MoneyTalks: ASX copper’s absolute showstoppers

MoneyTalks is Stockhead’s regular drill down into what stocks investors are looking at right now. We tap our extensive list of experts to hear what’s hot, their top picks, and what they’re looking out for.

Today we hear from James Whelan, MD of Barclay Pearce Capital Asset Management and William Smith, BPC AM Advisor.

Even as prices crashed from above US$11,000/t in May to below US$9,000/t last week, James Whelan and Will Smith reckon copper demand will rise in concert with contracting global supply.

And as if on cue, Bloomberg reported that China’s giant, dormant copper market had started showing signs of life.

After a months-long slump in demand which quieted the less committed among the copper bulls and saw prices collapse from earlier record highs, analysts and traders in China say that buyers in the world’s biggest copper market are starting to dip in again.

And while the general consensus is prices might not break out in the near term, Dr Copper will be operating as soon as the global market meets Mr Deficit. It’s all about the long game, says the team at BPC.

In mid July, Whelan put it this way.

“Buy copper.

“Buy copper companies.”

But which ASX copper companies? They’re glad you asked.

Alma Metals (ASX:ALM)

Whelan: One I’ve been in and around for a little while now. I’ve mentioned them on TV a few times and the key to their predicted success is the Briggs Copper Project: a lot of low-grade copper, close to the surface, close to the Gladstone Port in sunny Queensland. It has, for now, an inferred resource of 415Mt of Copper at a grade of 0.25%. I have a good feeling this is a low bid.

“Quantity, depth, convenience.”

Smith: They’re post raise (for now) with $2.6m being done in April. If it’ s a “spark” you’re looking for then the recent drilling update in mid-July showed confidence in a resource upgrade with initial assay results due at the end of August. Then scoping study and pre-feasibility study so news all the way through to the first quarter of 2025.

Whelan: If you’re in the “we believe in the copper story and want the least complicated/highest possible upside” camp then this is the one to look at.

Develop Global (ASX:DVP)

Smith: This one’s good for those looking for a diversifier. Own the copper and the mining services company. The services, let’s just assume, are going fine. Recent update on the expansion of Bellevue is positive. (Higher mining rate = higher services revenue.)

On top of this they have Woodlawn Copper/Zinc mine, an old one mined, closed, tried again and failed. Now Develop are getting it back up and running and with debt financing to be secured to restart capex and working capital requirements. Those numbers are big but the holding is bigger. JORCed at 7.3Mt at 13.2% zinc equivalent. Alongside that is assessed resources of 5.1Mt at ~9.1% zinc and ~1.6% copper.

Argonaut put out an update on it recently and it’s pretty bullish…

“Incorporating the expansion at the Bellevue Gold Mine has translated to upgrades to our medium-term earnings forecasts for DVP. We lift our FY25 earnings forecast from A$2m to A$6m, while FY26 and FY27 earnings rise 15% and 7%, respectively. The upgrades to our FY28-FY30 earnings are modest at 2-3% as earnings from Mining Services are dwarfed by Woodlawn and Pioneer Dome.”

Whelan: Wow.

Aeris Resources (ASX:AIS)

Smith: Aeris is a copper producer with three Australian copper and gold assets and two further development copper and zinc assets. Aeris hasn’t been shown any love over the past three months, dropping 29.41% along with the copper price, which has been pummelled as of late. However, Aeris has produced a solid 27.2kt of copper over FY24, meeting guidance.

Whelan: As copper is under pressure due to high inventories, we like oversold Australian copper producers that have the potential to dramatically improve their resources. Aeris has ongoing drilling at their Constellation Deposit to further their resource at the Tritton project. A kicker is the gold they produce at Cracow in Queensland, which produced 45.7koz over FY24. Keep an eye out for this one through to the end of the year.