After filing an updated mineral resource estimate (MRE), World Copper Ltd. (WCU:TSX.V; WCUFF:OTCQB) has filed a National Instrument 43-101 Technical Report for its 100%-owned Zonia copper project in Arizona.
The updated MRE, released in February, increased total resources by about 90% to about 198 million tonnes from a 2017 estimate, with contained copper increasing by 55% to about 1.03 billion pounds.
Analyst Sid Rajeev with Fundamental Research Corp. pointed out in an update note on April 4 that grades declined by 16% in the new resource.
"We believe the positive impact of higher resources more than offsets the negative impact of lower grades," Rajeev wrote.
Rajeev reiterated his Buy rating on the stock with an updated fair-value estimate of CA$1.28 per share.
"Although we are expected copper prices to be under pressure this year, we believe WCU is a good M&A target, especially considering its steeply discounted valuation metrics," he wrote.
About 40% of the world's public mining companies are listed on Canada's TSX and TSX Venture exchanges. Their mineral projects can be anywhere in the world, but if the company is listed on a Canadian stock exchange, it's required to file a NI 43-101 report.
The document includes publicly available information ranging from property descriptions and locations to technical descriptions of exploration, sampling, and testing.
World Copper's updated MRE includes indicated resources of 75.7 million short tons grading 0.30% total copper containing 450.5 million pounds of copper and inferred resources of 122 million short tons grading 0.24% total copper, containing 575.4 million pounds of copper.
"We view this update positively, as we believe there is further room to upgrade and grow the resource with future drilling," wrote Combaluzier, who maintained his Buy rating and increased his target price.
While indicated resources dropped by about 12% in the estimate, inferred resources increased by 272%, Red Cloud Securities analyst Taylor Combaluzier wrote in a Feb. 24 research note.
"We view this update positively, as we believe there is further room to upgrade and grow the resource with future drilling," wrote Combaluzier, who maintained his Buy rating and increased his target price to CA$2.20 a share from CA$2.15 a share.
The updated MRE is a "critical first milestone" for the company since acquiring the project, World Copper Chief Executive Office Nolan Peterson said.
"As we advance the project on the engineering front, we will simultaneously aim to expand the resource even further by targeting the high potential Zonia Norte target northeast of the main resource deposit," Peterson said.
The Catalyst: PEA, Drilling on the Table
The company intends to file an updated preliminary economic assessment (PEA) on the project this year and plans to conduct an 18-hole, 5,000-meter drilling program.
"Zonia Norte was fully permitted by the previous operator, and World Copper plans to restart the permitting process for this exploratory program, which will also include sampling and mapping of historical high-grade copper occurrences . . . on the north and east edges of the Zonia Norte," analyst Steven Ralston of Zacks Small-Cap Research wrote in a March 27 note.
Hard Rock Consulting LLC, which prepared the NI 43-101 report, wrote in the report that "the new core drilling should infill areas of the deposit on roughly 300-foot spacing from existing, appropriately oriented drill holes."
"There is a positive macro-tailwind for the copper mining industry, driven by the outlook for a looming supply shortage based on the confluence of increased demand from green electrification initiatives and an impending reduction of mine production," Ralston of Zacks Small-Cap Research wrote.
World Copper acquired Zonia, about 100 miles from Phoenix, about a year ago when it combined with Cardero Resource Corp.
The project is made up of 96 patented and 185 unpatented mineral claims, as well as 567 acres of surface rights acquired from the state of Arizona. Zonia's full surface area is more than 4,200 acres, according to the NI 43-101 report.
Since 1910, more than a dozen operators have completed more than 52,000 meters of drilling in 613 holes in the area.
The mine produced 33.2 million pounds of cement copper from 1966 to 1975. A PEA for that site released in 2018 estimated measured and indicated resources of 77 million short tons grading 0.33% copper, containing 510 million pounds of copper, and an inferred resource of 27 million short tons grading 0.28% copper, containing 154.6 million pounds of copper.
Zonia offers potential for expansion, the company reported. As a result of the tonnage increase in the new MRE, Combaluzier with Red Cloud wrote that he expected Zonia's life of mine (LOM) to increase from 10 to 16 years.
Copper Supply, Demand: A 'Looming Mismatch'
One of the new pillars of the new green economy will be electric vehicles (EVs), and they need at least three times as much copper as their fossil-fuel counterparts because of the metal's electrical conductivity.
However, according to a report last summer by S&P Global, there is a "looming mismatch, on a global basis, between available copper supply and future copper demand resulting from the energy transition."
The demand is expected to double from about 25 million metric tons (Mmt) in 2021 to about 50 Mmt by 2035, according to the report. Electric vehicles (EVs), their charging infrastructure, solar panels, wind, and batteries all require much more copper than fossil fuel-based technology.
Streetwise Ownership Overview*
World Copper Ltd. (WCU:TSX.V; WCUFF:OTCQB)
"There is a positive macro-tailwind for the copper mining industry, driven by the outlook for a looming supply shortage based on the confluence of increased demand from green electrification initiatives and an impending reduction of mine production," Ralston of Zacks Small-Cap Research wrote.
Ownership and Share Structure
Wealth Minerals Ltd. (WML:TSX.V; WMLLF:OTCQB) owns about 15.8% of the company or about 19.2 million shares. About 27% is owned by management and insiders, including Director Robert Kopple with 12.3% or 14.9 million shares and Board Chairman Hendrik van Alphen with 2.7% or 3.25 million shares. CEO Peterson said he holds about 700,000 shares. The rest is retail.
Its market cap is CA$24.94 million. It has 121.7 million shares outstanding, including 83.8 million of them free-floating. It trades in a 52-week range of CA$0.65 and CA$0.135.
Sign up for our FREE newsletter
Disclosures:
1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: World Copper Ltd. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
