Striking copper
The former CEO of gold mining junior Pan African Resources, Jan Nelson, is about to wade back into the listed fray with copper processing and mining company Copper 360. This comes after a hiatus in his career that included running a surf shop and establishing a microbrewery in Paternoster. The mine has netted itself most of the copper prospect in the Northern Cape, a once storied region for the metal, and is set to debut on the JSE’s AltX at the end of the month. He spoke to the FM.
How did Copper 360 come about?
JN: We entered the area about five years ago (myself, Stephan du Plessis and Rupert Smith, who are on the board). We were looking for base metal mining assets to build a company, and were directed to the Northern Cape, where we met Shirley Hayes, who had the SHiP copper company. She’s got a big tenement probably about 70% of the prospect ground.
Through Hayes we met Basie Fourie, who owned the O’okiep Copper Co. And when we walked around we noticed that the covering rocks were all white. We dug a little and saw that there were a lot of copper oxides, covered in waste material. No-one had really bothered with it. We did a deal with Fourie, Hayes joined in and we formed the Cape Copper Oxide Co, which acquired the rights to the oxides.
Subsequent to that we raised capital and built a solvent extraction and electro-winning plant we crush the oxides (there’s no mining), mill them and mix them with acid. We put the mixture through a solvent extraction plant, after which we make 1m-sized plates of A-grade copper.
We thought of listing, so we formed Big Tree Copper. Hayes had applied for a mining right on 19,000ha of property 12 mines that were predeveloped, with a huge data set that came from former owners Newmont and Gold Fields. We thought: why don’t we combine the two companies? So we agreed on a ratio and decided to change the name of Big Tree Copper to Copper 360, which would own the Cape Copper Oxide Co and SHiP. That company is listing at the end of the month.
Why are you listing?
JN: Coronation is one of the funds that came in about two years ago and liked the business because it processes the copper dumps and neutralises them we’ve got green credentials, as we’re cleaning up the environment. One of Coronation’s conditions was that we had to list. But we’re also using the listing as a platform to raise capital about R260m which will enable us to grow from about 1,200t of copper a year in the next three years to about 8,000t.
Why did the big guys let go of all these assets in the first place? Were they too small for these companies?
JN: The first mineral “discovery” was made here by Simon van der Stel in 1658, but the local Khoi people mined copper 300 years before that. Newmont eventually consolidated all the small companies in 1937, when the O’okiep Copper Co was formed. In the 1980s Newmont sold the company to Gold Fields because it wanted to be gold focused, and later on it pulled out because of apartheid.
Gold Fields mined it for a while, but then the bigger operations got to the end of their lives and the copper price collapsed. Gold Fields sold it to Metorex, which bought it because it needed the plant for the Ruashi operations in the DRC [Democratic Republic of Congo]. It then sold the company to Fourie.
Hayes saw the potential 10 years ago; she’s probably one of the first women in South Africa who had a blast ticket. She saw that copper would become a critical metal, and so had already begun to develop the assets 14 years ago. She bought the data sets, and the mining right was granted on October 31 2022.
Is it a hardscrabble area to mine? And is it difficult getting the copper to market?
JN: No. The infrastructure is very good; the area has some of the best roads, all the way up. Vedanta trucks all its ore from north of us down to Walvis Bay and Cape Town. There isn’t any rail. The municipality has worked with us and there are periods when it does not loadshed us. We’ve got a good, skilled labour force and have offtake agreements already. Our copper is fetched at the mine gate, where ownership is transferred, and we get paid the next day.
We’re not making enough copper for the demand that is there. You could call us the DRD of copper. Our total costs are below $4,000 a ton, all in, and we’re selling at about $9,400 a ton. We’re at about R350m of earnings before interest, tax, depreciation and amortisation, and that will go up to about R1bn in two years’ time.
Do you really think copper has a golden era ahead of it?
JN: Well, I think annual copper production is going to fall from about
30Mt in the next 10 years to 10Mt. If you just take electric vehicles [EVs], Europe has to hit its 30% target by 2030, which means you will have another 5-million EVs on the road, and each EV consumes 85kg of copper, so that’s 42Mt of copper. That’s excluding turbines, which use more than 30t of copper. Then you’ve got the infrastructure push in America and China — so there just isn’t enough copper, and there’s no metal that can replace it.
Because we’re low cost, even when copper fell we made a lot of money. We think the copper price will stay between $10,000 a ton and $12,000 a ton. But it might go to $14,000 or even $16,000. I’m not sure it will go to $18,000, but America is considering putting copper on its critical metals list.
Also, nobody’s done exploration for copper. The big Chilean open pits have come to the end of their lives; they’ve got to go underground and their grades are 0.2%; that’s only feasible if you’re mining 50Mt at surface.
About three weeks ago, the total copper stock in the world was enough for about three days.
All I can think is: don’t tell South Africa’s copper cable thieves.
JN: That’s why President Cyril Ramaphosa has stopped the export of scrap — exactly for that reason. Our trucks travel under armed escort. Where we are, copper is high grade, so we’re competing with deposits as good as those in the DRC.
Everybody has forgotten about this copper district. The difficulty is that South Africa has a perception problem. People would rather invest in the DRC, which I find ridiculous. We’ve got an Eskom problem, for example, but we still have power. In the DRC they don’t have power. And the corruption there is bad. Despite all the things that are said about South Africa, do you know that no mineral right has ever been taken away by the state? And the Minerals Council has successfully challenged the mineral resources & energy department in court. So we still have a system that is operational.
And if you want to build a mine, you need infrastructure. I’ve worked in a few other African countries and none of them has the infrastructure and skills that South Africa has. But because of the bad perception, nobody wants to invest here. If you look at the maps of the copper districts of the world, this was a major one — but it’s not even on the current map. That’s good for us, because we have no competition in the area; and now we own virtually all of it.
Is this what floats your boat? Taking an asset that has been overlooked and bringing it to the public? A little like what happened at Pan African Resources, say?
JN: We’ve got a helluva nice team and it’s about building something. And in addition to that, it’s to uplift communities. We will probably be the reason that towns like
Concordia and O’Kiep will become some of the most prosperous ones in the country, and the social upliftment involved in that really gets me going. I mean, these are some of the poorest communities in South Africa, but if you come back in five years’ time they will be some of the richest. There will be a thriving industry and big mining operations.
Have you already got commitments from investors with regard to the capital you want to raise?
JN: We’ve pretty much secured most of the money.
What about getting smaller retail investors in? That can often be a problem with juniors the story is exciting, but no-one can get any stock.
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JN: We’ve got a plan to make stock available for the retail shareholders after listing, but I think initially liquidity is not going to be that good.
Are you happy to go back into the listed environment?
JN: Yes. We’ve had a very good experience with the JSE, and the listed space gives us access to more capital — the ability for the share price to appreciate for the founders and the employees — and also visibility on the market, which is good for us.