Fast Tracking A Excellent Copper Project in Copper Country…
Shares Outstanding: 55.4 Million
Market Cap: $25 Million
Sullivan Family Trust:16.3% Forthe last month since my last article I have been stomaching marketvolatility and trying to find the most risk adjusted copper junior inthe market, in unstable times like today you do not want to be investingin a project with a huge CAPEX because the credit markets are stilldry, you want to invest in a company that has a reasonable CAPEX this isthe sweet spot with high commodity prices, money can still be raised. Itis obvious that copper is in a tremendous bull market rally, theunderlying commodity prices will not faultier so you are somewhatprotected from the downside when you buy a copper junior vs gold junior,copper is consumed and gone forever the same cannot be said about gold.
Notoften do you get an opportunity to invest in a junior explorationcompany and see it through to production in the mining industry. I wouldsuspect 1/100 projects actually see it through production fromdiscovery. The biggest project killer is time; time is of a essence in acyclical mining cycle, usually it takes a company 8-12 years fromdiscovery to production, by the time the project is fully financed andpermitted the good times are over and the party is long gone and it isno longer attractive to run the mine. Copper is at 4 dollars a poundtoday, commodity prices are at all time highs today because in the 90sand the early 2000s there was no exploration for metals, as prices werelow, today we spending record amounts on exploration and soon we willreplenish our supplies and then again we will see a downturn in metalprices. This is the beauty of the cyclical cycle, it is self correcting.The key points we have to look at, as investors are how do I profitfrom this cycle? Investing in a HUGE project that is 10-15 years in thedevelopment cycle like CUU.V or NDM.TO may not be the best course ofaction right now, investing in smaller companies with near termpotential will get you the same return faster, do not be lured by glitzydrill results or promotions, look at near term potential and reasonablecosts.
This Not Another Venture Promo… Ihave Identified Excelsior as a company that is fast tracking theirproduction Excelsior mining has gotten a lot of things done in a veryshort period of time. The low cost Gunnison project is located inArizona, for those of you that are unaware; Arizona is Copper Country,USA this great copper state produces 60% of the Americas copper or750,000 metric tons. Excelsior is a very special and unique deposit, itcan be mined using ISR methods, these kind of mining projects areMUCH easier to permit, the CAPEX is a fraction of a traditional openpit mine and best of all they cheaper to operate, and lastly they do notproduce unsightly pits and they are considered to be better for theenvironment. I will get into describing ISR in more detail later on inthe blog. The management team can raise the big bucks needed to fundthis project into production. The project is on track to be mining in2014 a mere three years away. Excelsior has been listed on the TSXVenture for about 2 years, they have made great strides, I expect thistrend to continue. Management is top notch, combined they have over 70years of copper mining experience The Key Points On ISR Mining. ISRmining accounts for nearly all uranium mining in the USA, it alsoaccounts for 20% of global uranium mining. This is not a new fly bynight method of mining the principles behind it are very simple.
Essentially lots of injection wells, the injection wells are injectedwith a solution, the solution goes out and collects all the copper fromthe porous rocks in a safe and controlled manner, then the solution inrecovered by recovery wells. The solution that is now filled with copperoxide is taken to a plant and extracted. Thousands of these wells aredrilled all over the property.
Youare probably looking at the grades, the average is 0.3%, don’t getfooled by low grades, low grade deposits can be mined efficiently andcost effectively using ISR methods. Why In-Situ Recovery Mining is VERY attractive: - Significantly Lower CAPEX, and the operating costs throughout the life of the mine are lower - ISR Mining is non evasive; no ore is moved, no unsightly open pits are left - Fewer permits are needed, mines can be in production within 18 months - Minimal noise, dust and greenhouse gases
- Reclamation cost’s are minimal
Findinga copper deposit that can be mined using In-Situ Recovery methods islike hitting a jackpot; all the stars have to align and when they do itcreates a perfect storm. Like I mentioned at the start of this articletime is of essence, most companies that are in the stage that Excelsioris in today will not benefit from high metal prices as it will take them8-10 years before they can be producing, Excelsior plans on doing thisexact same feat within 3 years! There are many other factors that can kill a project, but in the end it is a numbers game. How do you know if a project can be mined using ISR Methods? - The resource has to be below the water table - 9 of the 14 global ISR copper projects are actually located right in Arizona near the Gunnison project
- The rock has to be highly fractured and the copper should be a copper oxide for best results
The Hunt For the Next Ten bagger
Key Points that will make Excelsior a ten bagger: - Market Cap VS copper in ground Theoperating costs for the Florence project are supposed to be slated ataround .69 cents a pound; I believe that the Gunnison project will havecosts inline with the Florence deposit. The CAPEX should also be inlinewith the Florence project; these projects are almost identical the onlydifference is that Curis Resources has an 18-month head start onExcelsior. Thecurrent market cap is grossly undervalued for a company that has 4.7billion pounds of copper and a potential to increase that significantly. TheGunnison project is in Arizona, Arizona is copper country, moreimportantly its ISR mining country; 9 out of 14 global ISR miningprojects are located in Arizona. When it comes to ISR mining, Arizonahas the most skilled professionals and it has a competent workforce thatunderstands the specific challenges and needs of the industry. The citizens of Arizona are also supportive of mining; they understand that mining is a critical part of the economy. Thedeposit is not located in the middle of no where, it is 2.5hr fromPhoenix and 60 miles from Tucson, there are major highways and raillines that connect to the project. This is project is located in alegendary mining district and the company controls almost 3900 acres inthe region. The project is not located on or near any Indian reserve, itis far from the public, there is no scenic areas surrounding it and noone currently lives near it, this is truly the perfect place for a mine. - Hydrologicaland Metallurgical Results due within a month; these results willprovide substantial evidence to the market that Gunnison is minableusing ISR methods. - APEA is due later this year, a PEA will prove to the market that this isa legitimate project and the stock will start its inevitable parabolicrise. - JacksonHole Update; Ben the bank pretty much promised a QE3 if things got bad,I see copper stocks benefiting the most from QE3 as they have beenlagging, and Dr. Copper is a indicator of the economies over all wellbeing. Expect some sort of QE3 later this month
Excelsiorhas an indicated resource of 3.21 Billion pounds of copper oxide, andanother 1.21 Billion in the inferred category. This is a large project;the expected cost per pound should be under 70 cents a pound. Theaverage for a copper company that is putting a project into productionthese days is about 1.30, companies like Anvil Mining, Copper Mountain,Mercator Minerals etc, they have all went into production within thelast year with a cost per pound average of over 1.20. 150 million poundsat 4.00 would give excelsior 600 million a year, with an average cashcost of .70 cents a pound the total gross profit would be 495 millionaccording to my napkin economics model!
Excelsiorcurrently trades at a measly 0.006 cents per pound this gives thecompany a market cap somewhere north of 30 million companies such acopper mountain mining trade at 0.14 cents per pound, as Excelsiorcontinues to move up the ladder by proving feasibility and startingconstruction I see Excelsior reaching higher valuations as the cost perpound will defiantly be lower. At50 cents and a market cap of about 25 million, I see no risk investingin this wonderful copper company, I think the company will keep rippingit up proving up more copper and I truly see this producing before 2013.If you want to see what type of potential this company can have whenthey have their PEA out look at its older brother Curis Resources. Ireally see Excelsior gaining traction when the PEA is released. Theworld is increasingly going electric, we are seeing dozens of newelectric cars coming into showrooms, we are hearing about smart grids,electric hybrids, an electric car uses on average of 60 kilograms ofcopper a conventional automobile uses 24 KG. North Americans are tiredof being held hostage by political problems in the Middle East and weare generally tired of using fossil fuels that are ruining our planet,and we all have heard by now that China and India have finally decidedto join the rest of the civilized world by pluging into the electricgrid. Profit from the upcoming electric revolution by buying ExcelsiorMining Shares today. Discourse: This is one of my biggest holdings, I hold this personally and in a fund I manage. Thank you for reading this week’s edition of Resource Corp!
Its finally September LET THE GAMES BEGIN!!!
Check out my blog www.resourcecorp.blogspot.com for updates and the proper version of this post! Stockhouse takes off information and screws up format!