The copper sector can expect to come out of the price and supply doldrums over the next 12 to 18 months according to an Australian company which has just raised A$13 million to progress its advanced copper project in Chile. And it would include a continued high profile presence in the electric car sector where more new era commodities such as lithium and cobalt are fancied as being market drivers.
Addressing the opening day today of the sixth Paydirt Latin America Downunder conference in Perth, Hot Chilli Managing Director, Christian Easterday, said it was obvious from recent years that a $3/lb copper price was the benchmark for whether a project was viable or not and an important incentive price for the copper development pipeline..
“Anything below $3/lb has consigned projects to the uneconomic zone and it is little surprise that over this period, the number of Australian copper plays seeking new projects has collapsed from around 40 in our original peer group to just 13 companies currently,” Easterday said.
“But we believe the copper market is rising and moving out of its depressed cycle. One only has to look at the fact that Australia’s majors, BHP and Rio, have assigned substantial budgets this year to copper exploration, pointing to a reversal in attitudes to copper’s future prospects.”
On the much touted market dynamics for an increased global electric car market, Easterday said that sector remained the “icing on the cake” for copper.
“For all the talk and promotion, copper remains the most intensively used element in the electric car market,” Easterday said.
“Against lithium and other promoted metals, copper really stands out well and truly above anything else. When a market faces new technologies, the level of disruption to existing market dynamics is unpredictable – but copper remains king in electric car application.
“As such, we see a very tight copper environment becoming even tighter.”
Hot Chilli has an 80% stake in the Productora copper project JV in Chile, with shareholders voting on June 6 to approve a A$13 million unsecured Convertible Note funding package to pay off a $6.5 million loan liability and provide working capital for a second growth stage based on drilling out Productora to enable a development decision with 18 months.
Drilling is already underway, testing what Easterday describes as “large company making porphyry copper targets” at Productora.
Significantly, the cost and risk of running the drilling programs is all being borne by Blue Spec, a company owned by Hot Chilli’s Chairman, with no liability on Hot Chilli.
Chile is home to 30% of global copper production and hosts some of world’s largest porphyry copper mines
The PFS on Productora pointed to a minimum 10 year mine life, averaging 66,000 t/y of copper metal and 25,000 oz/y of gold in the first eight years.
