A Long-Lived Structural Bull Market In Copper And A Copper Junior That Offers Three Ways To Win Big
Copper is one of the leaders of the emerging commodities bull market. The strong bullish trend in the price of the red metal is underpinned by surging demand from the production of electric vehicles and the modernization of the global electric grid. Simply stated, there is no “decarbonization” without copper, without lots of copper. While controversial in its assessment, Goldman Sachs have dubbed copper to be “the new oil” due to its critical role in the green energy revolution. More than 70% of the world’s copper is used in applications that deliver electricity, and electric vehicles use up to 4x as much copper as internal combustion engines.
I don’t need to rehash the bullish demand case for copper, as that has been analyzed extensively by many credible sources. However, the supply side of the copper equation is much less well understood, and actually much more alarming and bullish for the copper price outlook. Goldman Sachs sees copper reaching US$6.80 per pound by 2025 as global mine supply falls short of meeting surging global demand.
A dearth of new copper discoveries and a decade of relatively light expenditures on exploration by the copper industry have left the global copper market facing a perfect storm: Surging demand intersecting a global copper mining industry that is struggling to keep production level.
Source: Goehring & Rocenzwacg
Global copper demand is estimated to reach more than 28 million tonnes in 2021 with total copper mine production worldwide at barely more than 20 million tonnes:
This leaves the global copper market in a supply deficit with much of the gap being made up by scrap supply. Bank of America expects the copper market to remain in deficit in 2022 before a rebalance takes place in 2023/24, and then the market moves into a deeper deficit in 2025 and beyond.
Major global mining companies are making big investments in copper projects that could come online over the next decade and help to fill some of the project supply deficit. A couple of these recent investments include:
Newmont Mining’s acquisition of GT Gold for C$400 million. GT Gold’s Saddle North Deposit hosts 298 million metric tons of indicated resource averaging 0.28% (1.81 billion pounds) copper, 0.36 grams per metric ton (3.47 million ounces) gold, and 0.8 g/t (7.58 million oz) silver; plus 543 million metric tons of inferred resource averaging 0.25% (2.98 billion lb) copper, 0.31 g/t (5.46 million oz) gold, and 0.7 g/t (11.64 million oz) silver.
Rio Tinto’s C$25.6 million investment in Western Copper & Gold (TSX:WRN). Western Copper’s Casino Project is a massive porphyry style copper/gold project with average copper grades of roughly .5% Cu and gold grades .29 grams/tonne gold.
In Western Copper’s investor presentation there is a slide that demonstrates the looming deficit facing the copper market:
Mining companies are beginning to make the investments that will be required in order to meet growing demand over the next couple of decades. Grassroots early stage exploration will be critical in making the big discoveries required to meet global copper demand in 2030 and beyond.
One junior copper explorer that is working hard across two continents to make a big copper discovery is Libero Copper & Gold (TSX-V:LBC, OTC:LBCMF). Libero has two projects in South America (Esperanza in Argentina and Mocoa in Colombia), and two projects in the Golden Triangle of British Columbia (Big Red and Big Bulk). Esperanza and Mocoa are both very attractive projects with impressive historic drill intercepts, Mocoa even has a significant resource totaling 4.6 billion pounds of copper and 511 million pounds of molybdenum.
Esperanza boasts a 2018 drill intercept that graded .78% copper-equivalent over 387, including 232 meters of 1.00% copper-equivalent. In a recent news release Libero pointed out the strong similarities between Esperanza and Filo Mining’s Filo Del Sol Project in the same province of Argentina (San Juan). Filo recently reported one of the most impressive drill intercepts seen in years in the entire mining sector; 858 meters of 1.80% copper.
Filo’s May 2019 drill hole that intercepted 548 meters of .4% copper and .78 grams/tonne gold tested the top of the system, much like the 2018 drill hole at Esperanza:
The similarities between Esperanza and Filo Del Sol are extensive:
Part of the Late Oligocene to Miocene Porphyry-Epithermal Belt in Argentina.
Long intervals of strong copper mineralization (> 200 m of > 1% Cueq).
Host telescoping systems and the juxtaposition of multiple mineralizing systems, increasing likelihood that the porphyry system has a substantial vertical component.
Mafic to intermediate composition host rocks (reactive).
Large alteration footprints over multi-km2.
Intense alteration – copper mineralization is present in distal facies.
The top of the system is preserved including advanced argillic lithocap facies.
Strong development of dense stockwork-style veins (e.g. A and D-type veins).
Mocoa is located in the same Jurassic porphyry belt and has many similarities with discoveries in Ecuador, including Corriente’s Mirador mine which was sold for $690 million, and Solaris’ Waritza project which currently has a valuation over $1 billion. Solaris released drill results on May 26th, including a kilometer of 0.63% Cu and 0.02% Mo. Drilling at Mocoa includes 634 meters of 0.49% Cu and 0.06% Mo ending in mineralization.
Both Mocoa and Esperanza are projects that could be “company makers” for Libero and the company is working hard on the community relations front to receive drill permits for both projects.
In the meantime, Libero will be focused on the beginning of a summer drill program at its 100% owned Big Red Copper Porphyry Project in British Columbia’s Golden Triangle. Big Red is a new greenfield porphyry copper discovery that was made in 2020 with five drill holes that were mineralized from surface to the end of the holes at the Terry Target. Highlight intersections include 70.1 meters grading .41% copper, including 12.19 meters at 1.02% copper AND 80.77 meters grading .36% copper, including 13.72 meters at .71% copper.
It’s important to understand that Libero had considerable success in its first drill program at Big Red, and the discovery holes only clipped the edge of the geophysical and geochemical target.
Fieldwork at Big Red is planned to commence in the next few weeks, Libero will also be launching a 3D IP Survey concurrently. This will be followed by a 5,000 meter diamond drill program at Big Red. The 2020 drilling at Big Red was limited by the RC drill, however, the diamond drill being used in this year’s program will be able to test the depth extent of the mineralization at Big Red (500+ meter holes).
At Big Red, porphyry copper targets are peripheral to a distinct large magnetic-high feature and coincide with a radiometric potassium anomaly, copper, gold, silver, and molybdenum geochemical anomalies, and a mapped Jurassic-aged porphyry intrusion. Libero will begin by drilling right into the center of the magnetic-low feature.
The closest projects physically and geologically to Big Red are Newmont’s Saddle North deposit (which they just acquired when purchasing GT Gold) and Newcrest’s Red Chris mine.
The phase 2 drill program at Big Red is very exciting because Libero has greatly expanded its understanding of this project, and there is considerable potential for a new discovery to be made with deeper drilling into the heart of the geophysical anomaly. Esperanza and Mocoa offer the icing on the cake for Libero shareholders, with the receipt of drill permits at either/both project(s) offering a significant bullish catalyst.
Investing in early stage junior exploration companies carries considerable risks, however, sometimes the potential rewards significantly outweigh the downside risks – I believe this is one of those times. I am a Libero shareholder and I plan to continue to accumulate additional shares as drilling gets underway at Big Red in the coming weeks.
Disclosure: Author owns LBC.V shares at the time of publishing and may choose to buy or sell at any time without notice.
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