There is one copper play Australian investors seem to have forgotten about – one which BHP and Newcrest are all over – and it could very well change the future global supply / demand equation for the red metal.
As we have been pointing out for a while, thanks to the gathering renewables boom, copper is now a hot commodity (along with nickel, lithium cobalt and aluminium) and even though prices this week have fallen sharply from Monday’s peak of more than $US4.70 a pound in trading on Comex to just over $US4.56 a pound on Thursday, it doesn’t disguise the fact that miners of all sizes want the metal.
South 32 and Sandfire Resources have done $A2 billion deals to either enter or expand their involvement with the metal, Newcrest has made it clear its 8-year expansion plan here in Australia and in Canada has a copper tinge to it, while maintaining its gold output, OZ Minerals keeps finding and proving up deposits in South Australia and Brazil.
BHP has control of the huge Escondida mine in Chile, plus two other mines in that country, Olympic Dam and Oak Dam in South Australia and prospects nearby in the same state and in the Northern Territory.
Investors have had their attention diverted by BHP and Andrew Forrest slugging it out for control of the small Canadian explorer, Noront Resources and its highly prospective nickel, copper, gold, PGE metals prospects in northern Ontario.
And it’s a similar story among smaller explorers where the rush to find copper (and report it in drilling results) has reached almost frenetic levels. Chalice Mining would be the standout with its emerging nickel, copper PGE metals Julimar find north east of Perth that will soon get an initial resource figure put on it.
But there is one Australian explorer – Brisbane-based but not listed here but in London and Canada – and that’s SolGold.
And its two top shareholders are Newcrest and BHP (and isn’t there a delightful irony here – Newcrest is the modern version of the old BHP Gold which still houses the Telfer gold (and a little copper) mine in the East Pilbara (Rio Tinto’s Winu is nearby). Newcrest and BHP together control more than 27% of SolGold’s issued shares.
SolGold owns 85% of the world’s most exciting copper / gold / silver prospect in northern Ecuador called Cascabel – and it is big – the same sort of deposit as Escondida to the south in northern Chile, but richer because of its gold and silver content.
Cascabel is located on northern section of the Andean Copper Belt, which accounts for nearly half of the world’s copper production (especially in Chile and Peru).
The first prospect at Cascabel is known as the Alpala deposit and according to SolGold its huge – the deposit comprises 2.663 billion tonnes at 0.53% Cu equivalent in the measured and indicated resource categories, for a contained metal content of 9.9 million tonnes of copper, 21.7 million ounces of gold and 92.2 million ounces of silver.
The SolGold website says “Alpala has produced some of the greatest drill hole intercepts in porphyry copper-gold exploration history, as exemplified by Hole 12 (CSD-16-012) returning 1560m grading 0.59% copper and 0.54 g/t gold including, 1044m grading 0.74% copper and 0.54 g/t gold.”
That’s 1,560 metres of continues mineralisation – or put another way just over 31 Olympic size (50 metres long) pools lain back-to-back.
The TAM deposit lies approximately 3 km north of the Alpala deposit, the main target in the Cascabel concession.
Ecuador’s Energy Ministry said in a 2019 statement that Alpala “could become the largest underground silver mine, third-largest gold and sixth-largest copper in the world.”
In its first 25 years, Alpala would have an annual production of around 207,000 thousand tonnes of copper, 438,000 ounces of gold and 1.4 million ounces of silver.
This week SolGold released first estimates of the size of a second deposit at Cascabel estimate called Tandayama-Ameríca (TAM). It’s lower grade than Alpala, but large all the same.
SolGold says the “independently verified” update provides for a maiden resource estimate (open pit and underground) of the TAM deposit, showing 233 million tonnes at 0.33% Cu equivalent containing 530,000 tonnes of copper Mt Cu and 1.2 million ounces of gold in the indicated category, plus 197 million tonnes at 0.39% Cu equivalent containing 520,000 tonnes of copper and 1.24 million ounces of gold inferred.
SolGold said this estimate is based on assays from the first 18 holes drilled at the TAM deposit. Drilling has continued during the estimation process, and visual mineralization from an additional 12 holes suggests there is potential for future resource growth with the highest-grade mineralization encountered thus far remains open at depth.
“The TAM deposit adds further copper and gold mineralization to Alpala’s large metal inventory at the Cascabel project,” SolGold’s interim CEO Keith Marshall said in a statement.
“The resource offers optionality and the potential to generate economic ore earlier, which will complement the high-grade Alpala underground ore.”
The company also said it expects to receive a briefing from the project committee on the project’s pre-feasibility study later this month.
In September SolGold said intends to shed 10 of the 72 exploration concessions held within its four subsidiaries in Ecuador which will lower its future exploration commitments by around $US75 million.
There are several other prospects in the Cascabel area called Blanca, Nieves and Rio Mira.
Earlier this year SolGold struck a truce in a fight with Canadian shareholder Cornerstone Capital Resources to allow the Alpala prospect to proceed to the mining stage by 2025.
The truce ended two years of shouting between SolGold management and Cornerstone, the company’s 4th largest shareholder and the vendor of the 85% stake in Cascabel (Cornerstone retains 15%) now held by SolGold.
“The parties will explore and evaluate a range of strategic and financing options focused on maximizing value for their respective shareholders with respect to the Cascabel Project,” SolGold said in a release in June.
Mining analysts said the truce was forced on the company by BHP and Newcrest which had participated in SolGold’s latest $US73.8 million fundraising in April.