Record Gold, Copper Prices Create Huge Opportunity for New Large-Scale Projects
NetworkNewsWire Editorial Coverage
18 Nov, 2020, 08:30 ET
NEW YORK, Nov. 18, 2020 /PRNewswire/ -- The surge in the price of gold has been well documented this year. The precious metal closed above $2,000 an ounce earlier this year, leading experts to forecast future prices from $2,300 (Goldman Sachs) to as high as $3,000 (Bank of America) in the coming months. In addition, copper prices have also risen to their highest levels in more than two years, climbing to more than $6,800 a ton. These numbers bode well for companies in the precious metals space, especially companies such as Josemaria Resources Inc. (TSX: JOSE) (OTCQB: JOSMF) (JOSE Profile), which has interests in both copper and gold. Earlier this month, JOSE released a feasibility study regarding its 100% owned Josemaria Copper-Gold Project in San Juan Province, Argentina. Other companies that are making moves in the base and precious metals sectors include Rio Tinto Plc (NYSE: RIO), which just announced that its Kennecott site in Utah is the first producer to be awarded the Copper Mark, the copper industry's new independently assessed responsible production program. Freeport-McMoRan Inc. (NYSE: FCX) has commenced the Copper Mark process for six of its operating sites and has future plans to validate all of its operating sites against the program's requirements. Southern Copper Corporation (NYSE: SCCO) recently released its Q3 2020 financial report, noting that its net sales totaled $2,129 million, up 14.5% compared to Q3 2019. Franco-Nevada Corporation (NYSE: FNV) also reported record revenue, EBITDA and net earnings in the third quarter with all material mining assets having returned to normal operations through the quarter.
- Gold closed above $2,000 an ounce earlier this year; copper prices have also risen to highest levels in more than two years.
- Feasibility study demonstrates robust, rapid pay-back, low-risk project yielding average annual production of 136,000 tonnes of copper, 231,000 ounces of gold and 1,164,000 ounces of silver.
- Founded more than 40 years ago, the Lundin Group of Companies currently comprises 13 publicly traded companies focused on resource sector.
Click here to view the custom infographic of the Josemaria Resources Inc. (TSX: JOSE) (OTCQB: JOSMF) editorial.
Rally Far from Over
Factors contributing to the rising gold and copper prices vary. "For centuries, investors have turned to gold as a safe haven store of value during times of downturn, volatility or crisis. The situation today is no different," reported a recent "Forbes" article, titled "What's Driving Gold Prices So High, and What Might the Future Hold?" The article noted that some analysts predict that gold's rally is far from over.
A recent "Bloomberg" article noted that the global copper market looks to be on the edge of an historic supply squeeze as demand escalates and inventories plunge to their lowest levels in more than a decade. "A growing chorus of traders and analysts say those dwindling spot reserves could trigger a further surge in prices, building on a rally that lifted copper . . . to two-year highs above $6,800 a ton," the article said.
With that in mind, savvy companies are seeking opportunities to expand in both the gold and copper spaces. For example, Barrick Gold, one of the world's largest gold mining companies, is looking to increase its exposure to copper through exploration or acquisition.
A Rare Find
Based in Vancouver, British Columbia, Josemaria Resources Inc. (TSX: JOSE) (OTCQB: JOSMF) is a natural resources company that is offering an advanced-stage copper-gold deposit, a rare find in a junior mining company. Josemaria is eyeing key growth in a global smart mining market that was estimated to reach $6.8 billion last year and forecast to reach $20.31 billion by 2025. A large portion of that increase is expected to be driven by technological advancements within the sector.
Specifically, Josemaria is focusing on the development of its wholly owned flagship Josemaria Copper-Gold Project located in the San Juan Province of Argentina. San Juan is a well-known mining hub supporting a wide variety of mining companies, where the Lundin Group has been active for almost three decades. Committed to advancing the project, Josemaria Resources has just completed a feasibility study, with basic engineering and submittal of the Environmental Social Impact Assessment expected in early 2021.
Through its endeavors in Argentina, Josemaria anticipates making a significant positive impact in the country in a variety of ways, including creating jobs and adding stable income potential for the workforce. In addition, the company intends to purchase as many goods and services as possible from local suppliers. According to a company study, JOSE projects will bring an estimated 37% increase in total mining related employment to San Juan specifically, and approximately 4% in total mining-related employment to Argentina. Josemaria plans to grow the mining industry in Argentina by around 28%, moving the sector from being the sixth largest exporter currently to the 4th largest when in full production.
As part of this plan and its development of the Josemaria Copper-Gold Project, JOSE recently released the results of the independent feasibility study for the property. Prepared by a team of engineering and consulting service providers, the study demonstrates a robust, rapid pay-back, low-risk project, with an open-pit operation feeding a conventional process plant at an average of 152,000 tonnes per day. The study also projected a mine life stretching more than 19 years and yielding average annual metal production of 136,000 tonnes of copper, 231,000 ounces of gold and 1,164,000 ounces of silver.
"We are extremely pleased with the results of the Feasibility Study at Josemaria, which indicates that this is one of the very few readily developable copper-gold projects in the world today," said Josemaria president and CEO Adam Lundin. "This study has materially de-risked the project and forecasts an attractive economic outcome which is comparable with other large-scale copper/gold projects already being developed or in production today. We believe that Josemaria is perfectly positioned to commence production by mid-decade, meeting rising copper demand from a rapidly electrifying global economy. I believe the study results will allow us to unlock various financing opportunities as we move toward construction."
Creating Substantial Value for Shareholders
Adam Lundin is the latest in an impressive line of Lundin family members who have been involved in the mining industry for many decades. The Lundin Group of Companies was founded more than 40 years ago by the late Adolf H. Lundin and currently comprises 13 publicly traded companies focused on the resource sector. Through investments in other public companies, the Lundins have been active in Argentina for more than 30 years and have established a strong track record of success, including the Alumbrera and Veladero projects.
An example of how the company operates and what it can accomplish can be found in the Fruta del Norte gold deposit, which was discovered in 2006. Lundin Gold purchased the asset in late 2014 for $240 million. Since acquiring the asset, Lundin Gold completed a feasibility study, signed all major agreements with the Ecuadorian government providing for the fiscal and regulatory regime and economic stability, and subsequently financed and constructed the mine and infrastructure on time and on schedule — all in five short years. First gold production was reached in November 2019, and commercial production was achieved in February 2020.
Fruta del Norte is only one example of the expertise, skill and effectiveness of the Lundin Group of Companies, including Josemaria Resources. JOSE is committed to conducting business in a highly ethical manner, demonstrating leadership in environmental management, ensuring the safety of both its workforce and nearby communities, and optimizing economic benefits for its investors and host jurisdiction, as well as engaging openly and collaboratively with stakeholders. The Lundin Group of Companies has a record of creating substantial value for shareholders, with past projects generating some $15.8 billion.
Distinctive Strengths, Differences
With gold and copper prices surging, companies are eager to establish their distinctive strengths and differences in the market.
By obtaining the Copper Mark distinction at its Kennecott property, Rio Tinto Plc's (NYSE: RIO) has demonstrated that it meets more than 30 criteria for responsible environmental, social and governance practices. "We are proud to lead the copper industry in being awarded the Copper Mark, demonstrating our commitment to responsible production and transparency," said Rio Tinto Copper & Diamonds chief executive Arnaud Soirat. "The Copper Mark allows our customers to purchase copper from operations that have been independently assessed as meeting the highest environmental, social and governance standards, responding to the growing expectations of consumers around the world for sustainable supply chains."
Freeport-McMoRan Inc. (NYSE: FCX) is also embracing the Copper Mark distinction, commencing the process for six of its operating sites, with plans to validate all of its operating sites against the program's requirements. "Copper plays an essential role in the technologies necessary to develop and deliver clean energy and to support the global transition to a low-carbon economy," said FCX president and CEO Richard C. Adkerson. "As the energy transition continues, copper use is expected to increase from the use of electric vehicles and their charging stations and renewable energy technologies, such as solar and wind, and their necessary connections to grids. This increased copper demand should not come at a cost to sustainability."
Southern Copper Corporation (NYSE: SCCO) recently released its Q3 2020 financial report, which highlighted impressive numbers for the company. Highlights included net sales growth of 14.5% over the same quarter last year, growth that was attributable to both an increase in sales and in copper and silver market prices. In addition, the reported noted that sales volumes were up for copper and improvements were reported for both silver and copper prices and copper prices. The company also reported net income of $506 million, which is a 29.9% jump over Q3 2019's net income figure.
Franco-Nevada Corporation (NYSE: FNV) also posted impressive numbers for its third-quarter financial report. The company continued to lead its royalty and streaming peers with the highest EBITDA margins and, in particular, with a record earnings margin of 55% in the quarter. During the third quarter, 25 new royalties were added to the company portfolio, bringing the number of mining related assets to 316. Franco-Nevada Corporation is the leading gold-focused royalty and streaming company with the largest and most diversified portfolio of cash-flow producing assets.
With an unstable global economy combined with uncertain supplies and rising demands, companies in the gold and copper space — especially those working to strengthen their position in the industry — may well see substantial rewards as prices swell and the industry heats up.
For more information about Josemaria Resources, please visit Josemaria Resources Inc. (TSX: JOSE) (OTC: JOSMF).
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