Copper faces some rough seas but EVs could drive further upside

Copper prices have been on a tear in the past six months with prices climbing some 40 per cent to just above $US3 ($4.25) a pound on the back of rebounding global manufacturing activity and soaring Chinese demand.

However, further upside might be kept in check by a second wave of COVID-19 infections in Europe which has led countries like the UK to reintroduce certain restrictions.

The industrial metal continues to show significant resilience with copper prices rising 0.81 per cent in September while US stock benchmark the S&P 500 feel 10.9 per cent since the beginning of this month.

On the positive front, the ongoing electrification of motor vehicles is helping to drive demand for copper, which could in turn drive copper prices up.

Recent comments by Tesla CEO Elon Musk have provided a boost to battery metal companies – now including nickel – and even manganese thanks to use in the US car maker’s proposed battery cathodes.

But copper plays just an equally important role given that Tesla’s most affordable electric vehicle, the Model 3, uses about 60kg of copper.

With that in mind, here are how some ASX small cap companies with copper assets have performed in the past six months.

ASX small cap copper plays

Recent copper news

Alicanto (ASX:AQI) has kicked off drilling at its Greater Falun copper-gold project in Sweden.

The 4,000m diamond drilling program will be the first thorough, modern exploration campaign to be undertaken at the project.

It will also be the first drilling since the company established that the dominant mineralisation at Greater Falun is copper-gold skarn rather than volcanogenic massive sulphide systems as long believed.

Castillo Copper’s (ASX:CCZ) rock chip sampling has verified high-grade copper mineralisation at the Big One deposit within its Mt Oxide project in Queensland’s Mt Isa copper belt.

This included top results of 33.2 per cent copper, 32.1 per cent copper and 26.6 per cent copper.

Drilling is expected to begin in October.

Encounter Resources (ASX:ENR) has just partnered with BHP (ASX:BHP) to explore the 4,500sqkm Elliott copper project in the Northern Territory.

Under the agreement, BHP can earn up to 75 per cent of the project by spending $22m over 10 years.

Elliott is located at a major structural intersection on the southwestern margin of the Beetaloo Basin and contains the key conceptual criteria for the formation of sedimentary copper with the target sequence being undercover and untested.

It also hosts a standout copper-in-groundwater anomaly which is supported by surface geochemical sampling.

The growth in copper prices could have played a role in BHP’s decision to awaken from its slumber and farm-in to the project.

KGL Resources (ASX:KGL) recently revealed a big resource upgrade at the advanced Jervois copper project.

The Jervois resource now contains 426,200 tonnes of copper, 21.4 million ounces of silver, and 175,700 ounces of gold.

A pre-feasibility study on a development at Jervois is expected to be ready for release during the fourth quarter of 2020.

Lefroy Exploration (ASX:LEX) expanded the footprint of its namesake project near Kalgoorlie after it was granted a tenement over the Burns copper-gold prospect.

Burns was discovered in 2011 and subsequent drilling intersected broad zones of gold and copper mineralisation.

Notable intersections included 32m at 1.7 grams per tonne (g/t) gold and 0.6 per cent copper from 76m, 50m at 0.9g/t gold and 0.5 per cent copper from 24m and 12m at 1.5g/t gold and 0.5 per cent copper from 27m.

New World Resources’ (ASX:NWC) extensional drilling has uncovered extensions of thick, high-grade copper at its Antler copper-gold deposit in Arizona.

Notable results include 1.7m at 3.8 per cent copper equivalent, 4.6m at 3.8 per cent copper equivalent and 2.7m at 5.7 per cent copper equivalent.

The new hits further extend the zone of thick, high-grade mineralisation discovered recently down dip of historical workings.

New World is mobilising a second drill rig to site to accelerate the current drilling program.

Meanwhile, St George Mining (ASX:SGQ) has completed preliminary test work that achieved high recoveries and generated separate clean saleable nickel and copper concentrates from its Investigators prospect in Western Australia’s northeastern Goldfields.

Nickel concentrate was produced at 16.2 per cent from massive sulphides at 90.6 per cent recovery, and 13.5 per cent from disseminated sulphides at 62 per cent recovery.

Copper concentrate was produced at 30.3 per cent from massive sulphides at 90.6 per cent recovery, and at 25 per cent from disseminated sulphides with 59.8 per cent recovery.

At Stockhead we tell it like it is. While Alicanto, Lefroy Exploration, New World Resources are Stockhead advertisers, they did not sponsor this article.