The Bull Case For The Interpretation Of Canadian Copper’s Metallurgical Testwork
FULL DISCLOSURE: This is sponsored content for Canadian Copper.
Canadian Copper (CSE: CCI) this past week released results from their ongoing metallurgical testwork program. This study is being conducted in advance of a preliminary economic assessment to be released later this year.
The program was conducted on 600 kilograms of material from historical diamond drill core collected from four separate regions of the Murray Brook copper-zinc-lead-silver deposit in New Brunswick. The program consisted of froth flotation tests simulating a bulk copper/lead float scenario, which occurred prior to zinc flotation.
READ: Canadian Copper Sees Positive Results From Early Metallurgical Testwork
There are most certainly things in these results that would make one feel that the future bodes very well for Canadian Copper’s drive toward becoming a copper producer. We recently interviewed Bo Krasic of Bay Street’s Terrella Capital, who is both a keen observer and a shareholder of Canadian Copper. From our conversation, several things were put in perspective.
“It was excellent that they were able to replicate the metallurgical results from the 2012 Report – especially given that the 2012 samples were higher grade,” commented Krasic when referencing the results.
Whenever a testing result is replicated in this fashion, it de-risks a project. Mine financiers are looking for this. Krasic also relates, “It’s my understanding that grade and recovery are generally linked, usually with the higher grades contributing to higher metallurgy results and recovery. It is a positive first test to have high recovery at a lower grade cutoff.”
The lower the cut-off from which a producer can get high rates of recovery, the larger the area from which ore can be recovered from a deposit. This in turn leads to a higher chance that an asset can become a working mine.
WATCH: US Tariffs vs Canadian Mining: What’s Really at Stake? | Simon Quick – Canadian Copper
Krasic also speaks to the extraction of the ore and the metallurgy. “Two major steps in metallurgy testing are the rough cleaning and fine cleaning in the extraction process, with the latter being more difficult to prove out. The first step is proven to be excellent, but the real test comes with the secondary metallurgy testing. And this should be outlined most probably within the PEA framework.”
Every nugget of information that Canadian Copper puts out is helping draw the picture. The PEA, which is on its way, will be a very big factor in the analysis of the big players watching for it.
“One can now postulate that as of now a larger ore mass with a lower cut-off could yield similar economic recovery rates as would a lower tonnage deposit.” Continues Krasic, “This not only gives a longer mine life, which on an NPV basis does add value – but it also allows for a smoothing effect to the bottom line once recovery rates are fully determined.”
Copper price movement
Currently there is a 250 basis point spread between spot copper prices and 3-month prices – meaning the arbitrage is in deep backwardation. Copper buyers are active, as there is a very legitimate risk of US tariffs.
Spot prices are elevated due to an immediate shortage. How that translates will depend heavily on tariffs in the short run. But the bull case for copper remains in fine form given long term shortages driven by low investments into the space during the last decade.
As it stands, New Brunswick is a province that currently has no active critical metal mines. Canada and the world needs new sources of copper production.
With the work that Canadian Copper CEO Simon Quick and his team, backed by industry leader Ocean Partners Holdings (who’s CEO, Brent Omland, sits on their Board of Directors) are putting in, it’s looking like the idea of combining the Murray Brook Deposit with the Caribou Complex mill is heading towards fruition.
FULL DISCLOSURE: Canadian Copper Inc. is a client of Canacom Group, the parent company of The Deep Dive. Canacom Group is currently long the equity of Canadian Copper Inc. The author has been compensated to cover Canadian Copper Inc. on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. We may buy or sell securities in the company at any time. Always do additional research and consult a professional before purchasing a security.
