The junior copper stocks we’ve identified have soared more than 250% so far this year
SmallCapPower | December 21, 2016: Copper was having a rather ho-hum year in 2016 until it got a jolt from the election of Donald Trump as President of the United States. Listening to his campaign rhetoric, there’s the perception that President-Elect Trump would try and push through as much US$1 trillion in infrastructure spending, which would require substantial amounts of copper. There are other possible catalysts though. TD Securities, Inc. analyst Craig Hutchison, for example, noted recently that he believes the copper market will shift into a deficit position in 2017, after six consecutive years of surpluses, which should be supported by sustained demand from China, and the market’s more serious consideration of new mine supply being absorbed in 2018/2019, and fewer new operations entering the market.
A rising copper price has benefitted most copper stocks this year, but the juniors tend to have the greatest leverage to the underlying commodity price. Today, we’ve identified a few junior copper stocks that have made big upward moves in 2016.
Northern Dynasty Minerals Ltd. (TSX: NDM) +462% YTD
Northern Dynasty’s principal asset is the Pebble Project in southwest Alaska, which is considered one of the largest undeveloped copper/gold projects in the world. The Measured & Indicated resource is estimated at 57 billion pounds of copper and 70 million ounces of gold, with 25 billion pounds of copper and 37 million ounces of gold in the Inferred category.
Standing in the Company’s way: a long-standing impasse with the U.S. Environmental Protection Agency. Northern Dynasty’s stock price has nearly doubled since Donald Trump’s victory, in part due to the belief that a Trump administration would ease environmental regulations in favour of development. The Company asserts that more than US$750 million has been invested in the Pebble Project to date.
Chilean Metals Inc. (TSXV: CMX): +400% YTD
Chilean Metals is exploring for Iron Oxide Copper and Gold (IOCG) targets in Chile and Nova Scotia. The Company’s Zulema Property in Chile is located just 15 kilometers from the Candelaria Mine that Lundin Mining bought for more than $2 billion two years ago. Chilean Metals also has a 3% NSR on Teck Resources’ Copaquire Copper-Molybdenum Property, which could be worth millions. Teck will likely need to develop Copaquire, as its adjoining Quebrada Blanca mine will deplete its resource of leachable ore by 2019 at current production and resource levels. Teck Resources has the option to repurchase a 1% NSR for C$3 million, leaving Chilean Metals with a 2% NSR.
Foran Mining Corporation (TSXV: FOM): +343% YTD
Foran is developing the McIlvenna Bay copper-zinc deposit as part of the Hanson Lake Camp in Saskatchewan. The Company produced a Preliminary Economic Assessment (PEA) back in the Fall of 2014, which estimated life of mine production at 804.7 million pounds of zinc, and 513.7 million pounds of copper, and pre-production CapEx of $249 million, using a model US$3.08/lb copper price, and US$1.06/lb zinc price.
Ivanhoe Mines (TSX: IVN) +298%
Ivanhoe is advancing three principal projects: the Kamoa-Kakula copper project and the Kipushi zinc-copper-lead-germanium mine in the Democratic Republic of Congo, as well as the Platreef platinum-palladium-gold-nickel-copper discovery in South Africa. Kakula’s Indicated Resource totals 192 million tonnes at a grade of 3.45% copper, containing 14.6 billion pounds of copper at a 1% copper cut-off. A recent PEA estimates cash costs of US$0.37/lb copper for the first 10 years of operations at Kakula.
The combined Kamoa-Kakula Indicated Mineral Resource totals 944 million tonnes grading 2.83% copper, containing 58.9 billion pounds of copper, at a 1.0% copper cut-off. Investors are betting on the past successes of Executive Chairman Robert Friedland, one of the biggest names in the mining business.
Ubika Research/SmallCapPower has received compensation from Chilean Metals to provide analyst research coverage. For full disclosure please visit here >>