I sleep soo good at night knowing that we are a highly profitable gold producer, and ...... soon a copper producer on top of this.
Read the following story.
jojo
Miners rush to find new copper sites Julie Gordon, Reuters
It will take more time, arid lots more money, to bring new copper supplies online as miners venture into more challenging geography and geology to meet soaring demand.
Passion for the metal, used in wiring and construction, has risen because of rapid urbanisation in Brazil, China and India. That demand coupled with project delays around the world, sent copper prices on the London Metal Exchange soaring 260 per cent from a December 2008 low to a record high of $10,190 a ton in February.
Rising copper prices bring rising profit, prompting junior explorers and diversified giants to spend increasing amounts of cash in search of the next mother lode.
�Where we sit today, we�re well above the incentive price to bring on new supply,� said BMO Capital Markets, analyst, David Radclyffe. �It�s a question of when, not if, that new supply arrives.� A new wave of copper projects and expansions is set to begin over the next two to three years, with about 60 per cent of the supply coming from Latin America.
While the price of copper has dipped 3 per cent this year, analysts said there was still enough of a shortfall to make challenging projects worthwhile.
�At the end of the day, we�re still short copper assets,� Radclyffe said. �The companies are spending a lot more on exploration this year, and hopefully that does lead to some more discoveries.�
The biggest challenge for the sector is not that there is no copper left but that all the good stuff is gone. �There�s no �peak copper� theory,� said Darren Lekkerkerker, a portfolio manager at Fidelity Investment Canada. �The problem is the easy-to-get stuff, we've already got.� Lekkerkerker, who manages a resource fund with copper investments, said producers needed either to take a second look at challenging, high-cost; projects or to start exploring in countries that might be less politically stable.
But moving into new regions is more challenging. Companies face major risks in places where government royalties and mining taxes may be unclear and where, in extreme cases, assets may be nationalized.
Infrastructure may also be poor or nonexistent in those places. Ivanhoe Mines' $5 billion Oyu Tolgoi project in Mongolia, about 80 kilometers, or 50 miles, from the Chinese border, is a perfect example, Lekkerkerker said. The mine was delayed repeatedly as the company negotiated an investment agreement with the government and then put roads, power and water in the remote Mongolian desert.
�They discovered it in 2001, and they�re going to start producing next year,� Lekkerkerker said. �That�s 11 years later. It just illustrates how long it takes.� Global exploration spending jumped 45 per cent in 2010, and about 20 per cent of that went into copper projects, according to Metals Economics Group, an independent research firm.
Most of the overall exploration is happening in North Chile are among the top 10 areas being searched, primarily because of copper exploration.
�There�s no question that people are spending money on the ground,� said Pierre Vaillan court, a mining analyst at Macquarie Research. But the traditional copper supply regions are saturated, and big producers are spending more money farther afield.
Southern Copper, which owns projects in Peru and Mexico, is exploring for new deposits in Ecuador, while First Quantum is focusing on Africa, with projects in Zambia and Mauritania.
The global giant Rio Tinto has invested in Mongolia. Still, even if someone announced a massive new discovery tomorrow, it would be years before the copper reached the market � especially if the project was in a more risky region. �It�s a big effort to bring on new production,� Radclyffe said. �Any exploration success that occurred this year would be very hard to bring on production until the next decade.�
EXS Price at posting:
68.0¢ Sentiment: LT Buy Disclosure: Held