Friday, August 16, 2019

Cu Acquisitions

I had a chuckle at Cordoba’s PR (link) on their resources, it is quite small, and spread over several deposits, but it made me think….

How good does a porphyry copper deposit need to be to give a massive erection to a mining executive and make them splash their wodge to buy it?

Fortunately, Oroco Resources had included a nice slide in their presentation (link), that I was able to use.

Assumptions:
  • CuEq derived from Cu and Au, the other metals don’t generate much value
  • 100% recovery
  • Metal prices of:
    • Cu = US$2.50/lb
    • Au = US$1250/oz
    • Ag = no-one gives a shit about this
Magenta = San Matias
Quite a spread, please note that I haven’t separated producing mines from development projects, and many of the largest deposits will have a high-grade core/starter pit (e.g. Cobre Panama), but you can clearly see that all bar one (El Pilar in Mexico) contained >1Mt copper.

So, plot on your favorite Cu project to see where it is, as companies don't appear to be very choosy with what they buy,.

In my opinion, we can see that lots of these projects are too low grade (<0.5% Cu) for development, but it seems that the only thing that matters is size.

I’m sure it is more technical than that, but it is an interesting guide to have a look to see is out there, and when copper starts raging, the FOMO will be strong and lots of stupid strategic acquisitions will be made and hopefully you’ll make out like bandits.

12 comments:

  1. It’s a useful guide. I think most majors would be looking to acquire projects capable of producing 200k tpy of copper for at least 30 years, to make it through several cycles of copper price. They would also want production costs to be lower quartile. Clean concentrate and no acid generation potential.

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    1. i'm sure such a deposit is on everyone's list. But where is it??

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  2. At least one copper mine acquisition left off: Apr 30, 2013
    Capstone Mining Corp. has agreed to buy BHP Billiton's Pinto Valley Mine in Gila County and the related San Manuel Arizona Railroad for $650 million in cash. Proven and probable mineral reserves increased to 473.8 million tonnes grading 0.31 percent copper (2016).

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    1. It is there, Oroco used total project resources (reserves and resources) so for Pinto Valley/Castle Dome, the project resources were ~1Bt @ 0.35%Cu (and minor Mo)

      https://capstonemining.com/news/news-details/2013/Capstone-Mining-to-Purchase-Pinto-Valley-Copper-Mine/default.aspx

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  3. That Oroco slide is no longer in the investor presentation deck.
    The May 2018 RBC Capital Markets: The World Needs More Copper has two gems:
    On Oroco's web site:
    https://orocoresourcecorp.com/copper-market-research-2/

    Larger projects tend to come with lower IRRs
    Exhibit 4: Large project come with larger capex at the expense of IRR
    (NOTE: Not translated from Mongolian)

    Exhibit 8: Smaller higher grade projects tend to have lower capital intensity

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  4. Interesting guide.

    Hoping you will have time to update your thoughts on GGI... I wonder how good their down hole and collar surveys are - they could have a big influence on size. 60 m apart? Or 6 m apart? Or more? (I'm a huge skeptic so I'm guessing closer to 6 then 60.....)

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    1. Done! I had planned to do an update, but work got in the way

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