Stockhead: Four Copper Stocks Poised to Ride the EV Boom
18th August 2021
The global economic recovery, coupled with the mass adoption of lithium batteries in the EV sector, has seen copper rally as much as 120 per cent from the crash of March 2020.
Copper is heavily used in the manufacturing of a wide range of goods, and the strong demand for the metal is perceived as a sign of economic health. Hence the nickname ‘Dr Copper’.
The outlook is extremely strong, says Barclay Pearce Capital equities trader, Joseph Raad.
“EVs contain approximately four times as much copper as conventional cars,” he says.
“2020 saw the global electric car stock reach 10 million units, a 41 per cent increase from 2019, and a conservative EV outlook by 2030 suggests that such stock will reach approximately 150 million vehicles and account for 7 per cent of the global vehicle fleet.”
The significant outpace in demand has left many analysts forecasting copper market deficits amid further declines in inventories over the coming years.
The price of copper could soar above $US20,000 per tonne, says Raad, up from a current price of ~$US9400/t.
That’s an incredible increase. Just look at the historic chart:
Here are four ASX copper stocks to watch from Barclay Pearce: one explorer, one project developer, and two producers.
This copper project developer has locked in $40m of funding to acquire the Cortadera copper-gold porphyry discovery in Chile “and deliver rapid resource growth”.
This includes a $35m private placement cornerstoned by mining major Glencore, which will emerge as HCH’s biggest shareholder (9.99%).
Hot Chili’s managing director Christian Easterday says Glencore’s investment and involvement “is a strong endorsement of our future”.
HCH is now funded to deliver a major resource upgrade and pre-feasibility study for the wider ‘Costa Fuego’ project, which has a current resource of 2.9Mt copper, 2.7Moz gold and 9.9Moz silver and 64,000t molybdenum.
The 470km2 ‘Tottenham’ copper gold project in NSW is a historic site, largely underexplored by modern standards.
The recently listed stock has set an initial exploration target at the ‘Carolina’ and ‘Mount Royal’ deposits of 90,600 gold ounces and 86,100 tonnes of copper.
Early drilling priorities include upgrading this potential project resource to JORC 2012 standards and extending it with immediate exploration.
Strong copper prices in the first half of 2021 gave a nice sheen to OZ Minerals’ half year results.
Record copper prices helped drive revenues to $986 million in the first half, giving OZ around $134 million cash on hand with no debt.
$7.4 billion capped OZ is up more than 15% year to date and almost 60% over the past 12 months.
Sandfire exceeded annual copper production guidance at its Degrussa mine in WA, producing 70,845 tonnes of copper and 39,459 ounces of gold for FY21.
Its revenue rose by 24 per cent to a record $813m thanks to surging copper prices.
DeGrussa’s reserves are set to run out in the third quarter of 2022, with Sandfire facing a brief period without production before it opens its Motheo copper mine in Botswana in early 2023.
The $1.2 billion market cap producer has secured the mining licence for Motheo, and is now ready for a full scale construction of the US$279 million ($364 million) project.
At Stockhead, we tell it like it is. While Hot Chili is a Stockhead advertiser, it did not sponsor this article.
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