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Copper set to outshine gold, Robert Friedland

[DRYOASIS]

Copper set to outshine gold, Friedland tells Sprott conference

 

An optimistic view on the outlook for copper and a promise of more co-operation in the gold mining industry were the focus of discussion as the Sprott Natural Resources Symposium got under way in Vancouver Tuesday.

Financier Robert Friedland outlined the investment case for copper, explaining that rapid urbanization, combined with efforts to fight air pollution and mass production of election vehicles will significantly increase demand for the red metal.

Goldcorp. Inc. (TSX: T.G, NYSE: GG, Forum) President and CEO David Garofalo was also on hand to predict that Goldcorp and other major gold producers will increasingly join forces to develop district scale projects, as they bid to replace depleting reserves, while trying to reduce costs.

Garofalo explained that a joint venture between Goldcorp, and Barrick Gold Corp. (TSX: T.ABX, Stock Forum) within the Maricunga Gold Belt in northern Chile is an example of how this is already happening.

However, the price of copper is trading at a 2-year high of US$2.84 a pound this week, driven higher by talk of a Chinese ban on scrap metal imports and better-than-expected consumer confidence numbers in the U.S.

Friedland said he is confident that copper will outperform gold as an investment in the coming years.

The Sprott Symposium is a forum for investors to mix and mingle with executives from resource companies which have been hand picked by Sprott U.S. Holdings Inc.. CEO Rick Rule and his team. The 4-day conference also features opinion from some high profile speakers.

During Tuesday's opening day sessions it was no surprise to see Friedland take a bullish stance on copper as his flagship company Ivanhoe Mines Ltd.(TSN: T.IVN, Stock Forum is currently developing one of the world’s largest copper projects in the Democratic Republic of Congo (DRC) in a joint venture with Zjin Mining Group Co. Ltd. and the DRC government.

Combined resources at the Kamoa-Kakula project stand at one billion tonnes of 3.02% copper in the indicated category, ranking it as one of the five largest copper deposits in the world and boasting significantly higher grades than any of the globe’s top 10 copper mines.

In December 2016, a preliminary economic assessment estimated that an initial mining rate of four million tonnes per year would have a projected average grade of 7.52% copper during the first five years of production. By comparison, most copper deposits in the world have an average grade of under 1%.

Friedland said he expects to see a nine fold increase in copper demand by 2027 that will be driven by mass production of electric vehicles. However, he said there is not enough copper being discovered in the world to meet that demand.

By comparison, he said there are currently no “disruptive technologies” that will spark a similar increase in consumption of gold.

Garofalo said he remains bullish on the outlook for gold. But he also said the gold mining industry as a whole will continue to struggle as it tries to find new reserves to replace the material that is being mined.

Goldcorp aims to buck that trend by maintaining an “Americas focus” and by working to extend the life of historic mining districts such as Red Lake and Porcupine camps in Ontario. Goldcorp is also hoping that the area around the newly acquired Coffee Project in the Yukon will eventually produce significant amounts of gold, hopefully in the region of 500,000 ounces annually.

Meanwhile, Garofalo said the major producers will look combine their interests in large deposits in a bid to achieve cost synergies that would not be achievable if the companies decided to go it alone.

For example, by forming a 50/50 joint venture with Barrick, Goldcorp has said it envisages jointly advancing the Cerro Casale and Caspiche gold deposits in northern Chile. When the agreement was announced, Goldcorp said the joint venture could allow the two companies to consolidate infrastructure, reduce capital and operating costs, condense environmental impacts and increase investment returns.

“I think we will see more of these types of partnerships [as the industry] tries to reverse the downward trajectory in reserves,’’ he said.
Read more at https://www.stockhouse.com/news/newswire/2017/07/26/copper-set-to-outshine-gold-friedland-tells-sprott-conference#rE1p7cd1MKmqgMRY.99