Advanced copper assets in tier one assets are as rare as hen’s teeth and are only becoming more sought-after as the copper price continues to surge higher.
Copper broke through US$10,000 per tonne this week as the red metal hit the headlines due to BHP’s pursuit of Anglo American.
Bid or no bid, high-quality copper assets are scarce, particularly against the backdrop of supply changes and growing demand.
One company that stands out against this backdrop is FireFly Metals, a copper explorer run by the team behind ASX 200 gold producer Bellevue Gold.
Last year, FireFly (formerly Auteco Minerals) acquired the Green Bay copper project in Newfoundland, Canada from the administrators of Rambler Metals for A$65 million in cash and shares.
The deal included A$250 million of infrastructure and an existing resource of 39.2 million tonnes at 1.83% copper and 0.5 grams per tonne gold, or 2.1% copper equivalent, for 811,000t of CuEq.
Green Bay’s Ming underground mine and 500,000t per annum Nugget Pond processing facility were operated up until early 2023.
Since acquisition, FireFly has been aggressively drilling at the project with the aim of growing the resource.
The company raised A$52 million last month at an average price of A64c per share and the stock has performed strongly since then, hitting an all-time high of A87c this week.
“[The raising has] really propelled us to get more rigs in and get the geophysics happening – a little bit like what we did with Bellevue Gold,” FireFly managing director Steve Parsons said.
“The more money you’ve got, the more drill rigs you can get in, which means you get the results back quicker and get things happening quicker – momentum is such a big part of this industry.”
As well as giving the company the financial firepower to advance Green Bay, the raising also saw BlackRock emerge with a 9.9% stake.
“BlackRock were strong supporters of us at Bellevue,” Parsons said.
“There’s a really good relationship there and they’ve followed us from being a A$100 million company all the way through to a A$2 billion company at Bellevue, so we’re hoping for the same journey and support from them along the way.”
Resource growth
FireFly already has three rigs on site at Green Bay with a fourth set to arrive shortly.
On Monday, the company reported new high-grade drilling results which sit between the resource and an earlier 460m step-out hole of 6.3m at 5.9% CuEq.
Results from the volcanogenic massive sulphide zone included 9.1m at 5.4% CuEq and 13m at 4.4% CuEq, while drilling in the footwall zone hit multiple high-grade zones with results including 12m at 4.8% CuEq and 13.8m at 2.3% CuEq.
Argonaut estimates that every 500m of vertical addition to the Ming deposit should add 21Mt at 2.3% CuEq in resources containing 475,000t of CuEq.
FireFly is planning a resource update in the September quarter, which will include about nine months of new drilling.
“We certainly should be able to get a pretty big increase in that resource,” Parsons said.
Production potential
Parsons said the upcoming resource update would allow the company to start looking at development scenarios.
While the project has an existing mill, FireFly will look to build a larger, more fit-for-purpose plant.
Parsons pointed out that the current resource is already big enough to start an operation.
“I think if we can get that resource up to 50, 60, 70, 80 million tonnes or so over the next little while, that’s certainly going to be a very large and long-life copper mine and hopefully, still with potential to grow from there,” he said.
The average time to start up a new copper mine has blown out to 16.5 years.
“Something like our Green Bay project, with the all the infrastructure sitting there, except for the processing plant, and it’s all fully permitted ready to go, you can obviously get into production really, really quickly, so that’s the real benefit for us,” Parsons said.
Argonaut has modelled a US$300 million, 3Mtpa operation over 14 years from mid-2026, which returned a post-tax net present value (8% discount rate) of A$819 million, assuming metal prices of US$4 per pound copper, US$1850 an ounce gold and US$20/oz silver.
On that basis, Green Bay would produce 46,000tpa of copper at all-in sustaining costs of about US$1.68/lb of copper, net of by-product credits, making it a copper mine of scale on the ASX.
For reference, Sandfire Resources’ (market cap A$4.4 billion) new Motheo mine in Botswana is expected to produce 39,000t of copper this financial year, while Metals Acquisition’s (market cap A$1.45 billion) CSA mine in New South Wales produces around 40,000tpa.
Canaccord Genuity analyst Tim McCormack recently visited Green Bay and said it had “all the ingredients for a mine of considerable scale”.
Argonaut and Canaccord both have speculative buy ratings for FireFly with price targets of A$1.45 and A$1.40 respectively.