5 Ways to Play the Copper Bull Market https://energyandgold.com/2021/02/19/5-ways-to-play-the-copper-bull-market/?shared=email&msg=fail “Build your new house out of copper bricks , cover that copper with gypsum wallboard so you forget it’s in the walls. Ten years from now you’ll be able to tear down that house and buy a fleet of electric Lamborghinis with your profits.” ~ Robert Friedland Our third copper pick is a company that is just beginning to ramp up copper production at its Gunnison Copper Project in Arizona.
Excelsior Mining (TSX:MIN, OTC:EXMGF) is steadily ramping up copper production after
announcing the sale of 90,000 pounds of copper cathode in January. Excelsior anticipates achieving the nameplate production rate of 25 million pounds per annum later this year. Similar to Ivanhoe, Excelsior is positioned in the sweet spot of the Lassonde Curve.
Excelsior is America’s newest copper producer and Gunnison has the unique title of being the world’s most environmentally friendly copper project. This is due to the fact that Gunnison utilizes an ISR mining method (in-situ recovery), which means that there is no heavy equipment, no blasting or fracking, and no underground tunneling required.
At Gunnison, leach solution (acid) is delivered into injection wells and the solution moves in a controlled way through naturally fractured rock. Extraction wells then pump to recover a copper-rich solution:
This copper-rich solution is pumped to the SX-EW facility (solution extraction and electrowinning facility) and copper is extracted from the solution to create pure copper sheets. The remaining solution is recycled back into the process.
A final feasibility study completed in 2017 showed a US$807 million net present value (NPV) for Gunnison using a 7.5% discount rate and a US$2.75/lb copper price. At today’s US$3.89 copper price the NPV is well over US$1.5 billion. Meanwhile, Excelsior’s current market cap is less than US$200 million.
This gap between Excelsior’s potential future value and its current value has a lot to do with last year essentially being a write-off year for the company. Covid certainly made everything more challenging, however, Excelsior also decided to take many months in order to complete a wellfield optimization to improve efficiency for long-term production performance.
The Gunnison Project is currently in the early days of ramping-up copper production, which is expected to achieve the rate of 25 million pounds per annum later this year as the first phase of a multi-staged development plan.
Gunnison will eventually be expanded to achieve a production rate of 125 million pounds per year – this will occur in year 4 or 5 of a 24 year mine life.Later this year, once the entire wellfield is active at Gunnison and copper cathode production accelerates, I expect Excelsior shares to quickly see an upward revaluation to C$1.50+