Two copper companies offer opportunity to benefit from future copper demand

The metal copper is often referred to as Dr. Copper, based on the fact that copper demand tells us if the global economy is growing or stalled.

Used in everything from housing construction, electronics to vehicle manufacturing, copper is an early warning barometer for the economy.

Between March 2020 and May 2021 London copper prices increased 130 per cent on a rising barometer. Copper price has come down only seven per cent since the peak.

The World Bank and International Monetary Fund predict a long-term average copper price of $3.85US a pound down from the current $4.38.

Several factors drove up the price of copper — economic health to sustainable energy production. Future demand will be driven by electronics/computing, increased need for electric vehicles and the fact China’s copper reserves are running down while consumption grows.

Bizworld will review two Canadian copper miners taking advantage of the growing copper demand.

Copper Mountain Mining Corporation has an open pit mine near Princeton, B.C. with 21 years life remaining and potential for exploration. Japan’s Mitsubishi owns 25 per cent of the mine.

Copper Mountain is in the midst of an expansion from 45,000 tonnes of ore per day to 65,000 tonnes. Production by the company will increase from 100 million pounds of copper equivalent to 130 million pounds.

Actual copper productions will be just over 110 million pounds with gold and silver making up the remainder,

A second project, the 100 per cent owned Eva mine in Queensland, Australia is under construction with late 2024 commissioning expected.

The open pit Eva mine will produce 100 million pounds of copper annually and 14,000 ounces of gold with an 11year mine life.

All-in operating costs of both mines will range from an estimated $1.90 to $2 a pound, leaving a nice profit margin.

Copper Mountain trades at $3.89 a share.

Kutcho Copper, priced at 87 cents a share, is building a copper/zinc mine in the “Golden Triangle” of northeastern B.C. with close access to a port and other infrastructure.

The open pit mine will cost $483 million with an 11-year mine life and potential for finding more ore deposits. Production cost is estimated at $1.80 per pound with credit from silver and gold.

Over the mine’s life production will be 533 million pounds of copper, 843 million pounds of zinc, 10.6 million ounces of silver and 129,000 ounces of gold.

Initially copper production will be 45 million pounds a year with zinc at 65 million pounds, making the project somewhat dependent on zinc prices.

Ten per cent of Kutchko is owned by Capstone Copper, a Yukon producer with 7.5 per cent owned by Wheaton Precious Metals.

Wheaton has taken a royalty on production in exchange for $100 million. That deal will reduce Kutchko’s need to sell more shares to finance the project for mining startup in late 2024.

Both these companies are worth putting on the watch list. For patient investors they could become quite rewarding.

CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.

Ron Walter can be reached at ronjoy@ sasktel.net