A supercycle in copper market is emerging, experts say. Such an event, a prolonged duration of rising prices, would be a boon to copper explorer-developers and those invested in them.
"Investing in juniors has historically been a good way to leverage rising metals prices," Ahead of the Herd's Richard Mills wrote in a June 16 article. "Juniors own the world's future mines."
Soaring Demand, Constrained Supply
Copper is critical to the green energy transition, specifically its use in the clean energy, artificial intelligence (AI) and cryptocurrency industries. It stands out for its conductivity, corrosion resistance, longevity and ductility. As such, the red metal is as essential to meeting the world's future power needs as natural gas is, U.S. Global Investors purported in a June 3 article.
Thus, demand for copper is soaring, driven in large part by the growing need for electric vehicle charging stations and AI data centers, according to Seeking Alpha's Erik Norland. Countries looking to secure vital materials is another contributor.
Growth in copper production has been "extremely slow" and has lagged that of all other ferrous and base metals, Nordik added.
Several factors, including "years of underdevelopment, expanding protectionist policy measures and a continued preference among copper producers to grow by mergers and acquisitions rather than greenfield development," have led to copper's currently constrained supply, Sprott asserted in a June 11 Energy Transition Materials Monthly article. Today, copper supply is facing numerous challenges, including technical mining difficulties, decreasing ore quality (leading to increasing capital and operating costs) and particularly in the copper-rich locales of Latin America and Africa, geopolitical tensions and restrictive environmental mandates.
Given the rising demand, 115% more copper than has ever been mined needs to be produced in the next three decades, U.S. Global pointed out.
"The International Energy Forum warns that under current policy settings, it's unlikely there will be sufficient new mines to achieve 100% EV adoption by 2035," the investment manager wrote.
Evidence A Supercycle Has Begun
Since the start of 2024, the copper price increased about 25% and hit its highest peak ever of US$5.20 per pound in May, resulting from long-term demand forecasts and supply constraints, wrote U.S. Global Investors. This has made copper "a highly attractive commodity."
As well, reported Sprott, copper mining stocks moved with the copper price, gaining 5.15% and reaching all-time highs last month, for a year-to-date increase of 33.79%. Copper junior mining stocks also did well in May, gaining 3.91%.
Haywood Securities pointed out in a June 13 report that over the past 12 months, equity stocks benefited from rising copper prices more than the metal did. During that period, whereas the copper price rose 17.5%, copper stocks rose 27.6% per the Copper Miner Exchange Traded Fund.
Since copper hit its peak in early June, it experienced a now completed short and sharp correction that reversed the previous heavily overbought condition entirely and returned the price to its rising 50-day moving average, reported Technical Analyst Clive Maund in a June 6 report.
Looking forward, he added, "the larger uptrend looks set to resume. This will result in many copper stocks and polymetallic stocks advancing too."
Newsletter Publisher Mills asserted that copper (and other commodities) will strengthen once the U.S. Federal Reserve begins cutting real interest rates and the U.S. dollar weakens as a result. Like Sprott, he too believes copper is entering a supercycle, supported by the demand surge, the supply crunch, resource nationalism, environmental concerns and inflation. He wrote that these factors "can only mean one thing: higher prices."
Here's a look at three junior mining companies, all headquartered in Vancouver, British Columbia (B.C.), that should benefit from a copper supercycle:
Blackwolf Copper & Gold Ltd. (TSXV.BWCG;OTC:BWCGF)
Explorer-developer Blackwolf owns base and precious metals projects, Niblack and the Hyder properties. Niblack, a volcanogenic massive sulphide project in southeast Alaska, is the most advanced and has a current resource of 5.851 million tons of 1.83 grams per ton (1.83 g/t) gold, 29 g/t silver, 0.94% copper and 1.73% zinc.
As announced in early May, Blackwolf is merging with Treasury Metals, another Canadian mining junior. Treasury Metals' flagship asset, which it is moving toward production, is the Goliath gold complex project, a trio of projects in Ontario.
"We view this transaction favorably as it provides Blackwolf shareholders access to an advanced development-stage asset in a tier one jurisdiction within a larger combined vehicle," Red Cloud Securities Analyst Taylor Combaluzier wrote in a May 3 research report.
As for the ownership of Blackwolf, according to Reuters, six strategic entities own 19.06%, or 23.45 million (23.45M) shares. Of these investors, the Top 3 are Frank Giustra with 13.79% or 16.96M shares, Blackwolf Director Andrew Bowering with 2.49% or 3.07M shares and Blackwolf Executive Chairman Robert McLeod with 1.98% or 2.44M shares.
Two institutions own 4.54% or 5.58M shares of Blackwolf. They are Crescat Capital with 4.13% or 5.08M shares and U.S. Global Investors Inc. with 0.41% or 0.5M shares.
Retail investors own the remaining 76.4% of Blackwolf.
Its share structure consists of 123M shares outstanding and 99.55M free float traded shares.
The company has a market cap of CA$11.19 million (CA$11.19M), and over the past 52 weeks, it has traded between CA$0.085 and CA$0.36 per share.
Granite Creek Copper Ltd. (GCX:TSX.V; GCXXF:OTCQB)
This copper-focused company, part of the Metallic Minerals Group (MMG:TSX.V), is advancing its cornerstone Carmacks copper-gold-silver project, in the Minto Copper Belt of Canada's Yukon Territory, toward a feasibility study, noted Couloir Capital. A 2023 preliminary economic assessment (PEA) on the asset indicated a CA$321M pretax net present value discounted at 5% and a 36% internal rate of return.
"The PEA demonstrates attractive project economics with significant opportunities for additional mine life expansion, reinforcing the potential of Carmacks to become a top-tier global copper project," Couloir Capital wrote.
Management is looking to attract a major company to consolidate and turn three properties, its CA$220M Carmacks project, some First Nations property and the Minto Metals Corp.'s past-producing mine, into "a local copper giant," reported Echelon Capital Markets Analyst Ryan Walker last year.
Granite Creek also owns the Lucky Ship molybdenum project and the Star copper-nickel-platinum group metals project, both in B.C.
Shares of Granite Creek Copper are owned by strategic and retail investors, according to Reuters. Six strategic entities together own 5.84%, or 11.58M shares, of the company. The three with the largest stake, all insiders, are President, Chief Executive Officer and Director Tim Johnson with 2.56% or 5.08M shares, Director Robert Sennott with 1.56% or 3.09M shares and Director Michael Rowley with 1.37% or 2.71M shares.
Retail investors hold the remaining 94.16% of the company. It does not have any institutional investors at this time.
Granite Creek has 198.27M outstanding shares and 186.69M free float traded shares.
Its market cap is CA$5.77M. The stock traded over the past 52 weeks between CA$0.03 and CA$0.06 per share.
World Copper Ltd. (WCU:TSX.V;WCUFF:OTCQX; 7LY0:FRA)
This Canadian company is working to increase shareholder value through acquiring and advancing copper oxide projects, reported Steven Ralston with Zacks Small-Cap Research.
World Copper has two assets, Zonia in Arizona and Escalones in Chile. Last month, management announced its decision to prioritize its U.S.-based assets, reported Red Cloud's Combaluzier in a May 2024 corporate update. Thus, the explorer now is concentrating solely on advancing Zonia and targeting a production start there in three to five years. It is executing its plan for moving forward, for taking Zonia to a feasibility study then to construction.
"With a new management team and technical committee, along with a current cash balance of about CA$49M, we believe the company is well positioned to execute on its refined U.S. strategy," the analyst wrote.
Red Cloud has a Buy rating on World Copper as well as a price target implying a 129% potential return.
World Copper outperformed the TSX Venture Exchange benchmark in at least the past four months, according to Fundamental Research Corp. (FRC), which covers and considers the stock a Top Pick. In May, for instance, WCU was up 195.7% month over month.
Earlier this month, Technical Analyst Clive Maund wrote that World Copper is a Buy given it has strong technicals and its trading pattern indicates a renewed advance should happen soon. Maund made this recommendation after WCU, in a heavy correction, had lost about one-third of the value from its recent high.
With respect to ownership of World Copper, according to Reuters, nine strategic investors hold a total of 28.18%, or 50.17M shares. Of these entities, the Top 3 are Wealth Minerals Ltd. with 11.51% or 20.5M shares, World Copper Director Robert Kopple with 8.37% or 14.9M shares and Grandchildren's Trust with 6.75% or 12.01M shares.
Two institutions hold 3.27%, or 5.82M shares. They are Mackenzie Financial Corp. with 3.08% or 5.48M shares and Palos Management Inc. with 0.19% or 0.33M shares.
Retail investors own the remaining 68.55% of World Copper.
In terms of share structure, the company has 178.02M outstanding shares and 127.86 free float traded shares.
World Copper's market cap is CA$30.44M and its 52-week, share price trading range is CA$0.055−0.35.
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