My New Company Recommendation: A Giant Copper Deposit in One of the World's Best Mining Jurisdictions
Why I think Namibia is emerging as a mining superpower and why this C$400 million company could become a takeover target. Plus more news from Comstock.
Well, here it is, finally. The pick of my Namibia tips.
As you know I have looked at pretty much every investment story in Namibia, and this is the one that has impressed me the most. It could amount to as much as 10% of the country’s GDP.
It’s a copper story, so let’s start with a quick 3-year chart of copper.
You can see that, despite the carnage elsewhere in precious metals and oil, the copper price remains in a clear uptrend.
This particular company is perhaps not the opportunity it was 2 years ago, when it was little more than a penny stock, but it has been significantly de-risked.
I’ve been waiting patiently for the price of this C$400 million market cap company to come back before covering it, but it has steadfastly refused to do that.
Nevertheless, the time has come to put pen to paper.
My simple view: it gets taken out by a major within 18-36 months at twice today’s prices or more.
A quick word on copper
I covered the case for copper at considerable length last month, but briefly, whether it’s AI, electrification or a manufacturing renaissance, all roads lead to copper. More of a reddish brick road, than yellow, if you catch my drift.
Electric vehicles, data centres, power grids, wind turbines, solar farms and, yes, the army - they all need copper.
Copper discoveries, meanwhile, have become increasingly rare. Existing mines are ageing, ore grades (the amount of metal in rock) are getting lower and mine permitting is (in most but not all placers) getting trickier. Large, mineable copper deposits in investible jurisdictions are not so easy to find.
Which brings us back to Namibia.
It’s not Canada, the US, Chile or Australia, that’s for sure. Until two months ago, I couldn’t even tell you where Namibia is on the map. Now I’m one of country’s biggest champions.
The place is on the up and it has quietly become one of the most attractive mining jurisdictions in the world. A tiny desert nation of just 4 million people, it is the world’s third largest uranium producer. Oil has just been discovered off the coast and there is gold, copper and lithium in abundance. Diamonds too, though best not to dwell on these.
It has a long mining history. Property rights are comparatively strong. There is rule of law. Corruption is low by regional standards. Infrastructure is good: roads, ports, power.
This deposit sits in southern Namibia, close to the border with South Africa. It has quietly grown into one of the larger undeveloped copper deposits on the planet. There may be plenty of small copper deposits around the world with higher grades. There not so many capable of supporting decades of production - and that’s what majors are looking for.
In the words of the company itself, it is “optimizing, right-sizing and de-risking the project towards an investment decision and/or asset/equity sale.”
The CEO has no intention of building a mine. He is getting everything in place for a mine to be built, and then he will sell to a major - for probably two to three times the current market cap of the company.
