We Have Liftoff
While Rio Tinto and Mongolia continue to fiddle around ... so you think maybe they can't see the forest for the trees?
CU spot - $4.94 USD/LB today, up 3.78% on the day.
YTD - spot CU UP 26%. One year - spot CU UP 31.75%.
Note that NSR's and profitability of OT rise as a multiple factor of rises in CU and gold prices, as costs of mining, although subject to inflation, are rising nowhere near as fast and many, like financing costs, or purchased, installed and depreciating equipment and completed development costs, are fixed. We have the housing, the mill, the conveyor, the airport, the undercuts, the mobile equipment, the crushers, the surface infrastructure and most of the hoists and access in place. Lots left to do but the main point is CU is galloping ahead.
This was the driver for many of us being here in the first place - the ongoing demographic of rural migration purbanization of the global economy, continuing population growth, the globalization of production and consumption building out the middle class in populous underdeveloped countries, now the push for decarbonization through greater electrical, solar, wind and alternative power, and coincident long term underinvestment in new copper mine exploration and development, plus very long approvals from discovery through to production - averaging more than ten years and in many cases closer to twenty ... or never never plan in places like Panama, Alaska and elsewhere where combined environmental, aboriginal, or national political pressures block and delay new copper mine developments.
Add to that mine depletion, labour strife, climate change water access challenges particularly in Western South America ... hello copper concentrate shortages and no end in sight to rising prices except we will see rallies in the US dollar, we will see trading pressures, we will see global economic slowdowns from time to time shake down the trend. But the long term chart looks more and more like it will go parabolic and many observers have noted the lower grades and the costs of exploration and development, time to production, militate a higher price required to close the supply gap. This can't be fixed in any short term way.
No wonder the major companies are turning first to corporate M&A to expand their portfolios - but of course that is a zero sum game except in some cases it will expose depleting mines to new capital for expansion projects - mostly economically justified by expanding reserves due to lowering of cut-off grades now made economic by sustained higher prices.
The cash cow at OT is fattening up here!
So we can fret about the stalled progress of negotiations to procure tax stability for ETG, to define the extent of Lift 2 resources, to answer the ambiguity of shared liability for Mongolia wanting 34% of ETG's entitlements ... but CU is running away with the show at an annualized rate far in excess of all concerns, with leverage over costs. Awaaaay we go!
It is inevitable that these copper prices - especially topping $5, will attract eyeballs and interest to the sector, and the share prices across the board will respond to buying pressure by rising. Watch and wait I guess.
cg