired by Swiss mining giant Xstrata in 2006.

Both in sheer volume and dollar value, 2010 was a record year in mining mergers and acquisitions. But given the frantic start to 2011, it is very likely that this year will eclipse it. We look at two copper mining companies – Duluth Metals (TSX: DM) and PolyMet Mining (TSX: POM) – that one analyst thinks may be potential takeover candidates, in all likelihood by Chinese concerns. China consumes almost forty percent of the world’s copper production yet holds only 6.3 percent of the world’s copper reserves, the key reason it has been purchasing stakes in copper assets, particularly concentrate producers.

Duluth Metals is developing a copper-nickel-precious metals project in the mining district of the Mesabi Iron Range in northeastern Minnesota and is the number one pick of CIBC analyst Ian Parkinson. Duluth topped his list of more than 160 companies when ranked by attributes including share price and the size, quality and likely production cost of their assets. Duluth owns 60 percent of the Nokomis Project in Minnesota and has the highest-grade copper among the 25 companies in Parkinson’s shortlist of potential acquisition targets. The company, based in Toronto, ranked third in the size of its resources and has the third-lowest likely cash cost per pound according to the CIBC analyst’s calculations. On March 7th, 2011 Duluth expanded its position in the area when it acquired all of the issued and outstanding common shares of Franconia Minerals Corporation (TSX: FRA) that it did not already own in a transaction valued at approximately C$77 million. Shares of Duluth Metals closed today at $2.40 down $0.04.

Second on Parkinson’s list is Polymet Mining which also plans to mine in Minnesota. Based on the CIBC report, Polymet would have the lowest cash costs and the most production per dollar of capital expenditures among the companies reviewed. Polymet Mining also ranked #1 in the Diversified Metals & Mining industry as measured by the potential gains between the current stock price and the projected average analyst target. According to Zacks Investment Research, Polymet has a potential upside of 132.3% based on a price of $2.15 at the time of the report and an average consensus analyst price target of $4.99. Polymet Mining’s shares closed today at $1.90.

Yep, Sudbury once had a big penny too. This picture is from the Canadian Centennial Numismatic Park, which opened July 27, 1964.
Yep, Sudbury once had a big penny too. This picture is from the Canadian Centennial Numismatic Park, which opened July 27, 1964.

In the mining circles of Sudbury, Ontario it takes a lot to raise an eyebrow.

The resource business has been ingrained in the town for a long time. Long enough, in fact, that Sudbury’s founding dovetails with the very creation of the country. During construction of the the Canadian Pacific Railway in 1883, blasting revealed high concentrations of nickel-copper ore at what was then a small lumber camp on the edge of the Sudbury Basin. As the twentieth century dawned, The International Nickel Company sauntered into town. Today, INCO’s (now Vale Limited) Copper Cliff processing facility remains the largest nickel smelting operation in the world.

On Tuesday, Sudbury’s claim as one of the western world’s preeminent mining towns got a shot in the arm. Vancouver’s Quadra FNX (TSX:QUX) made what CEO Paul Bly called “one of the most significant discoveries made in the Sudbury district in the past 40 years”. A 43-101 report from the company’s Victoria project showed an inferred resource hat totaled 12.5 million tonnes grading 2.3 per cent copper, 2.2 per cent nickel and 8.5 grams per tonne total precious metals. Quadra FNX will begin to develop the project next year and an internal scoping study estimates the mine will begin producing in 2017.

Quadra FNX was formed in May, 2010, through the merger of Quadra Mining and FNX Mining. Geographically, the company is an unusually diverse mid-tier miner, with properties in the US, Chile and Greenland. Investors, however, are clearly excited by the singular prospect of the Victoria project. Today, shares of the company closed at $15.59, up more than ten percent, on heavy volume.

Those bullish on Quadra FNX’s prospects no doubt feel the company’s timing is exceptional; the price of copper has risen ten fold in the past decade, tacked on 30% in 2010, and recently broke through the $1,000 per tonne mark. The price of copper has risen so high, in fact, that it actually now costs The Royal Canadian Mint 1.7 cents to produce a penny.

Many analysts, predictably, point to demand from China. Li Yihuang, chairman of China’s largest copper producer Jiangxi, says he expects Chinese demand may grown by 7% this year.

Quadra FNX produced 224 million pounds of copper in 2010 and 148,000 ounces of precious group metals. In 2011, the company says it expects to produce 240 million pounds of copper, seven million pounds of payable nickel and 115,000 ounces of precious group metals.

Some fear that ex-army lieutenant and presidential candidate Ollanta Humala wants to nationalize Peru's wealth in Rambo-like fashion.

Ollanta Humala is not a name that many outside of South America are familiar with. In 2006, however, the Peruvian Nationalist actually won the first round in Peru’s 2006 presidential vote. Although Hugo Chavez openly backed him Humala was, ultimately, defeated in a runoff 53 per cent to 47 percent by current Peruvian President Alan Garcia.

Humala was back in the news this past Sunday when, yet again, he won the first round of Peru’s elections with 31.7 % of the vote. This sets the stage for another runoff which is scheduled for June 5th, this time against Keiko Fujimori, the daughter of incarcerated former President Alberto Fujimori. On 7 April 2009, Alberto Fujimori was convicted of human rights violations and sentenced to 25 years in prison for his role in killings and kidnappings by the Grupo Colina death squad during his government’s battle against leftist guerrillas in the 1990s.

Peruvian Nobel literature laureate Mario Vargas Llosa went as far as to call the Humala-Fujimori runoff option “a choice between AIDS and terminal cancer,” given their perceived anti-democratic tendencies. Vargas Llosa was defeated by Alberto Fujimori in Peru’s 1990 elections.

The Peru election results caught the financial markets off guard.  The cost of insuring Peru’s debt against default has jumped to a five-year high relative to neighboring Colombia, on concern that Ollanta Humala may win the presidential vote and expand government control over the economy. Marjorie Hernandez, a currency strategist at HSBC Holdings Plc in New York stated, “While everyone had expected this to be a non-event election, we were proven wrong. The market was not positioned that way. Everyone was long Peru everything.” Since Peru is ranked #5 on the world’s mining exploration list, the political instability is spilling over to the mining sector.

Compañía de Minas Buenaventura S.A. (NYSE: BVN), Peru’s largest publicly-traded mining company, with seven operating mines in the country, is being hit hard this week down $4.50 to $39.00 (10.3%).

Some Canadian listed Peruvian precious and base metal juniors have also been affected by the news. Candente Copper (TSX: DNT) is down $0.24 to $1.56 (13.3%), Tinka Resources (TSX-V: TK) is down $0.04 currently trading at $0.60 (6.3%); while Duran Ventures (TSX-V: DRV) has managed to buck the trend and is up half a cent.

Peru is the world’s largest silver producer, second in zinc, and sixth in gold production. Peruvian silver production totaled 135.8 million ounces in 2009. Meanwhile, zinc and gold production totaled 1.50 million tons and 6.42 million ounces, respectively. So when Humala talks about renegotiating mining contracts with foreign companies, investors naturally take note.

But Eduardo Suarez, a strategist at RBC Capital Markets in Toronto thinks the market may be overreacting.  In a report on March 29th, he estimates Humala’s chance of becoming president at about 20 percent, and believes recent declines in asset prices are overdone. Suarez says “the current sell-off should be seen as a buying opportunity, but timing is key.”

BC Environment Minister Murray Coell (above) and Forests, Mines and Lands Minister Pat Bell granted the environmental assessment certificate to the Northwest Transmission Line, which terminates 90km from Copper Fox's Schaft Creek property.
BC Environment Minister Murray Coell (above) and Forests, Mines and Lands Minister Pat Bell granted the environmental assessment certificate to the Northwest Transmission Line, which terminates 90km from Copper Fox's Schaft Creek property.

Copper Fox (TSXV:CUU) investors are use to playing the waiting game, but the company’s management just might be experts. Copper Fox listed on the TSX Venture in June 2004 to explore the potential of Schaft Creek, which the company believes is one one of the largest undeveloped copper deposits in North America. Guillermo Salazar, the company’s founding president and CEO actually secured the rights to the project in 2002.

Most of the uncertainty around Copper Fox has revolved around infrastructure. Shares of the company fell as low as $0.05 in late 2008 as investors were no doubt leery that the success of the company’s project was entirely dependent upon the BC Government’s approval of the Northwest Power Line, an approximately 344 km, 287 kV that terminated at Bob Quinn Lake, about 90km from Schaft Creek.

The approval of the Northwest Power Line was no slam dunk. BC Hydro had performed technical studies on the project for years and, although they said the new line would provide a reliable supply of clean power to potential industrial developments in the area, environmental opponents were vocal.

And then, on February 23rd, 2011 Copper Fox’s wait was over. The BC Environmental Assessment Office announced that the Northwest Transmission Line was finally granted an Environmental Assessment Certificate. Copper Fox put out a press release applauding the decision. Investors, in turn, applauded Copper Fox; shares of the company moved from $.96 cents on February 11th to $1.75 today.

The approval was a major win for Copper Fox, and long time investors must now feel like they were paid to wait. In 2002 the price of copper was $.60 cents a pound. On Friday, March 4th the base metal closed at $4.48 a pound.

Copper may be the textbook case for Chinese demand moving markets around the world; experts now estimate expecting a supply shortfall of about 500,000 tonnes next year. As CIBC World Markets analyst Ian Parkinson told the Globe and Mail last September 14th “In very simplistic terms, we believe if you’re long what China’s short, you’re in a good position.”

Cooper is in high demand in China because it has a wide range of applications in the construction and electronics industries. The metal is used in circuitry, wiring and contacts for computers, televisions and phones. Cooper Fox estimates that there are 7.8 billion of lbs measured and indicated copper at Schaft Creek.

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