US Copper Stock ready to join impressive rally
The price of copper has reached record highs. As Ed Milewski says “copper is hot!”. That being said, there is a American copper stock that looks set to take part in the impressive rally in commodities.
With the growing demand and lack of supply of copper, analysts predict that prices will appreciate much more than the current record of $ 4.7785.
Although the price of copper is at its all-time high, once adjusted for inflation, historical values show there is much more room for growth. Goldman Sachs has shown that the best relative price for copper was in the 1970s – the equivalent of around $ 6 a pound.
With the complete lack of copper supply, analysts at Bank of America are predicting a major rebalancing in the market. They warn that the price of copper could climb to as high as $ 9.07 a pound.
Historically, the demand for copper has grown by around 3% per year due to population growth and urbanization. But, with the global energy transition from fossil fuels to sustainable energy production, and the need for copper to facilitate this shift, increased demand for copper will only increase.
So how is the price of copper factored into valuations of junior copper mining stocks?
A copper price of $ 3.50 per pound is widely accepted by large copper producers to justify the capital expenditure of building new mines in order to be profitable.
As the price of copper has only risen above $ 3.50 for about 6 months, junior mining stocks have yet to join the rally in underlying asset prices. But as these price levels hold, we could enter a period that would make it attractive for copper producers to buy copper deposits.
A 2018 Preliminary Economic Assessment (PEA) demonstrated a positive US $ 3 copper saving for the Moonlight deposit, which has an NI 43-101 indicated resource of 252 million tonnes at 0.25% copper and an inferred resource from 109 million tonnes to 0.24% copper. Specifically, the saving of a deposit with a net present value (NPV) of 8% is equivalent to US $ 376 million after tax at $ 3.50 / lb of copper.
And that’s just a deposit.
The company has a seven-hole drilling program scheduled for this spring at its Superior and Engels deposits in California. The Superior deposit already has an NI 43-101 resource of 54 million tonnes at 0.41% copper, and the Engels deposit has an unconfirmed historical resource of 19 million tonnes at 0.63% copper sulphide on the surface. .
If the company can demonstrate that these two deposits are high-grade start-up pits, US Copper can further improve the profitability of its overall copper project.
Watch the full interview to learn more about US Coppers’ drilling activity, the likelihood of the company being taken over by a copper producer, the rise in commodities, and the world’s shift to electric vehicles.