The question I always pose to my closer friends and contacts who fundamentally understand and follow the high risk, high reward Jr. Mining sector is… if you don’t see the opportunity now, when you can buy entire projects at a few pennies on the already spent exploration dollar, when will you? I sometimes liken our strategy at CopperBank to that of The Maytag Repairman – patient, dependable, and most importantly, will be ready when needed.  

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All that being said, and as positive as I have been the past four years collecting a portfolio of broken dreams in the copper space, this commodity cycle is different. It has now been over 8 years of gloom, and many of the usual speculators are years beyond capitulation. Just remember the sentiment this past November/December! Too, the brokerage community that traditionally supported Jr. Mining speculations are for the most part gone, and/or become like Big Banks where a client has to sign numerous forms that they are potentially going to lose 100% of their money.  

It’s the generalist investor, not the usual suspects, that will move the needle for the well positioned, well managed… well branded Jr. Miner – just pick your commodity carefully!

Let us not forget about the fundamentals and the result of virtually every single bear market in history, that is, bear markets are the authors of bull markets. I lose no sleep at night regarding the CAGR growth rate for copper. And, as the above cartoon accurately depicts, it will be the non-interested “generalist” investment community that will begin to applaud the virtues of copper as the king of electrification as the Red Metal enters page one, above the fold, of global newspapers. Have you not seen the recent positive forecasts by Citi, Morgan Stanley, Goldman et al?

That is the once in a multi-generation opportunity. A totally forgotten and under-followed sector where the opportunity is hiding in plain sight and so very few analysts that even cover the subject. Fantastic. There are so few established copper development projects remaining, and CopperBank owns a portfolio of them. CopperBank’s projects may not be economic today but who’s project is? BHP Billiton, the world’s largest integrated miner, claims that the bulk of copper development projects require +$3.50/lb to be economic.  I will remind readers that the previous market cap highs of the all the companies CopperBank acquired the past four years, is ~$1.20 per share based on our current share count! There is your over/under.

So what happens if copper prices actually do eclipse previous all-time highs of ~$4.50 /lb due to 0.3% and 0.4% copper grades? So what happens when copper prices inevitably turn and all the non-jaundiced investors take-on outsized positions? Do all the fence sitting Jr. Mining expert investors think that penny shares just wait for them to then load up… and things will only go higher once they are positioned? Or, like some of my other check writing friends, do they think that companies will take their check, or, will they take take the check of the newcomer Generalist Investor who won’t be shy to pay a slight premium?

What will happen, in my humble opinion, is many well positioned, well managed, well branded Jr. Mining stocks will gap higher, and gap again and gap again… like many cycles before. Then, fence sitters who are are stuck in the emotion that there will be a pull-back will have to wait, and wait. 

I also re-iterate my oil decoupling from copper trend. So obvious is the graphic from any period of time from the year 2000, one can see for oneself – we won’t get confused by the college level math of coefficients etc. It’s like pornography, you know it when you see it!

Happy Investing,