Peak makes its mark in new copper province as prices set to go ‘much higher than anyone expects’
Peak is strengthening its presence in a newly identified and under-explored emerging copper province in WA at the same time as macroeconomic factors and strikes at two large copper mines are pushing the price of red metal up.
Earlier in May, copper hit an all-time high of US $ 10,724 ($ 13,848) per tonne on the London Metal Exchange before falling back below US $ 9,800 per tonne.
However, the sudden ban on the export of cobalt and copper concentrate from Katanga province in the Democratic Republic of Congo (DRC) and workers leaving their jobs at BHP’s Spence and Escondida mines in Chile have reversed the downward trajectory of prices.
Both moves increase pressure on the supply side at a time when major discoveries are scarce.
This led New York-based resource fund manager Goehring & Rozencwajg to an overwhelmingly optimistic prediction that copper will hit over $ 33,000 a tonne by the end of this decade.
Managing partners Leigh Goehring and Adam Rozencwajg recently said that the previous copper bull market took place between 2001 and 2011 and saw prices increase sevenfold from US $ 0.60 to US $ 4.62 per pound.
âWe have fully embraced this copper bull market and maintained significant exposure throughout the rally,â they said.
âToday’s fundamentals are even more optimistic. We would not be surprised to see copper prices rise a minimum of seven times again before this bull market ends.
Goehring & Rozencwajg argue that the main driver of this price dynamic is the hope that the growth in supply from copper mines will stop this decade.
âThe number of new, world-class discoveries coming online will drop dramatically and the problems of depletion at existing mines will accelerate,â they said.
âAdditionally, the geological constraints surrounding copper porphyry deposits, a topic few analysts and investors understand, will contribute to the problems.
âStagnant supply from copper mines, which is already facing strong demand, will push copper prices much higher than expected.
This is good news for copper explorers like Peak Minerals (ASX: PUA), which has secured a first-mover advantage in a neglected emerging copper province in Western Australia.
Peak was already advancing what is becoming a large copper sulfide system in the Meekatharra region. But shortly after reporting the early success of its Copper Hills project, the company unveiled an exclusive deal to acquire more promising land around the project.
Peak acquires CU2 WA, which has a portfolio of 33 base and precious metal properties spanning approximately 225 km2 in the Meekatharra region, an area previously only explored primarily for gold and titanium-vanadium mineralization.
Peak Minerals tenure including acquisition and occupation of the farm.
The acquisition gives Peak control of a significant ground position in an under-explored region that has shown similarities to OZ Minerals’ Succoth copper (ASX: OZL) and Nebo-Babel nickel-copper prospects in the province of Musgrave in Western Australia. The Nebo and Babel deposits extend over 5 km.
An update of the pre-feasibility study on the Nebo and Babel deposits published in December of last year highlighted the potential of an operation producing 32,000 tonnes of copper and 26,000 tonnes of nickel each year for at least under 26 years old. It is estimated to generate around $ 220 million in average net cash flow each year.
Exploration results for the CU2 buildings that Peak is acquiring indicate mineralized gabbroic intrusives throughout the project area similar to those at Copper Hills and Lady Alma where copper sulphide mineralization has been confirmed.
Previous limited exploration for copper mineralization has been completed on the CU2 buildings, but over the next several months Peak will undertake extensive field exploration to determine the potential of the province.
This article was developed in collaboration with Peak Minerals, a Stockhead advertiser at the time of publication.
This article is not advice on financial products. You should consider getting independent advice before making any financial decisions.