Big appetite for Canadian copper raising puts spotlight on ASX red metal explorers

The Canadian mining market has received bad press in recent years for its lack of support for the junior explorers.

But oh boy, the market there loves a development story, particularly if it is for one of the hot commodities like copper.

That hit home during the week when Steve Parson’s FireFly (ASX:FFM) went for a bit of a trot in response to news all the way from Saskatchewan.

The news was from the Toronto-listed Foran Mining that it had pulled in $C315 million from placements (including to Agnico Eagle) and an upsized project debt facility from the Sprott group for its McIlvenna Bay copper project.

There are similarities between Foran and FireFly. Both are advancing copper projects of roughly similar size and of roughly similar exploration upside, with FireFly’s focus being its Green Bay copper-gold project in Newfoundland.

The main difference between the pair is that Foran boasts a market cap of $A1.32 billion while FireFly has a $A392m market cap (undiluted).

Yet FireFly’s development ambition is aided by some $250m in infrastructure left behind by the previous under-capitalised owner. FireFly is also close to releasing a resource upgrade for Green Bay.

Foran is more advanced on the development front though, with first production from McIlvenna Bay project forecast for the fourth quarter of next year.

FireFly in the meantime is focussing on growing the resource in support of an expanded Green Bay come back, with local followers of the stock suggesting a 40,000tpa-60,000tpa production rate is on the cards.

The coming resource upgrade – recent exploration returned high-grade mineralisation up to 460m outside of the current resource estimate of 811,000t at 2.07% copper equivalent – shapes up as the first step in closing the gap on Foran’s market cap.

The world’s biggest resources investor BlackRock likes the FireFly story. It has been a steady buyer in the past month, increasing its stake from 11.89% to 13.12% at 80c a share. FireFly traded on Thursday at 84c.

New World Resources (ASX:NWC):

As much as there is an argument for FireFly to start capturing North American-type market valuations for copper developers, so it is for New World Resources (ASX:NWC).

It has just released a prefeasibility study for its Antler copper dominant polymetallic project in sunny Arizonia.

The PFS was based on a mining inventory of 13.6Mt grading 3% copper equivalent to underpin an initial 12.2 year mine life. Annual production was put at 30,100tpa of copper equivalent at C1 cash costs for copper, after co-product credits, of US12c/lb (negative US29c/lb at spot prices).

So it looks robust all right. Canaccord said it was a solid PFS which overall, looked to be a bit better than it had been modelling. It has a 12c price target on the stock.

But since the release of the PFS, NWC has been left drift to 2.9c a share for a market cap of all of $82m.

Its market cap looks underdone on a comparable basis, particularly given the low capital intensity ($US298m), and the advice to the company from finance types that the project looks to be capable of supporting 65% debt funding.

Debt funding will get easier still, assuming copper prices head off to more than $US5/lb come 2025 like the big investment banks are forecasting.

NWC expects to make a final investment decision on a development by late 2025 for a construction start in 2026.

To help keep the stock out of the trough that can develop during the financing phase, NWC is pursuing a dual strategy of getting to FID but also adding to the story with the drill bit at both Antler and at other regional targets.

Discover Co:

Ed Eshuys, the veteran geologist of Plutonic, Bronzewing and Jundee gold deposit discovery fame, has notched up an interesting copper discovery at Pernatty on South Australia’s Suart Shelf.

It’s early days but the large-scale potential of the shallow Zambian-style sediment-hosted mineralisation intersected in a drill campaign by the Eshuys-led and privately owned Discover Co has created a bit of a buzz in exploration circles.

The fabled Zambian copper belt hosts its copper mineralisation in reduced shale overlying an oxidised sandstone aquifer, with the best grades found at the basin margins. The equivalent in SA is the Tapley Hill shale overlying the Pandurra sandstone.

The best result reported by Discover Co was 8m grading 1.06% copper from 62m. Other significant hits ranged from 0.27% to 0.83% and were returned across more than 2kms which goes to the large-scale potential.

Discover Co is expediting another drill campaign to do just that, assess the scale potential of the discovery.

Listed exposure to the discovery is limited through Investigator (ASX:IVR) and Gold Road (ASX:GOR).

Discover Co can earn up to 80% of the Investigator tenements at Pernatty by spending $4m over 4 years while on the Gold Road tenements, it can earn a 70% interest by spending $11.5m over 5.5 years.

In a sense, Eshuys and his backers at Discover Co have been at Pernatty before as the ground was either held by Eshuy’s last ASX-listed vehicle DGO Gold, or the subject of the farm-in agreement DGO had secured with Investigator.

Completing the circle, DGO was taken over by Gold Road in July 2022 for $308 million for its then 14.4% stake in De Grey (ASX:DEG) more than anything else, clearing the way for Eshuys to resume the lead role in the hunt for Zambian-style copper at Pernatty.

Noronex (ASX:NRX):

Talking about Africa’s copper belt riches, the Kalahari Copper Belt (KCB) which runs from northern Botswana down into central Namibia is an emerging hotspot for the red metal.

Examples include Sandfire’s (ASX:SFR) newish 50,000tpa Motheo copper mine, and the recent acquisition from a private equity group by China’s MMG of the Khoemacau copper mine (60,000tpa, expanding to 130,000tpa) for $US1.8bn.

Both Sandfire and South32 (ASX:S32) were both rumoured to be interested in Khoemacau but baulked at the final sale price to the Chinese.

For the $15 billion South32 it is a case of fear not, let’s go and try and find the next Khoemacau, or Motheo for that matter.

In an expansion of its junior explorer alliance strategy, South32 is to partner up on the KCB in Namibia with Noronex (ASX:NRX), trading at 1.5c for a market cap of $7m.

South32 has undertaken to fund $15m of exploration on the junior’s KCB ground over five years for a 60% interest.

Populated by former Sandfire operatives, Noronex reckons the deal is transformational stuff. Access for exploration dollars will do that for a $7m junior.

It is not going to be a long-winded affair either. Following an in-fill gravity survey the first of many targets being worked up by Noronex will be tested with the drill bit starting in October.