Long-Awaited News Could Catalyze Copper Co.'s Stock

Freeport Resources Inc. (FRI:TSX.V; FEERF:OTCQB; 4XH:FSE) announced that Papua New Guinea's Mining Resource Authority approved the renewal of the Yandera Copper Project's License EL 1335 through November 19, 2025, noted a news release.

With the renewal in hand, Freeport is planning to commence preparatory work toward a Definitive Feasibility Study to advance the Yandera Copper Project, one of the largest undeveloped copper projects in the world, toward a Final Investment Decision. Freeport has also begun discussions with key international strategic investors and prospective partners for the development of the company's 100% owned, pre-feasibility stage, Yandera Copper Project.

"These Exploration Licenses are typically issued many months or more in arrears, so this renewal of Yandera Copper Project's Exploration License clearly demonstrates the increasing commitment of the Government of PNG to building strong, working relationships with international mineral exploration and development companies such as Freeport Resources," said the company's senior vice-president of operations, Nathan Chutas, in the release.

A new minister of mining in Papua New Guinea, Muguwa Dila, took office this January, but it was his predecessor, Ano Pala, who approved the renewal of the Yandera license, which is now valid until November 19, 2025.

As for the other news item covered in the release, PNG's newly appointed Minister of Mining, the Honourable Muguwa 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 Positive Pre-Feasibility Study, Great Expansion 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.

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.

The Yandera project is a high-quality porphyry copper project with by-product credits of gold and molybdenum, potentially reducing price volatility risk. Yandera is close to Asia, which is a positive, according to the company, given that China is the world's largest copper refiner and consumer, positioning Yandera as an attractive potential long-term source of copper supply.

Since 2005, US$200 million in exploration and development expenditures have been spent on Yandera, including 154,600 meters of exploration drilling, the vast majority of which has focused on the Yandera Central deposit, as well as scoping, engineering, environmental, and infrastructure-related studies; and a prefeasibility study (PFS) prepared by Worley Parsons dated 2017. As outlined in the PFS, Yandera has estimated Measured and Indicated resources of 728 million tonnes of 0.39% copper equivalent.

Freeport noted that the proposed Feasibility Study offers the potential for significant resource expansion through highly prospective porphyry copper targets just outside of the Yandera Central Deposit, which are well understood and immediately available for exploration drilling.

Freeport believes its copper-gold-molybdenum project is significantly undervalued based on the historical work done and the potential for growing the resource, 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

Demand for copper is forecast to undergo unprecedented structural change driven by the global energy transition, with mined copper supply forecast to enter a deficit position starting as early as 2024, Freeport shared. As a result of several mine disruptions in 2023, including the shutdown of Cobre Panama, which represented approximately 1.5% of global copper supply, and production downgrades from majors, including Anglo American and Rio Tinto, the copper market is forecast to reach a 428kt deficit in 2024, Freeport noted.

According to a January 2024 equity research report by the Royal Bank of Canada, current mined copper production along with sanctioned projects, those that are shovel-ready and have been advanced through the last 5-year period, point to an ongoing global mined copper supply shortage through to the second half of this decade.  

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 by 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 price of copper, which is expected to surge over 75% to record highs by 2025, CNBC reported this January.

The Catalysts: Steps To Advance Yandera

Freeport Resources intends to tackle three key aspects of advancing Yandera, progress and success, any of which could boost 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."

To bring the project to production, it is expected that between USD $900 million to US$1. 3 billion is required in additional investment, with an estimated IRR of 20+%. Yandera is expected to be a significant contributor to the economy of PNG, which is a pro-mining jurisdiction with 2 major mining projects permitted in 2023.

In terms of market value, Freeport is well positioned as one of the largest copper resources with high copper equivalent grades (CuEq) of 0.39%, while currently trading at a significant discount to its peers.  Freeport Resources also has the lowest EV/Resources per pound of CuEq - US$0.0003 across a group of peers, with immediate value re-rate potential as the company advances toward a definitive feasibility study and expands exploration of the license area.

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, 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$5.51M, and its 52-week trading range is CA$0.05−CA$0.015 per share.

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Freeport Resources Inc.
2. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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