Copper’s Short-Term Worries Unlikely To Change The Long-Term Picture

October 13, 2022 at 12:11 PM EDT

Copper is facing hurdles in 2022, but experts believe the long-term outlook for the base metal remains positive. Copper prices began the year on a high note, reaching an all-time high in March when the red metal traded for more than $10,000 a metric tonne (MT). Copper has corrected sharply since its peak and is now trading at $7,000 per pound. However, global copper mine output has underperformed this year, up roughly 3% year on year in H1 2022, versus a full-year expectation of more than 5%. Meanwhile, annual copper demand from green energy is expected to increase by more than 3 million MT per year over this decade, meaning more copper is vital for the energy transition. Simply put, demand is expected to outpace supply, creating a positive environment for copper prices and companies. Copper investments are also required to help supply the needs of this green energy transition, putting the spotlight on exploration companies like Gama Explorations Inc (CSE:GAMA) and copper producers like Freeport-McMoRan Inc. (NYSE:FCX), Teck Resources Limited (TSX:TECK.A and TECK.B) (NYSE:TECK), Southern Copper Corporation (NYSE:SCCO) (BVL:SCCO), and Rio Tinto Plc (NYSE:RIO).

Gama Explorations Inc (CSE:GAMA) is a mineral exploration company specializing in acquiring, exploring, and developing copper mining opportunities. The company has the option to acquire a 100% stake in the Big Onion Project, which is about a 20-minute drive north of Smithers in British Columbia.

On October 12, Gama introduced its newly acquired Tyee Nickel-Copper Project, which comprises a single claim block of 81.46 square kilometers (km) prospective for nickel, copper and platinum group elements.

The Tyee Ni-Cu Project is in the Havre St. Pierre anorthosite complex, which contains known nickel, copper and PGE occurrences, and cover some of the most anomalous sediment samples in the complex. It also has geophysical features similar to Go Metal’s HSP Nickel-Copper discovery, which is located right next door. The project is also 12 km from the Romaine IV hydroelectric power facility and service roads.

Gama aims to identify extensions to the massive sulphide Ni-Cu. The Tyee nickel claims were staked by Tyee in March 2022 following a detailed geological, geophysical, and geochemical review of the HSP Complex.

Gama’s Tyee Ni-Cu Project project features geochemical and geophysical anomalies, which likely represent mafic to ultramafic feeders to the adjacent Havre St. Pierre anorthosite complex. Interestingly, the anorthosite complex is in a region that hasn’t seen a lot of exploration, yet it is known to host nickel-copper-PGE occurrences. These occurrences have been found as close as 20 km west of the Tyee Nickel-Copper Project in an area exhibiting substantial geophysical and lithological similarity. At the moment, Gama Exploration is focused on identifying and expanding on higher-grade porphyry-style Cu-Mo-Au mineralization beyond the historic resource.

Gama plans to fly an airborne electromagnetic survey as soon as possible at Tyee, followed by prospecting and ground geophysics and will continue to use detailed analysis of government data to assess the region for the continuation of nickel sulphides and other commodities including copper, cobalt, platinum, palladium and graphite. Based on the outcome of the airborne electromagnetic surveys, prospecting, and geophysics, Gama will decide the best method for implementing a maiden drill program in 2023.

Gama Explorations just bolstered its leadership team by appointing Dr. Mick Carew as Chief Executive Officer (CEO).

Carew has been involved in the mining industry for over 25 years, combining financial markets experience and technical expertise as a research analyst at Haywood Securities. For 15 years, he worked as a geologist for major and minor mining/exploration companies, including BHP and Ivanhoe Mines, and gained regional and near-mine mineral exploration experience. He has worked on uranium, base, and precious metal ore resources in Australia, Canada, and Asia. Mr. Carew also has executive-level business management expertise.

“I am excited to join Gama’s management team to help develop exploration strategies for both the Big Onion copper-porphyry project and the newly-acquired Tyee claims. Based on the work done thus far, I believe that there’s significant value to be unlocked by taking a new approach to exploration to unlock higher-grade zones to complement the Big Onion’s historical resource,” said Carew. “Additionally, I believe our Tyee nickel claims are in a highly prospective area where a disciplined approach to defining targets could lead to considerable upside in the asset.”

Gama Explorations also announced a proposed private placement of up to 8,333,333 common shares at $0.30 per share for aggregate proceeds up to $2.5 million. The proceeds will be utilized for exploration activities on the company’s holdings in BC and Quebec, corporate expenses, and working capital.

To learn more about Gama Explorations (CSE:GAMA), please visit this link.

Copper Mining Operations Are Moving Forward

Freeport-McMoRan Inc. (NYSE:FCX) announced the release of its updated Climate Report on September 26. The report describes the Company’s ongoing efforts to cut GHG emissions, enhance the energy efficiency, evaluate and integrate lower carbon and renewable energy sources, and strengthen its resilience to future climate-related threats. Freeport-McMoran continues expanding its GHG emissions reduction measures across its global operations and has established 2030 GHG reduction targets that comprise approximately 100% of its Scope 1 and 2 GHG emissions.

On September 30, Teck Resources Limited (TSX:TECK.A) (TSX:TECK.B) (NYSE:TECK) and BCIT announced a $5 million contribution to the BCIT INSPIRE Campaign. The donation, the campaign’s second-largest overall contribution to date, will support campus redevelopment and innovative teaching and learning innovations, as well as increase the usage of antimicrobial copper across BCIT’s campuses. On September 16, Teck Resources and Agnico Eagle Mines announced that Agnico Eagle has agreed to subscribe for a 50% stake in Minas de San Nicolás, S.A.P.I. de C.V.. This wholly-owned Teck subsidiary owns the San Nicolás copper-zinc development project in Zacatecas, Mexico’s largest mining state. San Nicolás has significant geological potential and numerous polymetallic and precious metal opportunities. Zacatecas also has easy access to infrastructure and skilled labour.

Southern Copper Corporation (NYSE:SCCO) reported $2.3 billion in net sales for the second quarter, a 20.4% reduction from Q2 2021 primarily to lower market metal prices for copper (-1.8%, LME) and silver (-15.4%). Net income for 2Q22 was $432.3 million, a 53.7% decrease from the prior-year quarter’s $932.7 million. Unexpected circumstances have impacted Southern Copper‘s quarterly financial results. Inflationary increases in gasoline, electricity, and other working supplies have aggravated the situation. Quarterly profitability was also hurt by a 25,624-tonne drop in copper output at the Company’s Peruvian operations, primarily attributable to the Cuajone shutdown and lower ore grades. Temporary production losses were offset by copper obtained from other parties, albeit at a higher cost, to avoid a force majeure event. Copper output declined 12.1% in 2Q22 to 208,428 tonnes, a 12.1% decrease from the previous quarter.

Rio Tinto Plc (NYSE:RIO) has approved a $55 million development capital investment to begin underground mining and improve output at its Kennecott copper facilities in Utah, USA. Along with open-cut operations, underground mining at Kennecott will focus first on an area known as the Lower Commercial Skarn (LCS), which will generate around 30kt of additional high-quality mined copper by 2027. The first ore will be mined in early 2023, with full production starting in the second part of that year. It will be processed at Kennecott, one of just two remaining copper smelters in the US. Feasibility studies are currently being conducted to continue open pit mining at Kennecott beyond 2032.

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