Copper Co. Cancels Project Option to Focus on Other Sites

Alpha Copper Corp. (ALCU:CSE;ALCUF:OTC) announced it has canceled its option agreement for the Okeover project in British Columbia so it can focus on its other three projects.

The company will now put its efforts into exploring the drill-ready Star project in the British Columbia's Golden Triangle, and its Indata project in British Columbia and Hopper project in the Yukon Territory.

"We decided to terminate the option agreement based on all the exploration results to date," Chief Executive Office Darryl Jones said. "After careful consideration, it became clear to us that the value of the option deal did not reflect the value of the project anymore. Rather than aligning the price and value, we have chosen to focus on the assets in our portfolio that we believe have more immediate exploration upside."

CAVU was "well-positioned" even before its purchase to make a significant copper discovery, Red Cloud Securities analyst Taylor Combaluzier wrote last summer.

Demand for copper is expected to explode as the economy switches footing to green technologies, like electric vehicles (EVs), which use more than three times the amount of copper as gas-burning cars. Charging infrastructure, solar panels, wind, and batteries all require more of the red metal, as well.

The need for copper is expected to double from about 25 million metric tons (Mmt) in 2021 to about 50 Mmt by 2035, according to a report by S&P Global.

All of this will require much more investment in copper and copper explorers, a market analysis by RFC Ambrian said in 2022.

"Based on industry-wide capital intensity data, we calculate that some US$196 billion of investment will be required," according to the analysis. "Of this, US$80 billion is for greenfield projects, and US$116 billion is for brownfield projects, of which US$71 billion is simply for replacement capacity. A further US$35 billion of investment will be required to close the supply gap."

The Catalyst: Shifting Focus

A drilling program at the 4,613-hectare Okeover project was finished last December. Its goal was to reconfirm historical drilling data at the North Lake Zone as the company pushed toward updating and publishing a new resource for the project.

Hole 4 looked promising from 330 meters to 600 meters, the company said. Historically, the hole intercepted 76 meters grading 0.34% copper (Cu) and 0.020% molybdenum disulfide (MoS2), including 19 meters grading 0.42% Cu and 0.020% MoS2.

Canceling the Okeover option agreement removes Alpha's obligation for a pending share issuance and a further US$3.5 million in working expenditures, the company said.

Alpha said it would use those resources to increase its focus on Star, Indata, and Hopper.

Last month, Alpha announced Hopper had been issued a 10-year permit for drilling and road and trail building.

A 74-kilometer multi-target porphyry copper-molybdenum project, Hopper has "significant copper-gold-silver peripheral skarn mineralization," Alpha has said. The best intercept there was 22.28 meters at 1.405% Cu.

Alpha obtained Hopper and Star with its purchase of CAVU Energy Metals Corp., which closed in December 2022.

"The Hopper Project is a great project with a lot of exploration upside," Jones said. "The Project has proven skarn horizons that are ready to build towards a maiden resource and the potential for a large porphyry zone that was proven up in the last two years and is close to discovery. We believe there is something big here and are looking forward to unlocking the project's potential."

"Bottom line? We gotta find more copper," analyst Rick Mills wrote. 

Star is a multi-target copper-gold porphyry project in the Golden Triangle with 106.98 meters graded at 0.77% Cu in one hole. Over 13,000 meters of modern drilling have been completed there, and it is fully permitted for 200 drill sites until 2026.

"These could be multibillion-pound copper deposits," Jones has said.

CAVU was "well-positioned" even before its purchase to make a significant copper discovery, Red Cloud Securities analyst Taylor Combaluzier wrote last summer.

"We believe the company stands to benefit from the global trend toward electrification, which will require increased copper production to meet the demands of the worldwide green economy," Combaluzier wrote about CAVU before the sale.

Indata is close to Northwest Copper's Kwanika and Stardust discoveries. Historical drilling includes 148 meters grading 0.20% Cu, including 24.1 meters grading 0.37% Cu, the company said. Assays from Indata are also expected soon.

Analyst: More Exploration Needed

Adding to the problem of the looming supply and demand shortfall for copper is the lead time for getting new mines online.

The S&P report said politicized regulatory processes and litigation make it "unlikely that efforts to expand copper output in the United States would yield significant increases in domestic supply within the decade."

"Bottom line? We gotta find more copper," analyst Rick Mills wrote. "That sentiment is clearly shared by some of the world's largest copper companies, who are doing everything they can to expand existing mines and acquire prospective new deposits as they seek to replace their rapidly depleting copper reserves and resources." 

Some used copper is recycled for things like plumbing tubes and roofing sheets. But it's not feasible to use scrap copper for all copper products, as electrical wiring and cables require the "very pure sort of copper that flows from the mining-smelting-refining process," the Copper Development Association Inc. wrote.

Ownership and Share Structure

About 15% of the company is held by insiders, including the CEO Jones, who holds 1.54% or 800,000 shares; and Director Daniel Matthews, who owns 1.11% or 580,000 shares, according to Reuters.

The rest is retail, Alpha said.

The company has about 52 million shares outstanding, 48.9 million of them free-floating, with a market cap of CA$15.89 million. It trades in a 52-week range of CA$1.02 and CA$0.135.

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