Why Is Copper Such Great Investment Theme?


Peter Epstein

Peter Epstein of Epstein Analysis shares his ideas on why “cashed-up” Allied Copper is a Cu firm to observe.

Allied Copper Corp. (CPR:TSX; CPRRF:OTCQB) is an thrilling pure-play copper (“Cu”) story with a rising portfolio of properties and initiatives within the mining-friendly western U.S. It has a high-quality administration group and board, particularly for an organization with C$5M in money and an enterprise worth (market cap + debt – money) of ~C$4M.

Allied Copper is all cashed-up, in the fitting place, on the proper time with the fitting group.

 

 

Firms with giant money conflict chests relative to their enterprise values have large blue-sky potential to make issues occur. Allied’s group is actively pursuing acquisitions. They anticipate to have so much to speak about this yr as they pursue long-life, scalable initiatives in protected jurisdictions and advance present initiatives.

Safety of Cu provide is prime of thoughts as severe issues mount throughout South America. Chile, Perú, and Ecuador are within the midst of political challenges that threaten to boost royalty and/or tax charges, the cancellation of key permits, or expropriation of property.   

Why is copper such a fantastic funding theme?

Along with copper’s rising use in new high-tech functions like electrical autos, telecom / 5G wi-fi, grid-scale vitality storage techniques, and renewable energy crops, it stays one of the vital essential elements (together with metal and cement) of latest and alternative infrastructure (roads, bridges, buildings, and many others.) and electrical grid build-outs.

Within the chart above from a current Teck Sources presentation, anticipated demand development from 2020 to 2030 in new makes use of of Cu is estimated at 26%/yr. By 2030 an extra 4M tonnes/yr. might be wanted for the 4 classes proven within the chart. That’s ~16% of the ~25M tonnes consumed in 2020.

Later this decade as tens of hundreds of thousands of EVs per yr plug into the grid, considerably extra Cu might be wanted to construct and join new energy crops. On the similar time, the world is present process a paradigm shift to renewable vitality platforms, that are copper-intensive.

Wind and photo voltaic farms use a staggering quantity of Cu in wires, cables, motors, and transformers. Backside line, something plugged right into a wall or related to the Web results in extra copper-dependent energy era.

Copper demand to stay sturdy; provide more and more unsure

Because of Cu’s use in so many new (and traditional) functions, its outlook seems vivid for many years to come back. Even a small improve above the 120-year CAGR of three.4% (see chart beneath) makes a giant distinction.

Take into account that in 2050 consumption would improve to 68.2M tonnes/yr. at a 3.4% CAGR, 81.1M tonnes/yr. at a 4.0% CAGR or 93.6M tonnes/yr. at a 4.5% CAGR. Copper might be crucial industrial metallic on the planet.

Among the many prime 10 Cu producing international locations, the highest 4 are; Chile, Peru, China, and the DRC. Of the remaining international locations are Russia, Zambia, and Kazakhstan (Kazakhstan is carefully tied to Russia). Mixed, Chile and Peru account for almost 40% of the world’s main mine provide.

South America (Chile, Peru, Ecuador, Argentina, Colombia) hosts nearly all of the biggest Cu initiatives within the pipeline, however a mixture of water shortage, environmental challenges, excessive altitudes, left-leaning politics, and acquiring and sustaining local people assist, are significant headwinds throughout the continent.

This makes initiatives within the U.S., Canada, and Australia extremely essential and extremely wanted.

Allied Copper all cashed-up, in the fitting place, on the proper time with the fitting group

Allied has three Cu properties to date, all within the western U.S. Make no mistake, these are early-stage alternatives. Nevertheless, if the Cu worth bull market continues, traders can obtain sturdy capital features with juniors like Allied Copper, firms which have the potential to make impactful discoveries.

Maybe essentially the most thrilling a part of the Allied story is upcoming acquisitions (or choices to amass) of extra properties within the U.S. There are a variety of highly-attractive properties which were neglected, under-explored or not superior with fashionable methods. The perfect alternatives have substantial exploration upside, but might be picked up cheaply with modest upfront money.

“With the current change in governments in Chile and Peru, there’s uncertainty on royalty prices and different facets of mining throughout S. America, residence to almost half the world’s copper manufacturing. Buyers are actually searching for safe, politically protected jurisdictions.

Allied Copper is properly positioned to fulfill this want with its key asset in Nevada and the acquisition of extra initiatives within the western U.S. We’ve got an skilled administration group ready to take property into manufacturing to assist the world’s transition to battery electrical vehicles.

— Exec. Chairman Warner Uhl

The newest addition to Allied’s portfolio is the sediment-hosted, Cu mineralized, highway accessible 365.7-acre Stateline Property (“STL”) within the Paradox Copper Belt in San Miguel County, Colorado / San Juan County, Utah. STL is eight km southeast of the manufacturing Lisbon Valley Mining Advanced (“LVMC”).

Stateline’s uncovered Cu oxide mineralization at floor, hosted in sandstone items, bear sturdy similarities to Cu deposits alongside pattern on the LVMC. Outcropping samples returned as much as 1.6% Cu.

There are numerous historic occurrences which were recognized all through the belt, however most have by no means been explored with fashionable exploration methods.

Shifting to Nevada, the Silver King (“SK”) Property is a Cu-Au porphyry asset on the intersection of the well-known Battle Mountain – Eureka (Cortez) pattern and the Heat Springs Lineament. It’s comprised of 316 un-patented lode claims for a complete space of two,560 hectares.

SK is a promising exploration goal in Lincoln County, Nevada (between Las Vegas & Ely). It’s in a geologic pattern internet hosting a number of producing mines. Allied can earn right into a 100% possession of SK for a complete of $420k over 5 years.

Administration introduced the beginning of a floor Induced Polarization (IP) & Resistivity survey. The 3D protection will contain 400 m x 200 m grid spacing whereas the 2D array may have 100 m spacing alongside three strains. The protection space is ~5 sq. km. The survey goals to seize photos to a depth of 500 to 600 m. 

Each survey coverages goal to outline geophysical signatures of a potential porphyry system with related polymetallic skarn and/or carbonate alternative mineralization at depth. The corporate expects to obtain ends in March and conduct a drill program in Q2 or Q3. 

The highlighted assays beneath, from Anaconda Mining’s drilling, present two intervals of as much as 2%+ Cu Eq. 5 kinds of mineralization have been noticed thus far offering a number of drill targets inside a possible porphyry system.

Allied’s third asset is an possibility on the Klondike Property in Colorado, positioned throughout the Paradox Copper Belt. The working LVMC Mine is 50 km to the NW. Klondike consists of 76 unpatented lode claims totaling 843 hectares (2,083 acres). Klondike is anticipated to be accessible for exploration all yr.

To earn a 100% curiosity over three years, Allied must situation 7M shares and make a complete of C$400k in money funds. As well as, Allied must incur a complete of C$4.75M in exploration expenditures.

We stay up for exploring our western U.S. copper initiatives: SK, Klondike, and Stateline, Allied Copper’s preliminary constructing blocks. With C$5M in our Treasury, we’re excited to safe extra promising copper alternatives in 2022.”

— CEO Richard Tremblay

A current reconnaissance program at Klondike performed by Cloudbreak / Alianza consisting of mapping, stream sediment / rock sampling, was undertaken to assist outline drill targets.

Rock sampling and mapping efficiently expanded the footprint of each targets and recognized an extra goal. Sampling returned a formidable 1.56% Cu over a 4.6 m chip pattern.

Earlier work reported high-grade floor showings of 6.3% Cu + 23.3 g/t Ag. Along with high-grade potential, disseminated Cu-Ag mineralization has been noticed, which can be amenable to fashionable open pit mining with Solvent Extraction Electro Successful processing — just like the LVMC.

TSX-V listed metals / mining juniors have had a troublesome couple of months with tax loss promoting, COVID-19, and inflation fears. Nevertheless, now’s the time to have a look at excessive danger / excessive return exploration performs in the very best metals, with properties in prime jurisdictions. That’s Cu within the U.S. & Canada!

Have a look at the long-term Cu worth graph above. Copper is simply ~7% beneath its all-time excessive, but many Cu juniors are buying and selling as if the world is ending. With Omicron quickly to be behind us, will Cu shares rally? I for one assume they’ll.

Allied Copper Corp. has a powerful group and C$5M within the financial institution to discover three enticing properties and purchase extra. With an enterprise worth of simply C$4M, it will not require that a lot drilling success for the valuation to soar.

Key administration group and board members

Govt Chairman Mr. Warner Uhl makes a speciality of taking initiatives from idea by way of to working mines and delivering key course of / operational enhancements. He has 30+ years’ expertise as a senior mining & engineering skilled constructing & working mines globally, incl. main main initiatives with Procon, KGHM, Iamgold & Leighton Contractors.

Mr. Uhl consulted with Nevada Copper leading to IRR & NPV enhancements, and was previously venture director of the Mt. Milligan Mine building. Whereas with KGHM he was concerned within the Robinson Mine close to Ely, Nevada. Previous President & CEO of BMEX GOLD and presently the Regional Director for Research Administration within the Americas Worley Know-how and Professional Options.

President, CEO, Director Richard Tremblay has 15+ years’ expertise as a pure useful resource government & entrepreneur. He has in depth expertise managing explorers, elevating public & non-public fairness capital, growing investor relations applications & delivering worth. His current expertise consists of company growth roles at Temas Sources, CEO of Golden Ears Consulting and the CEO of Pacific Potash.

Director Campbell Smyth has 25+ years’ expertise financing, managing & investing in resource-focused companies incl. 15 years of managed portfolio investing. He obtained a bachelor of commerce diploma from the College of Western Australia and is a certified securities consultant in Australia. Mr. Smyth is at present the Chairman of Norseman Silver, a director of Nubian Sources and CEO of Clairiden Capital.

Director Kyle Hookey has 10+ years’ capital markets expertise in N. America, the UK & Australia advising on M&A, financings, and company restructuring. Beforehand, Mr. Hookey was based mostly in Australia working with Goldman Sachs, JBWere, and Euroz Securities. He’s a member of the CFA Institute, a Associate in Cronin Capital, CEO of Calidus Sources & VP Company Finance of Imperial Helium.

CFO Morgan Tiernan has 8 years’ tax & advisory expertise for personal & public entities. He has a Diploma of Enterprise, is a Chartered Accountant and has a bachelor of regulation.

Director David Eaton has 40 years’ capital markets expertise incl. as a flooring dealer on the Vancouver Inventory Change, company finance, capital elevating and advisory & service provider banking. Mr. Eaton’s expertise consists of actual property, mining, tourism, retail, manufacturing, advertising & distribution. His current expertise consists of CEO of Jayden Sources, Director / Marketing consultant Novo Sources, Confederation Minerals, Kariana Sources and Chairman of Baron World Monetary Canada since 2007.

Tech. Advisor Cam Bartsch P.Geo has over 20 years’ expertise from grassroots by way of to manufacturing, centered on structural & econ. geology. Evaluated & accomplished structural assessments for Kinross, Newmont & Teck as a senior structural Geo with Terrane Geoscience. Labored on the BCSC and Fairness Exploration Consultants. Helped increase the Again River Mission with Dundee Valuable Metals & Sabina Gold.

Peter Epstein is the founding father of Epstein Analysis. His background is in firm and monetary evaluation. He holds an MBA diploma in monetary evaluation from New York College’s Stern Faculty of Enterprise.

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Disclosures / Disclaimers: The content material of this text is for info solely. Readers totally perceive and agree that nothing contained herein, written by Peter Epstein of Epstein Analysis [ER], (collectively, [ER]) about Allied Copper Corp., together with however not restricted to, commentary, opinions, views, assumptions, reported information, calculations, and many others. is to be thought of implicit or specific funding recommendation. Nothing contained herein is a suggestion or solicitation to purchase or promote any safety. [ER] just isn’t accountable underneath any circumstances for funding actions taken by the reader. [ER] has by no means been, and isn’t at present, a registered or licensed monetary advisor or dealer/supplier, funding advisor, stockbroker, dealer, cash supervisor, compliance or authorized officer, and doesn’t carry out market making actions. [ER] just isn’t instantly employed by any firm, group, group, get together or individual. The shares of Allied Copper Corp. are extremely speculative, not appropriate for all traders. Readers perceive and agree that investments in small cap shares may end up in a 100% lack of invested funds. It’s assumed and agreed upon by readers that they’ll seek the advice of with their very own licensed or registered monetary advisors earlier than making any funding choices.

On the time this text was posted, Allied Copper Corp. was an advertiser on [ER] and Peter Epstein owned shares within the Firm.

Readers perceive and agree that they have to conduct their very own due diligence above and past studying this text. Whereas the creator believes he’s diligent in screening out firms that, for any causes in any way, are unattractive funding alternatives, he can not assure that his efforts will (or have been) profitable. [ER] just isn’t accountable for any perceived, or precise, errors together with, however not restricted to, commentary, opinions, views, assumptions, reported information & monetary calculations, or for the completeness of this text or future content material. [ER] just isn’t anticipated or required to subsequently observe or cowl occasions & information, or write about any explicit firm or matter. [ER] just isn’t an professional in any firm, business sector or funding matter.

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