(MENAFN - ProactiveInvestors) Corp (CSE:CBK) sees itself as a transactional depository of established copper projects distinguishing itself from other mining developers with its culture of “owner-operators” and low burn rate business model.
The company which listed on the Canadian Securities Exchange in November after acquiring the assets of two subsidiaries is geared for maximum optionality to moves in the copper price on a per pound basis according to executive chairman Gianni Kovacevic who has a background in electrical studies and recently published a novel on smart investing in green energy.
“The kind of company me and my investors wanted to have exposure to did not exist so we created something for ourselves and for the market in general. You can look at us as an aggregator of copper projects or pounds in the ground if you will” says Kovacevic the author of “My Electrician Drives a Porsche”
has plans to be aggressive in 2015 with several projects already under consideration for accretive inventory additions. It has about $800000 in cash but Kovacevic says most of the company’s costs for 2015 are already sunk. The current bank balance takes the company well into 2016.
“We don’t have a conventional office as most of our team already has exiting arrangements; we’re very lean. The only major expense is our annual lease payments for our projects which are modest” he explains adding that no additional capital will be required until the middle of next year and even then it will be modest.
The company owns two flagship assets at the moment with the 100 percent owned Contact project in northeastern Nevada and the Pyramid property in Alaska where it has the option to also earn a 100 percent interest.
Contact is a fully engineered project with about $15 million spent already to bring it to its advanced stage. It has about 1.23 billion pounds of copper in the measured and indicated category with another 393 million pounds of inferred resources. “There are no work commitments or obligations there but it remains open to exploration” says Copper Bank’s executive chairman.
A pre-feasibility study which was released in late 2013 showed a project that produces 49 million pounds of copper per year with an after-tax net present value of $76 million and an IRR of 21 percent using a copper price of $3.05 per pound. At a copper price of $3.20 per pound NPV jumps to $107 million and IRR rises to 25.9 percent. Total initial capital was pegged at $189 million.
“We feel there could be engineering enhancements as well” adds Kovacevic.
For the moment though ’s plans are to keep the project “in good standing” and look internally at further enhancing the “already favourable” engineering and metallurgy meaning the review would be completed at little cost to the company -- quite a benefit in the current commodity price environment.
“All the pounds are leachable which means lower capex and opex as copper cathode would be produced on site. It’s a very special type of deposit that has a far lower capital intensity requirement to put into production.”
At Contact ore would be crushed in a two-stage process and then heap leached with sulfuric acid solution. Copper would then be recovered in a solvent extraction-electrowinning plant to produce copper cathodes on site with metallurgy indicating modest acid consumption of 17 lbs per tonne and a recovery rate of approximately 76 percent.
Meanwhile ’s Pyramid project in Alaska is at an earlier stage of development and the company would entertain a joint venture opportunity to conduct additional work. The property is located on Native-owned lands on the Aleutian islands of Alaska a region that represents a classic “island-arc volcanic setting” that is prospective for both epithermal gold and porphyry copper-gold systems said .
The project has an inferred NI 43-101 compliant resource of 1.34 billion pounds of copper 74 million pounds of molybdenum and some 488000 ounces of gold. The resource is dated as of May 2013 and is based on the drilling conducted by Antofagasta (one of ’s shareholders) in 2011 and 2012.
“This is an exciting delineation play” says Kovacevic who adds that the San Diego Bay prospect which sits just 7 km east of Pyramid is the largest geological anomaly that ’s CEO Robert McLeod has ever seen in his mining career at 60 square km.
“We’re looking to joint venture [the property] to enhance and increase the size and confidence of the resource following up on the first two rounds of successful drilling.”
Kovacevic who is one of the largest single shareholders of says he is looking to increase his position in the company as it continues to aggressively seek accretive inventory additions and/or projects that could offer shareholders “cost-free” exploration opportunities.
Given his significant holding Kovacevic is mindful of adding assets that are not very accretive to current shareholders and his desire to increase his stake demonstrates his confidence in an overall alignment with the company’s goals.
Despite the recent slump in copper prices Kovacevic remains positive on the metal. “Oil is energy; energy without fossil fuels is electricity and electricity demands copper.”
He sees a supply deficit in the market happening in the next few years as “major producers do not have an incentive to build production beyond 2017/2018 unless the copper price is significantly higher.”
“The market will continue to be very tight and it could surprise people how tight it will be” Kovacevic opines.
Demand however is reliable says the chairman with continued strength from China seen even in 2014. “I don’t see a situation where we wouldn’t have demand growth on a global scale” he explains.
Kovacevic is not alone in his view with also finding favour in the red metal in spite of a 6 percent correction last week. The investment bank said there was no evidence of impaired trade or a collapse in demand and therefore remains bullish on the copper outlook citing copper fundamentals that are largely unchanged.
Like Kovacevic Morgan says there is a modest surplus at the moment but sees the market moving into a deficit which will likely shore up prices. There is not enough new supply coming to the market to satisfy even flat demand growth according to the analysts.
Copper prices have been dragged down by oil a commodity which was the victim of a 50 percent collapse in 2014. But and others that are seeking to buy copper on the cheap remain optimistic on the metal which is used as a conductor of heat and electricity as well as a building material and as a constituent of various metal alloys.
The investment bank reiterated its copper price forecast of $7049 a tonne by the end of the year with expectations for an “oil-led” price recovery. Copper is currently trading around $5727.50 a tonne on the London Metals Exchange.
With copper prices where they are the metal’s strong fundamentals mean the time could not be more perfect for to acquire value-add copper assets from juniors that are struggling to stay afloat positioning the company for success as soon as prices revive.