Worth Watching: Ten Potential ASX Copper Developers
ASX listed copper-focussed producers are thin on the ground, really it’s a choice between OZ Minerals Limited (ASX: OZL) and Sandfire Resources Limited (ASX: SFR). SFR could be worth a look as the imminent closure of its main mine, DeGrussa, has led to negative market sentiment. However, there is still meaningful profit to come from DeGrussa, the company is cash-rich with a reasonable development pipeline.
There are other copper producers, such as BHP, but leverage to copper is limited.
The list (click the link below) is not exhaustive and I have almost certainly missed comparable companies. The main issue with companies at this development stage is that the transformation from explorer to developer is very risky. The best factors for de-risking are: a major JV partner; an offtake partner which will also provide funding; project delivery by way of a BOOT (build-operate-own-transfer) delivery process.
Conclusion
Australia is not well blessed in the copper space, particularly when compared with the Americas. In the above list several projects have been around for quite some time but have not attracted JV/investor interest. Others may may not attract interest due cost issues such as grade or location. Having said that, there is little doubt that one or more will be producers in the near to medium term.
Many copper watchers were expecting the essential industrial metal to take a big hit from the COVID-19, but if current market fundamentals continue, we might even see copper posting a 2020 gain on economic recovery momentum.
That would be great for copper explorers, and their investors, who know the best leverage against a rising copper price is to own an early-stage junior with a sizeable and scalable deposit in a mining-friendly jurisdiction.
Cheers
These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.
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