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Copper trading in New York jumped more than 2% to $2.4775 a pound ($5,460 a tonne) in afternoon trade, bring the bellwether metal’s gains since its mid-March low to more than 25%.


CNBC reports Bank of America analysts increased their price forecast for copper in 2020 by 5.4% to $5,620 per tonne.


Given its widespread use in industry and construction, the expected contraction in the global economy this year could translate into double digit declines in copper consumption according to BofA:


However, they questioned whether falls in purchases to such a degree were realistic, and suggested that while Western economies may not completely mirror the rebound seen in China, the easing of lockdown measures would likely facilitate a rise in raw material purchases around the world.


“We also note that the current recession is different to the usual downturns on various other metrics: the epicenter is in services, not manufacturing; governments are gearing up to implement remarkable fiscal stimulus packages, reflected in China’s NPC and Europe’s Next Generation EU initiative,†the note read
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With the price of copper going up, it seems like the thefts of copper go up in sync.


From The OZ

The WA government is regulating copper due to widespread theft from homes, industrial sites and even memorial plaques and the live electricity network.


Unlike gold and silver, there is currently no requirement in the state to record information about the sale of copper, making it an attractive metal for criminals to steal and quickly make a profit from.


The state government says the problem has escalated in recent times, with thieves stripping copper wiring from residential and commercial properties - even sculptures.


Worryingly, utility Western Power says there has been significant theft of copper from around its live electricity network, leaving power poles and other infrastructure in a potentially unsafe state.


Under the State Government’s proposed legislative amendments, sellers of copper will be required to produce identification and licenced dealers will have to record all transactions and report details to police.


“The cost of the mess and significant damage being left by copper thieves exceeds the value of the copper stolen,†Police Minister Michelle Roberts said.


“It doesn’t matter if its wiring, piping, brackets, even memorial plaques, it seems these thieves will steal anything to make a quick buck.


“It’s effectively both vandalism and theft.â€


She said the State Government was looking into more comprehensive legislative

OZL recently reached 52 week highs.


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What makes for a good commodity stew? A dollop of demand strength. A sprinkle of supply concerns. A rising cost curve. Minimal threats from alternatives.


We see all these ingredients and more for the copper sector and are thus more bullish than both consensus commodity forecasts and the forward curve.

Bernstein, US investment firm, September 2020
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Goldman Sachs calls copper “the new oilâ€​


Goldman forecasts a copper price of US$15,000 per tonne by 2025, up from the US$9,000 per tonne today. It estimates prices for the metal will average US$9,675 per tonne this year; US$11,875 per tonne in 2022; US$12,000 per tonne in 2023; and US$14,000 per tonne in 2024.​


Goldman estimates “EV-related demand to amount to 2.4 million tonnes of copper by 2030 (vs. 210kt in 2020) with an additional 153kt of copper demand coming from charging stations (vs 14kt in 2020). We expect this demand to grow at a rate of 31% a year for the remainder of the decade.â€​


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Given that the Australian market is renowned as one of two global resources hubs, it would be reasonable to assume that there would be a host of copper producers listed on the ASX. But that is not the case. If we exclude BHP (ASX: BHP) and Rio Tinto (ASX: RIO) - whose main earnings come from iron ore - there are only four ASX-listed copper producers. This scenario has played out over the past decade via a combination of corporate activity, low copper prices, increased fiscal discipline and depleted ore bodies. This is extraordinary for the most widely used base metal on our planet.




Of the four producers, OZ Minerals (ASX: OZL) and Copper Mountain Mining (ASX: C6C) are both trading on price-to-equity ratios in the mid 20s. Sandfire Resources (ASX: SFR) would appear superficially cheap, however, the DeGrussa mine is scheduled to be depleted sometime during 2022.


This leaves Aeris Resources (ASX: AIS), which our funds have been steadily accumulating on a PE ratio of less than 3-times. Aeris recently came to life on the well-timed and equally well-priced purchase of the Cracow gold mine from Evolution in 2020. In fact, so well-timed and priced was the acquisition, that in the space of 12 months management has been able to completely pay off its debt and is now generating strong surplus cashflow. But it is the Tritton Copper mine near Cobar in western NSW that has piqued our interest....



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The copper price hit an all time high of $US10,724 a tonne in May, notching an over 35 per cent gain since the start of the year. In the first week of June, it is still up nearly 26 per cent, hovering just below $US10,000 a tonne.


Sam Spring, former Goldman Sachs analyst and now CEO of newly listed small cap copper explorer Kincora Copper KCC, told Stockhead the supply side for copper, and risk of a supply side shock after recent years of relatively limited disruptions, continued to be in focus given the already tight market.


He said this was illustrated by current TC/ RCs (copper concentrate treatment and refining charges) and inventory levels.

At the moment there is a query over copper exports from the DRC, strikes at BHPs Escondida and Spence copper mines in Chile, a bill to ratchet up royalties in Chile ahead of a general election in November and a similar narrative in many other jurisdictions which are either important sources of new copper supply or existing production, he explained.


To put the Chilean bill into context, a recent note from Goldmans estimated, if unaltered, the live bill could put at risk some 1 million tonnes of annual output, representing around 4 per cent of global copper supply, at a time where Codelco is in the early stages of $35 billion of spending until 2030 to more or less keep its existing production profile just flat.

Spring said elections and COVID driven impacts on state budgets were also at play in Peru, which accounts for around 13 per cent of global copper supply.



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And to add to the potential woes from South America, from Zero Hedge

In a continuing trend in Latin American politics of Left-wing political movements on the ascendancy which has seen successful attempts to roll back free market friendly policies in favor of "starting from scratch" toward erecting more interventionist socialist states, the next political and electoral earthquake is set to hit Peru, where socialist candidate Pedro Castillo is maintaining a narrow lead over right-wing rival Keiko Fujimori as votes are still being counted and increasingly contested from Sunday's run-off election.


As of early Tuesday it's still being deemed "too close to call", but with Castillo pulling away Fujimori is now alleging election "irregularities". Son of peasant famers and an outspoken union leader, Castillo has "vowed to nationalize Peru's vast mineral resources, to expel foreigners who commit crimes in the country, and to move towards reinstating the death penalty," according to one profile.

Meanwhile Reuters noted that Peru's sol has continued plummeting to new lows, falling another 1% Tuesday after plunging 2.5% on Monday.


Rinstating the death penalty is always a bit of a worry, especially to his enemies, but the real wrecking ball is the nationalisation of all minerals is a worry.

History has shown that nationalisation never works all that well, and I can't see why Peru would be any different.


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[Apart from BHP and RIO as diversified majors,] there are only four ASX listed copper producers. This scenario has played out over the past decade via a combination of corporate activity, low copper prices, increased fiscal discipline and depleted ore bodies. This is extraordinary for the most widely used base metal on our planet.


Of the four producers, OZ Minerals (ASX: OZL) and Copper Mountain Mining (ASX: C6C) are both trading on PE ratios in the mid 20s. Sandfire Resources (ASX: SFR) would appear superficially cheap, however, the DeGrussa mine is scheduled to be depleted sometime during 2022.


This leaves Aeris Resources (ASX: AIS)....

There are, however, plenty of explorers and small producers which offer near-pure exposure to the copper story, including:


Venturex Resources (ASX: VXR) is very much a follow the man situation. The company is the new corporate vehicle for Bill Beament, the creator and former driving force behind the Australian gold sector's great success Northern Star (ASX: NST), which ran from $0.02 to $16 over a decade.


This time around Beament wants to build a company that he controls, rather than serve as a salaried executive with another variation being copper rather than gold ... though it is also worth remembering that the two metals often occur together.


Beament's plan is to take the reins of Venturex on 1 July with the relatively small Sulphur Springs project in WAs Pilbara region as the initial focus, but with ambitions of getting much bigger through discovery and deals – perhaps a repeat of Northern Star.


Since Beament announced his shift to Venturex in February, as well as taking a 30% stake in the stock, it has rocketed up by 750% from $0.09 to $0.78, but at that latest price the company is only capitalised at a modest $330 million, a country mile short of Northern Star's $12.8 billion.


Aeris (ASX: AIS) was once a copper star when trading as Straits Resources and working the Tritton mine in central NSW.


Older investors might remember, longingly, when Straits was a $5 stock in 2011, which was the last time copper traded as high as $US4.50/lb, before a long slide down to $US2/lb ... a drop which was instrumental in Straits falling to around $0.50, and then all the way to $0.03 at this time last year.


Reborn as Aeris the key asset remains Tritton which is generating handy profits, but which is also at the centre of an exploration program.


The program is starting to reveal highly encouraging signs of bigger and better nearby copper deposits.


The discovery of the Constellation structure just before Christmas last year put a spring in the Aeris' share price which last week hit a 12-month high of $0.21.


Apart from high grades, such as 38m assaying 3.72% copper reported last week, Constellation is shallow (starting at 8m) and only 40km from the Tritton processing plant.


A company that tends to float under the radar is Caravel Minerals (ASX: CVV) with its namesake bulk tonnage copper project in WA.


Caravel maintains its namesake project is one of Australia's largest undeveloped copper deposits with a resource of 662Mt at 0.28% copper for 1.86Mt of contained metal.


A pre-feasibility study is underway which is due for completion later this year along with a resource upgrade.


Of note, is that large institutional investor Paradice bought up $7 million in Caravel shares in a $7.5 million equity raising last month.


The investor is known for longer-term strategy of purchasing intrinsically undervalued stocks trading at "substantial discounts" within he small and mid-tier spaces.


In the past 12 months, Caravel's share price has boomed more than 2,000% from around $0.025 last June to $0.54.


Inca Minerals (ASX: ICG) – the name is a clue to the company's focus on South American assets, but the real interest in Inca today is a promising discovery in the Northern Territory.


Work so far has been largely limited to "rock kicking" which is one way of describing the collection of chip samples from outcropping rocks, but those samples have yielded tantalising assays of more than 9% copper and 3 grams per tonne of gold.


The location, 450km northeast of Alice Springs is also a point of encouragement because it is a region with a rich history of copper (and gold).


News flow from the Jean Elson discovery and the Frewena East project is expected to pick up over the next few months, helping continue a share price move which has seen the stock double from $0.07 to $0.14 over the last four months, a price which values the company at $54 million.


Coda Minerals (ASX: COD) is a star performer on the market this week after a highly encouraging drill result from its Emmie Bluff Deeps project in South Australia's "copper elephant" country which is home to BHP's giant Olympic Dam mine and OZ Minerals Prominent Hill.


The first deep hole at the project intersected a whopping 200m of IOCG (iron oxide copper gold) mineralisation with assays yet to be processed, but a result good enough to more than double Coda's share from which jumped from $0.36 to $0.88, a price which values the stock at a still untaxing $60 million.


Much more drilling is required by Coda, but the latest result is a spectacular justification for decades of work by explorers on a project once known as Mt Gunson and an asset on a number of companies including Chinese control WA iron ore producer Gindalbie Metals.


The Chinese company behind Gindalbie, Angang Steel, retained a 14% stake in Coda after it was floated off last year.


Other small copper explorer stocks worth an entry in an investor's black book of stocks to watch include:

Encounter Resources (ASX: ENR), which has among its assets a promising joint venture with BHP in the Northern Territory.


Peel Mining (ASX: PEX), which has made what looks to be a high-grade discovery at its Wirlong project in NSW.


Prodigy Gold (ASX: PRX), which is partnering IGO (ASX: IGO) in its promising Phreaker discovery in WA.


Stavely Minerals (ASX: SVY) which has reported a series of outstanding copper and gold assays from its Thursday's Gossan project in Victoria.


QMines (ASX: QML), which recently listed on the ASX is currently drilling the Mt Chalmers copper and gold project in Queensland.

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