Coppermoly Limited (ASX: COY): Interesting Times
Coppermoly holds some very interesting copper-gold-molybdenum resources in PNG, with huge upside potential. However, the company has languished at a market capitalisation of around $6 million for the past year. This does not remotely reflect asset value; but to be fair, many other junior resource companies are in the same position.
What does distinguish Coppermoly is that its two largest shareholders, Vangold Resources Limited and Pacific Kanon Gold Corporation, have called a General Meeting to replace the entire four man board with four of their own nominees. With all respect to existing and proposed directors, in the words of PNG Industry News “the standout [nominee] is long time Coppermoly consulting geologist Stan Yeaman, who owns his own 2.99% stake of Coppermoly.”.
The image below shows Mr Stan Yeaman in Trench 6 at Coppermoly’s Simuku Project. A drill hole underneath this trench intersected 14 metres at 0.42% molybdenum. This is very high grade, but much more work will be required to determine economic potential.
Mr Yeaman knows Coppermoly’s projects very well and is the best placed to add shareholder value through further discoveries. He first had an interest in Simuku in 1995, was a key founder of Coppermoly and most recently was responsible for the Barrick joint venture described below.
Mr Stan Yeaman
The company’s projects are all on New Britain Island, PNG. The Simuku, Nakru and Talelumas projects are joint ventured with Barrick (PNG Exploration) Ltd, wherein Barrick holds 72% and Coppermoly 28%. Barrack earned its interest through exploration expenditure of $22 million.
While Barrick is still exploring to maintain tenure, it has indicated that it will dispose of its joint venture interest. This is not surprising as the resources are too small for the world’s largest gold producer. Coppermoly has the right to match any offer that Barrick accepts. Although there are various deal structures that would allow Coppermoly to acquire Barrick’s interest without undue share dilution, it could be advantageous to partner with a larger company with a strong balance sheet.
The Simuku copper project hosts an inferred mineral resource of 200 million tonnes at a grade of 0.36% copper, 0.06g/t gold, 2.0g/t silver and 0.006% molybdenum. Read more about large, low grade copper deposits here. Simuku has excellent potential for the discovery of additional copper and molybdenum.
The Nakru copper-gold project hosts an inferred resource of 38 million tonnes at a grade of 0.82% copper, 0.29 g/t gold and 1.8 g/t silver. A Conceptual Mining Study completed in September 2012 showed Net Present Value, at a 10% discount rate, of $291 million. That is $81 million for Coppermoly’s share. Further, there is excellent potential for the discovery of additional copper and gold at Nakru.
The company also holds a 100% interest in the Makmak project and in the Fullerton and Powell tenement applications. Makmak will be discussed in a subsequent article.
The General Meeting to consider the removal and appointment of directors will be held on April 10, 2013, at the Gold Coast Turf Club, of all places. There are various scenarios that could play out before then, some of which could be very positive for the share price.
Investors should monitor this stock for a resolution to issues that appear to have been holding it back. Meanwhile, in future articles I shall discuss the company’s projects in more detail.
20 March 2013
Disclosure: Market Capital holds securities in Coppermoly Ltd as at the date of publication of this article.