Every generation produces its business visionaries. In recent years, tech and social media luminaries like Elon Musk, Mark Zuckerberg and Jack Dorsey have garnered all the headlines and accolades.
This is because of their ability to create billions of dollars worth of value out of nothing more than ideas – ones that are meant to usher in a shiny new world with almost every convenience at our fingertips.
Trend-setters like this may bedazzle the capital markets. But this makes investors more likely to overlook the opportunity to ride the coattails of similarly youthful visionaries in less fashionable industries. Especially traditional ones that are both capital-intensive and labour-intensive, too.
Take gold, silver, and copper exploration for instance. A big find can be worth billions of dollars, but such massive buried treasures are few and far between. In fact, most of the world’s largest and most lucrative deposits have long since been developed thanks to the advent of modern, sophisticated mineral exploration technology.
This is why only a handful of the best and brightest young mineral explorationists have been hitting the ball out of the park over the last generation. One of them is Chris Taylor – a modest, low-key Canadian geologist, aged 40, who heads up a team of gold hunters that has made a world-class discovery in Red Lake, Ontario. All indications suggest it may shape up to be one of North America’s richest gold finds ever.
Backing a Winning Pedigree
Investors who chose to back Taylor’s Great Bear Resources (TSX.V: GBR) when the share price was only $0.15 would have seen their investments appreciate over 11,000% by now.
When Taylor first took the reins at Great Bear, he gambled that a resurgent bull market for bullion prices was on the horizon. And he has since been proven right. This is why his team’s against-the-odds discovery of a world-class gold deposit in the well-trodden Red Lake mining district has been so well rewarded by the capital markets. Great Bear currently has a market capitalization of around CDN $850 million, and is well on its way to becoming a unicorn company.
Now Taylor is also turning his attention to copper with Great Bear’s sister company,
Kodiak Copper Corp. (
TSX.V: KDK), where he is founder and Chairman of the Board. Fortunately for investors, he is no stranger to big copper finds. During his tenure with Imperial Metals, he was instrumental in the exploration of what became the world-class Red Chris copper-gold porphyry mine, which is also in BC.
Working alongside Taylor is Kodiak’s CEO Claudia Tornquist, who gained plenty of experience in the development of other world-class copper porphyry projects and mines while working as a senior executive with the multinational mining heavyweight Rio Tinto Group. These include the world’s largest copper mine, the Escondida operation in Chile, as well as Rio Tinto’s majority-owned, world-class Oyu Tolgoi mine in Mongolia.
Taylor and Tornquist believe that copper prices are similarly about to enjoy a renewed multi-year rally. This is where they see another excellent early-mover opportunity for investors. Notably, it was Taylor’s prescience that inspired Kodiak to acquire three prospective company-maker porphyry copper-gold projects – all of which he personally cherry-picked at a time when cash-strapped rival companies were struggling during a protracted mining industry slump.
Thanks to the leadership skills of Taylor and Tornquist, Kodiak’s share price has been on a roll lately.
Zeroing-In on Big Game in Copper’s “Elephant Country”
Zodiak wholly owns three prospectively high-impact exploration plays which are located in parts of western North America that are renowned for hosting some of North America’s most prolific copper-gold mines. Their various geological attributes have been discussed in a previous article
(click here to learn more).
It bears repeating that all were purchased at fire-sale prices during the worst of the mining industry recession. Ironically, the company was more focussed on being a diamond explorer at the time. It even had a different name – Dunnedin Ventures.
However, times change. Whereas diamond prices have lost some of their glitter, copper has become a particularly hot commodity lately. This is why a recent re-brand under a new name makes sense to better reflect the company’s newly prioritized aspirations.
Accordingly, Kodiak is now at the vanguard of the big push to replenish the planet’s dwindling copper supplies with new world-class discoveries. This daunting challenge is being presaged by China’s new US $700 billion economic revitalization stimulus program, involving massive infrastructure and urbanization projects.
All told, Kodiak is intent on finding elephant-sized copper-gold discoveries in so-called “elephant country” – a term used to describe the few geological environments around the world that host massive concentrations of copper, often including plenty of gold as a lucrative by-product.
However, only four world-class copper deposits – consisting of over one billion tonnes, grading 1% copper or better – have been found since the turn of the new millennium. This illustrates how difficult it has become to discover them.
Yet the rewards for any exploration junior that can beat the odds – especially in North America – promise to be stupendous. Each of these “super mines” is typically worth billions of dollars and is large enough to run profitably for decades on end.
Copper Demand to Surge for Years to Come
China already consumes more than half the world’s copper and its refineries cannot get enough of it. Now that this heavily populated country is going into overdrive with record-setting building and consumption, it is manufacturing far more copper wire and cable than ever before.
Therefore, some of Canada’s leading mining analysts are calling for a big rally for copper prices in the coming years. They include Eric Zaunscherb, a leading Toronto-based mining analyst in the capital markets, who says, “If the economic recovery from the 2008 financial crisis is a guide, copper pricing and company valuations face significant appreciation going forward.”
South of the border, the consensus is the same. For instance, New York-headquartered investment firm, Jefferies Financial Group, said last week in a letter to its investors, “Copper has benefited from a stimulus-driven recovery in Chinese demand, and an end to the lockdown in the United States and Europe is a clear cyclical tailwind. Demand has been highly correlated with global GDP growth for the past 120 years, and this correlation should continue.”
Meanwhile, annual copper demand is now significantly outstripping supply due to heightened demand, particularly for the electrification of vehicles and other “green” initiatives.
Another contributing factor is the diminishing average grade of the world’s copper-gold mines. It has fallen by around 60% from around 1% copper to less than 0.4% copper over the past couple of decades.
Additionally, nearly all the world’s high-grade copper reserves are long gone. Miners have to dig deeper and deeper each year to continue to access large quantities of copper. In turn, this means that production costs are increasing steadily.
The shortfall in new world-class copper discoveries in recent years is not for the lack of trying. The mineral exploration industry has spent US $25.8 billion in finding and developing new deposits over the past 10 years. And this has involved 21 major discoveries, which yielded 102.4 million tonnes of copper. In stark comparison, the preceding 19 years were far more fruitful, involving 199 new discoveries that subsequently produced almost one billion pounds of copper (992.5 million tonnes, to be exact).
Kevin Murphy, a senior mining analyst at S&P Global Market Intelligence, puts these figures in clear perspective:
“Even after adjusting for copper in recently identified deposits that we expect eventually to surpass our major discovery threshold, and the addition of further copper at recent major discoveries, we forecast copper in discoveries to remain historically low,
he told the Mining Journal last month.
The MPD Property: A Copper-Gold Giant in the Making?
Taylor’s next shot at glory comes with the MPD Property located in southern British Columbia. This expansive 7,850-hectare project area sits at the heart of one of North America’s most prolific copper belts and in close proximity to several big-league copper and gold mines, namely Highland Valley, Copper Mountain and New Afton.
Also, there exists excellent infrastructure in this mining camp, including a network of highways and roads that offer easy access to the MPD project area.
Notably, this is the first time ever that a large land package has ever been consolidated into one single contiguous property, which boosts the odds of Kodiak unearthing a district-scale, elephant-sized copper-gold deposit, much like the ones that this historic mining district is already renowned for.
To this point, the company is about to capitalize on a successful Phase I drill program that was conducted last year – one that shows that copper mineralization runs to over 800 metres below surface, with a significant improvement of grades compared to historic results. In fact, some of these drill results compare very favourably with nearby operating mines, such as Copper Mountain.
Examining copper-gold porphyry core from Phase I drilling at Kodiak’s MPD Project in BC.
Very tellingly, a recent geophysical survey revealed a massive anomaly that correlates well with the highest grades intersected among Kodiak’s Phase I drill results from last year. In other words, both exploration methodologies appear to corroborate one another, giving credence to the tantalizing theory that a monster copper-gold porphyry deposit may be lurking beneath the surface.
A Phase II drill program is about to test this hypothesis. It is expected this this next round of drilling may go a long way towards defining the structural controls – at depth and along a lateral plane spanning a 10-square-kilometre footprint – of a prospectively very expansive copper-gold porphyry system.
For more information on the prospects of this upcoming drill program, please visit the following link where investment newsletter writer Keith Schaefer offers up a compelling commentary.
Company CEO Tornquist sums up the opportunity for investors as follows, “Going forward, we are now advancing a known mineral discovery that is currently undervalued but has demonstrated considerable exploration upside and the potential to yield a major copper-gold porphyry system. We believe that MPD has the right geological characteristics to drive rapid value growth for investors when modern exploration methods and management’s experience is applied.”
If Kodiak does indeed come up trumps, Chris Taylor will surely be remembered for many years to come as one of the mineral exploration industry’s brightest young shining stars. And unlike the fresh-faced billionaire titans of tech, he will have the bragging rights of having created vast wealth for investors the old-fashioned way – through sweat and toil, as well as an equal measure of outside-of-the-box thinking and dogged determination.
ABOUT THE AUTHOR: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have also appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, The Times (UK), Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post, AOL, City A.M. (London), Bloomberg, WallStreetOnline.de (Germany) and the Independent (UK). He has also appeared in business interviews on the BBC, CBC, and SKY TV. Marc is also an enthusiastic shareholder of Kodiak Copper.