CuFe ready to pounce when the iron ore price is right
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Emerging copper and iron ore junior CuFe says its JWD project near Wiluna is poised and ready to take advantage of any spike in the iron ore price in 2022.
Executive director Mark Hancock said that iron ore is finishing the year strongly, up nearly 50% off its lows.
“With the demand outlook in the period post Chinese New Year looking strong and the risk of supply disruption to the majors from the wet season there’s the potential for prices to replicate their performance from this year,” he said.
“We have JWD continuing to operate and ready to take advantage of any spike in iron ore price, whereas many others who started mines recently have suspended them and will take some time to respond to a price spike.”
Plus, CuFe (ASX:CUF) entered an offtake and prepayment agreement with Glencore for the project earlier this year – which gave the company a top tier offtaker and a US$7.5 million prepayment to meet working capital needs without tapping shareholders.
“They also facilitated us in hedging the price for our first three shipments which has been important protection for us given iron ore price volatility,” Hancock said.
The company also completed its first shipment from the project in 2021, which Hancock said was “a great milestone achieved within 12 months of acquiring the project and for less than $5m in capex”.
CuFe also restructuring the buy-in terms for JWD, reaching an agreement with GWR Group Ltd to settle deferred considerations payments to them on a more gradual basis.
“This gives us certainty over ownership while reducing the pressure on cashflow,” Hancock said.
Looking forward, the company has drilled the first few holes at its near-port iron ore project Yarram, with results expected in the near term.
CuFe also acquired a 60% stake in the Tennant Creek copper project in the Northern Territory this year.
“This has given us a brownfields copper/gold project which we can look to restart to take advantage of the current pricing environment and look to explore further in this prospective province,” Hancock said.
“We are progressing studies and approvals on the Tennant Creek copper/gold project so will have plenty of milestones coming through from it.”
With regards to the copper market, Hancock said the dynamic looks even more positive given its role in the green energy space.
Not to mention the price has more than doubled since April last year, with majors like BHP forecasting a doubling of copper demand in the next 30 years.
And when you consider prices hit all-time highs and LME stockpiles fell to 47-year lows this year, that would be a serious trend to watch.
This article was developed in collaboration with CuFe Limited, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.