Freeport Resources Inc. (FRI:TSX.V; FEERF:OTCQB; 4XH:FSE) received a two-year renewal of Exploration License 1335 for its Yandera project in Papua New Guinea, one of the world's biggest undeveloped copper deposits, noted a news release.
"We are excited to finally have the visibility going forward that we have lacked since Freeport took over the project" in 2021, said the company's senior vice-president of operations, Nathan Chutas, in the release.
A decision on the license renewal was a long time coming, the company said. This was because Papua New Guinea had about a two-year backlog in its license review and decision process, caused by the COVID pandemic and political issues.
A new minister of mining in Papua New Guinea, Muguwa Dila, took office this January, but it was his predecessor Ano Pala, who approved renewal of the Yandera license, now valid through until Nov. 19, 2025.
As for the other news item covered in the release, Dilu appointed a member of Freeport's advisory board, Tobias Kulang Thomas, to Papua New Guinea's Mining Advisory Council. This independent body reviews applications for exploration licenses and special mining leases and gives its recommendation on each to the mining minister.
Flagship Asset Has Resource, Great Potential
Freeport Resources is a junior mineral exploration company based in Vancouver, British Columbia. Its 245-square-kilometer flagship project Yandera "is of strategic national interest in Papua New Guinea and has the potential to become one of the country's most significant copper mines," the company said in the release.
Yandera is located about 95 kilometers southwest of Madang, in the highly prolific PNG Orogenic Belt, home to several robust copper and gold deposits including Grasberg, Frieda River, Porgera, Lihir, Wafi-Golpu and Kainantu. Freeport's Yandera is close to Asia, a positive given most of the global copper supply is refined and consumed there.
Since 2005, US$200 million (US$200M) have been spent on Yandera, on 154,600 meters of exploration drilling; scoping, engineering, environmental and infrastructure-related studies; and a prefeasibility study (PFS) in 2017. As outlined in the PFS, Yandera has an estimated Measured and Indicated resource of 728 million tons of 0.39% copper equivalent.
Freeport Resources believes its copper-gold-molybdenum project is significantly undervalued based on the historical work done and the potential for growing the resource there as well as the current copper prices, the release noted. As such, the company began a strategic review to determine how best to maximize Yandera's value.
Copper Demand to Drive Sector Growth
Rising demand is expected to fuel expansion of the copper market over the next 10 years and lead to an undersupply of the metal sometime in the next five, experts said. About 2–3% growth is projected to happen this year followed by another 16–17% by 2035, indicated S&P Global, a provider of information on commodity markets.
As for copper demand, the Commodities Research Unit, specializing in analysis, forecasted it will increase 39% to 42,500,000 tons (42.5 Mt) by 2050, as reported by Fitch Ratings Inc., an American credit rating agency. Driving the demand, a recent Bloomberg article purported, is the worldwide transition to green energy, which by itself "requires massive increases in copper supply." Within this arena, copper is needed for the generation and transmission of renewable energy as well as for the manufacturing of electric vehicles.
Demand for the metal is expected to exceed supply by 2027, Bloomberg reported last fall. The deficit is projected to reach 3.6 Mt this year with the shortfall peaking at 4.5 Mt after 2025.
This scenario bodes well for the copper price, expected to surge over 75% to record highs by 2025, CNBC reported this January.
The Catalysts: Steps Taken to Advance Yandera
Freeport Resources intends to tackle three key aspects of advancing Yandera, progress and success in any of which could boosts its stock price.
They are planning the work necessary to complete a definitive feasibility study of the project; engaging prospective strategic partners for developing the mine; and determining whether new copper catalyst technologies could be employed.
"If they prove to be viable," the company said, "this could greatly enhance the feasibility of Yandera by significantly reducing the capex and opex required to transition the project to production."
Technical Analyst Clive Maund recommended Freeport Resources as an immediate Strong Speculative Buy and cited three supporting reasons, in a May 2023 note. One, the company's stock price had dropped significantly to just below CA$0.05 per share from its CA$0.95 peak in 2020. (Today, the price is about CA$0.04 per share.)
Two, the stock's trading pattern had fully formed a downward trending pan and handle base followed by "big upside volume," Maund wrote. Three, the second tranche of a financing was in the company's rear view.
With a valid exploration license for Yandera in hand, Freeport Resources now may move forward on the project, the company said. Yandera's upside potential and, according to Maund, Freeport's low share price are two factors making the Canadian mining company an attractive investment.
Ownership and Share Structure
According to Reuters, Freeport Resources has 157.33 million (157.33M) shares outstanding and 156.03M free float traded shares.
Insiders own 0.83%, or 1.3M shares, of the company. Of the three insider owners, Chief Financial Officer and Director Scott Davis holds the biggest stake, 0.57% or 0.9M shares.
President, Chief Executive Officer and Director Gordon Friesen and Director Allan Glowach each own 0.13% or 0.2M shares.
Retail investors own the remaining 99.17%. There are no institutional or strategic investors at this time.
Freeport Resources' market cap is CA$4.66M and its 52-week trading range is CA$0.005−CA$0.05 per share.
| Want to be the first to know about interesting Critical Metals and Base Metals investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
