Blue Sky for a Red Metal: Copper Porphyry Deposits in British Columbia

Infrastructure upgrades have opened up new exploration opportunities for copper porphyry deposits in British Columbia.

Copper is the best electrical conductor of all metals and is used as a key material in a wide range of industrial applications. While the short-term outlook for copper may be one for the bears, the long-term demand outlook is much more optimistic. At the beginning of 2019, copper prices were up more than 200 percent since the year 2000.

China is the biggest driving force behind global demand for copper. While the trade war between the US and China may be causing some uncertainty in the market, the International Copper Study Group predicts that the Asian nation’s copper consumption will increase by 3.2 percent in 2019. Considering their proximity to copper-hungry Asian markets, copper porphyry deposits in British Columbia could play an important role in global copper production.

“I think as we get further out, 2021, 2022, there is definitely an argument that the idea of US$3.75 to US$4 (per pound) copper is not crazy,” said Stefan Ioannou of Cormark Securities.

Copper porphyry offer large-scale, long-mine-life operations

Copper porphyry deposits are among the most valuable sources of copper. They contain the largest-known exploitable concentrations of the red metal and are responsible for three-quarters of the world’s copper production. These deposits have several features that make them highly attractive to mining companies, including enormous size, decades-long mine life and high production rates.

Copper porphyry deposits range in size from 100 million tonnes to upwards of 10 billion tonnes of ore. Geologically, the copper mineralization within porphyry systems can extend vertically for several kilometers beyond the main deposit base. Such widespread, large-tonnage mineralization is what ensures a long mine life. According to the US Geological Survey, annual production from copper porphyry deposits totals billions of kilograms with a median grade of 0.44 percent copper.

Metallurgically, copper porphyry ore is inexpensive to mine via bulk-mining methods and concentrate can be produced using low-cost extraction methods include flotation, heap leaching and electrowinning. These deposits are also polymetallic by nature, representing around half of the world’s molybdenum production and 20 percent of gold production. They also account for significant production of silver, lead and zinc. Cost-effective copper porphyry mines that feature a diverse range of metal by-products are more likely to survive even the most challenging commodity cycles.

Copper porphyry in British Columbia

Copper porphyry deposits are forged along the Pacific Basin’s Ring of Fire and concentrated in the island arcs of the Philippines and Papua New Guinea as well as the orogenic belts of North and South America’s west coasts.

In terms of exploration potential, some of the most notable regions for copper porphyries are found in North America, including British Columbia. Along with Ontario, BC is one of the two largest copper-producing provinces in Canada. Most of the copper mined in BC is shipped to Asia for smelting and refining.

Teck Resources’ (TSX:TECK.B,NYSE:TCK) Highland Valley mine, one of the largest copper-mining and concentrating operations in the world, is built on a low-grade porphyry copper-molybdenum deposit found in the south-central region of the province. Teck also has a joint venture project with Newmont Goldcorp (NYSE:NEM,TSX:NGT) on the Galore Creek project in BC, which is one of the world’s largest undeveloped copper-gold-silver deposits.

Taseko Mines’ (TSX:TKO) Gibraltar mine near Williams Lake is the second-largest open-pit copper-molybdenum mine in Canada. In 2018, the mine produced 125.2 million pounds of copper and 2.4 million pounds of molybdenum. Other notable copper porphyry producers in BC include the Copper Mountain mine, a joint venture operation between Copper Mountain Mining (TSX:CMMC) and Mitsubishi (TSE:8058), and New Gold’s (TSX:NGD) New Afton gold-copper mine, which produces an average of 75 million pounds of copper and 85,000 ounces of gold annually.

British Columbia, an attractive mining jurisdiction

Newcrest’s nearly billion dollar deal for a majority share in the Red Chris mine is a testament to BC’s prominence as a highly attractive mining investment destination. The province is well known as a globally competitive, mining-friendly jurisdiction with plentiful mineral resources and a highly skilled workforce. BC netted C$10.1 billion in mining revenue for 2017, up from C$7.3 billion in 2016, according to the most recent PwC Canada report.

BC’s close proximity to Asian markets via its pacific coast ports is also a highly attractive feature for growth markets such as China and South Korea. Copper is a critical material in the manufacturing of electric vehicles as well as the lithium-ion batteries that power them. China’s mandate that all new cars be electric by 2030 is a major driver for copper demand along with the country’s massive urban infrastructure projects. While Asia accounts for more than 60 percent of global copper demand, the region lacks enough domestic sources and therefore turns to imports to provide supply.

Copper porphyry exploration in BC

British Columbia may be one of Canada’s biggest copper-producing provinces, but the province still remains relatively underexplored, offering lots of upside potential for copper-focused juniors.

The province’s mineral exploration companies have benefited greatly in the recent years from three critical infrastructure upgrades, including the paving of the Stewart-Cassiar Highway, the opening of ocean port facilities for export at Stewart and the completion of a C$700 million high-voltage transmission line.

Project generator Commander Resources (TSXV:CMD) has in its portfolio a growing number of BC-based copper porphyry projects totaling 29,000 hectares. The Omineca gold-copper project is located midway between the large producing Mount Milligan gold-copper mine and the past producing Kemess mine. The main target is a 4 kilometer long copper and gold soil anomaly defined by greater than 100 parts per billion gold and 100 parts per million copper.

Commander acquired two new copper porphyry properties in 2018, including the newly expanded Henry Lee property and the Burn property, both of which are located in North-Central BC. Commander also holds a cash-flowing royalty on Teck’s Tam property that generates C$25,000 in annual payments, as well as a production-based royalty on milled tonnes for a portion of the Boundary zone at the Mount Polley mine.

Copper Fox Metals (TSXV:CUU) has two copper-focused projects in BC, including its joint venture with Teck Resources on the Schaft Creek copper-gold-molybdenum-silver project. NorthIsle Copper and Gold (TSXV:NCX) owns the North Island copper-gold project on Vancouver Island. Freeport-McMoRan (NYSE:FCX) has an option to earn a 65 percent interest in the Pemberton Hills target on the property by funding a total of C$23.9 million in exploration expenditures. Metallis Resources (TSXV:MTS) owns the 10,600 hectare Kirkham project, which hosts multiple deposits, including the Cliff copper porphyry system.

Takeaway

Porphyry-style deposits represent one of the world’s premier sources for copper supplies. British Columbia’s geological address in the porphyry-rich Ring of Fire makes it an ideal location for copper exploration and development projects. With direct access to copper-hungry Asian markets, operations in British Columbia are optimally positioned to serve the growing copper market.

This INNSpired article was written as part of an advertising campaign for a company that is no longer a client of INN. This INNSpired article provides information which was sourced by INN, written according to INN's editorial standards, in order to help investors learn more about the company. The company’s campaign fees paid for INN to create and update this INNSpired article. INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled. If your company would benefit from being associated with INN's trusted news and education for investors, please contact us.