As we see a short pause in the bull market for copper, this provides a good opportunity for investors to step back and look at the Big Picture in the copper market.
Commodities trader Jeff Currie of the Carlyle Group is already on record as calling copper
“the best trade” he’s ever seen in commodity markets. But what does that look like in dollar terms?
Try
$250 billion of new investing in copper. And to drive that enormous amount of capital into the copper industry,
the price of copper could easily quadruple from the current price level.
Copper supply crisis requires $250 billion in new investment
This copper market forecast doesn’t merely reflect the outlook of Dynamic Wealth Research on copper.
Mike Henry, the Canadian-born CEO of BHP Billiton recently stated that the copper industry required
$250 billion in new investing by 2030 just to keep pace with demand. Only $50 billion of that capital is already on the table.
Hedge fund manager Pierre Andurand, who became a legend in commodities for his calls on oil,
predicted at the end of May that the price of copper will rise to
$40,000 per ton ($20 per pound) within four years.
We made a similar forecast for the copper market in our
April 4th report on copper. But we don’t have Pierre Andurand’s stature.
Earlier this year, Andurand predicted
a quintupling in the price of cocoa to $20,000 per tonne. After that market quickly tripled, then pulled back sharply, cocoa futures are once again soaring as
the supply crisis looks worse than ever.
With the price of copper having slipped to a one-month low, it’s hard not to notice the close parallels between the two markets.
Even in the strongest bull markets, commodity prices rarely go straight to the top.
Rebuilding the copper supply chain – from the bottom up
Part of the $250 billion required to meet the copper supply crisis will go into existing mines.
Tens of billions in capital investments are required to
upgrade many of the world’s largest (but aging) copper mines. However, that will merely maintain the supply of copper at existing levels.
Most of the $250 billion in new copper investments has to occur starting
at the bottom of the supply chain, at the exploration level.
Due to gross underinvestment in copper exploration over the past decade,
major copper discoveries have declined by ~98%.
Globally, a few dozen large copper projects are currently under development. Even combined, that will only add roughly
half of the additional copper
required by 2031. After that, there’s nothing in the supply pipeline.
This is why we see major multinational mining companies now scrambling to find new greenfield sources of copper. And one mining jurisdiction that has seen a sudden explosion in new staking and copper exploration is western Idaho.
The region is already famous for its high-grade silver mining.
In late 2023, Hercules Silver discovered what appears to be a major porphyry copper system beneath the near-surface, high-grade silver that characterizes this geology.
- 185 meters @ 0.84% copper, 111 ppm molybdenum, and 2.6 g/t silver, including 45 meters of 1.95% copper
Several other major copper intercepts have already been reported. Meanwhile, the near-surface, high-grade silver mineralization is looking increasingly robust.
- 112.2 meters @ 193 g/t silver, 1.7% zinc, and 0.7% lead, including 11.3 meters of 1,660 g/t silver
Barrick Gold (a major copper producer) and Rio Tinto have already staked out land packages in the region. Barrick has also made a CAD$23.4 million strategic investment in Hercules Silver.
However, getting there ahead of the multinationals was
Zeus North America Mining Corp (CSE:ZEUS / OTC:ZUUZF).
Zeus is strategically positioned as an early-stage district play
Zeus North America Mining Corp. is a newly-listed junior exploration company based in Vancouver. After recent weakness in the copper market, it sits with a market cap of only $16.5 million.
Zeus’s Cuddy Mountain property is directly adjacent to the Hercules Project. The Company recently announced its
spring/summer exploration program for Cuddy Mountain.
This is part of the necessary field work to map out mineralization and identify drilling targets for future exploration. However, perhaps even more of a near-term driver for Zeus is the new
20,000-meter drilling campaign currently underway with Hercules Silver.
What makes this new drill program especially exciting for investors is that not only will Hercules be seeking to expand copper mineralization laterally, it will also be
testing mineralization at depth.
Previous copper drilling intercepts were “open at depth”, meaning that they ended in copper mineralization, at a depth of ~430 meters. It is yet
unknown how deep this porphyry mineralization extends.
Deep drilling offers exciting blue-sky potential
Hercules has brought in drill rigs capable of drilling as far as 2,000 meters below surface. Any significant extension of these large porphyry copper intercepts implies a dramatic increase in the commercial potential of this geology.
Sitting right beside the Hercules Project, Zeus would be one of the prime beneficiaries of any additional major drilling successes from Hercules Silver.
Driving $100s of billions of new capital into the copper mining industry will require more than new record-highs for the price of copper. It will require
sustained high prices, over a span of many years – if not permanently.
This is what implies a “mega-bull investment opportunity” in copper. This is why some of the world’s leading commodities traders can’t find enough nice things to say about copper.
Even if a Barrick Gold or a Rio Tinto were to make a major copper discovery of their own in Idaho, it would represent (at best) a small bump to their share price.
Any significant copper discovery by Zeus would be a company-maker.
With a major bull market for copper telegraphed for years to come and billions of new investment capital flooding into copper, this provides a comfort zone for investors to get in early with ground-floor opportunities such as Zeus North America Mining.
Copper prices (and mining stocks) will not remain subdued for long. Astute investors will want to capitalize on the current buying opportunity.
Zeusminingcorp.com
Zeus Corporate Presentation (April 2024)
DISCLOSURE: Zeus North America Mining Corp. is a paid client of Dynamic Wealth Research.
