Source: Streetwise Reports 07/20/2023
With copper prices seemingly secure above US$3.75/lb, Interra Copper Corp. has completed Phase 1 of its new drilling program in Chile.
If you’re unfamiliar with Interra Copper Corp. (IMCX:CSE; IMIMF:OTCQB; 3MX:FRA), it’s a junior exploration and development company based in British Columbia, Canada, with an established reputation for acquiring, exploring, and evaluating mineral properties in that province, with a focus on copper ores.
The company operates two mineral exploration properties in B.C., the Thane and Chuck Creek properties, with the Thane property covering some 206 square kilometers in the Quesnel Terrane.
Covering another 33.57 square kilometers, the Chuck Creek Property is situated within the Eagle Bay Assemblage. It is surrounded by Taseko Mines’ Yellowhead property, which hosts a copper-gold volcanogenic sulfide deposit.
In March 2023, Interra Copper completed its acquisition of Alto Verde Copper, which owns three copper projects located in Chile’s Central Volcanic Zone within the prolific Copper belt. They include Tres Marias and Zenaida in the Antofagasta region and Pitbull in the Tarapaca region.
The Catalyst: Drilling Program Complete
On July 11, Interra Copper announced the completion of its phase 1 drilling program at the Tres Marias copper project, which is located approximately 40 kilometers southwest of the city of Calama.
According to the release, “Six reverse circulation holes totaling 1,896 meters were drilled. Samples were sent to ALS Global in Santiago for analysis, and results are expected in early August.” It’s not unreasonable to assume that the company’s valuation could grow upon the release of those results, especially if they exceed expectations.
Why This Sector? Copper Crunch Continues
The ongoing transition to a greener economy is driving continued and increasing demands for base metals, with copper remaining king among them. As Nelson Bennet reported on Mining.com last year, in the ominously titled The looming copper crunch and why recycling can’t fix it, “it’s copper that is the biggest worry, with the biggest driver of scarcity being the energy transition and increased [Electric Vehicle] demand, although the demand for more power transmission will also add strain to the supply of copper.”
Technical Analyst Clive Maund points out that the stock price is ready for reevaluation by the market. “Interra Copper is another small speculative copper stock that looks poised to advance soon. After a spike, it went into a severe bear market from April 2020 that took it down to a very low level where a base pattern built out last year. It is well-placed to break higher soon.”
“A battery electric vehicle requires 2.5 times more copper than a standard internal combustion engine vehicle. Much of that is in the electric motor, some in the battery,” Bennet explains. “There simply aren’t enough copper mines being built or expanded to provide all the copper needed to produce the 27 million EVs that S&P Global has forecast to be sold annually by 2030.”
“Copper could rival oil as a national energy security concern for some countries.”
Bennet bases many of his presumptions on an S&P Global Market Intelligence report titled The Future of Copper: Will the looming supply gap short-circuit the energy transition? The report is somewhat dour, stating that “The 2050 climate objectives will not be achieved without a significant ramp-up in copper production in the near and medium term, which will be very challenging.”
It goes on to say that “The chronic gap between worldwide copper supply and demand projected to begin in the middle of this decade will have serious consequences across the global economy and will affect the timing of Net-Zero Emissions by 2050.” By securing a reputation as a major supplier of this in-demand metal, Interra Copper could position itself to maximize the leverage that increasing demand and dwindling supply offer.
Why This Company? High-torque Exposure
The inclusion of copper and other base metals will be an important part of well-balanced portfolios going forward.
As Interra Copper CEO Buncic explains, “Fundamentally, there is a large gap in supply that will start affecting the market within the next six to twelve months and thus the copper price. Investors should have exposure to the copper market, and juniors provide a high torque exposure to this coming price surge.”
“Our valuation is low as we come out of the gate, and the share structure is tight with AVC shareholders under a rolling 18-month escrow. Tres Marias has three large target areas to be followed up on through drilling that were selected out of a portfolio of 32 that Freeport McMoRan had in Chile, where they have reduced their exploration operations significantly to focus elsewhere on larger investments. These projects are large and prospective for copper porphyry mineralization.”
Why Now? Drilling Done, but Results Still Pending
As mentioned above, although phase 1 of the Tres Marias drill program is complete, the results won’t be available until early August. This reality offers prospective Interra Copper investors a narrow window in which to acquire the stock before its latest technical valuation becomes apparent.
Technical Analyst Clive Maund points out that the stock price is ready for reevaluation by the market. “Interra Copper is another small speculative copper stock that looks poised to advance soon,” he wrote in February. “After a spike, it went into a severe bear market from April 2020 that took it down to a very low level where a base pattern built out last year.”
“It is well-placed to break higher soon,” he continues, ” a development made more likely by the bullish look of other copper stocks and of copper itself, whose correction within an ongoing uptrend looks done.”
Maund explained that “Interra trades in light but acceptable volumes on the US OTC market where limit orders should always be employed – volume on this market can be expected to expand significantly if it breaks higher as expected” and concluded that the stock is “an immediate speculative buy here.” [OWNERSHIP_CHART-10753]
Ownership and Share Structure
Interra notes that 0.4% is with institutions.
Management owns 2.4 million shares, or roughly 10.7% of the total. Buncic is the largest management shareholder at 3.55%, with 793,356 shares, while board member Rick Gittleman and board advisor Mike Ciricillo own roughly half a million shares each at 2.38%.
The company has roughly CA$2.8 million in cash with a monthly burn rate of CA$60,000. Its drill costs are calculated per campaign, with the first phase of the incipient drilling in Chile projected to cost some CA$500,000.
Interra Copper has a market cap of CA$17.5 million, with 22.5 million shares in circulation, alongside 5.0 million warrants ($0.75 – $2.70 strike) and 554,000 options ($0.77 – $2.47 strike).
2.5 million 3-year warrants at CA$0.75 that came with the firm’s recent financing and are subject to an accelerator at CA$1.25 on a 10d VWAP. Another 2.5 million warrants are way out of the money with a CA$2.66 strike price.
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Important Disclosures:
Interra Copper Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Interra Copper Corp.
Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
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( Companies Mentioned: IMCX:CSE; IMIMF:OTCQB; 3MX:FRA,
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