Laurentian Bank analyst Christopher Chang gets thinking about what a new mid-tier copper miner in British Columbia would look like, bringing together Taseko, Copper Mountain and Yellowhead.
HALIFAX, NS (MINEWEB) – It’s a bit like putting together a championship worthy team in a sports video game. Only the players are real copper miners and juniors. And the intent is quite a bit more serious than a lazy bout of flexing the thumbs in front of a screen.
In a note to clients late last week, Laurentian Bank analyst Christopher Chang made the case for the creation of a new mid-tier copper company focused on BC, calling his would-be combination of two current copper miners and one junior copper project developer “BC Mining Inc.”
Call it a think piece. Pure speculation. A what-if scenario. A bit of M&A provocation. Perhaps above all: a creative bit of thinking about the possibilities in the mid-tier copper arena.
Chang argues that following the takeover of Quadra FNX by KGHM last year there’s a mid-tier copper void to fill and he suggests one possible team – whose players already have a history of attempted takeover – that would star Taseko Mines, Copper Mountain Mining and Yellowhead Mining.
Chang sums up the opportunity this way. “By our estimate, BC Mining Inc. would immediately become the 6th largest producer within the TSX mid-tier universe. By 2015, we anticipate the company’s overall production would surpass HudBay Minerals and be comparable to Quadra FNX at the time of its acquisition by KGHM. With the start-up of Harper Creek in 2017, BC Mining Inc.’s attributable copper-equivalent production would be comparable to Lundin Mining and above Equinox Minerals at the time of its acquisition by Barrick Gold.”
These three names have one big thing in common: They own and/or operate massive copper projects or mines in BC. Among several projects, Taseko has the Gibraltar copper-molybdenum mine, “the second largest open pit copper-molybdenum mine in Canada” as the miner puts it. Copper Mountain runs the recently constructed Copper Mountain copper-gold-silver mine and Yellowhead Mining is developing the Harper Creek copper project. All are projects or mines encompassing low-grade copper resources in the 500 million to 1 billion tonne range.
Brought together and assuming positive development, Chang charts aggressive production growth over four years. If the company were one today, then in 2013 Chang estimates it would churn out 147 million pounds copper, along with significant amounts of moly, gold and silver. Cash costs, he estimates, would be around $2.21 per pound copper.
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