Explorer Looks to Have 'Key Year' as Copper Prices Break Out

Copper and gold explorer Vortex Metals Inc. (VMSSF:OTCMKTS;VMS:TSX;DM8:FSE) believes that 2024 will be a "key year" for the company as it works toward permitting for two projects in Mexico and advancing the highly prospective brownfield Illapel project in Chile, and two experts agree that the stock is attractive as the red metal breaks out.

So far this year, the metal important to the energy transition has jumped more than 16%, hitting US$4.53 on Tuesday.

"Copper has traded in the (US)$3.13-3.90 range for most of the past two years, with the lows occurring in 2022, shortly after the Fed embarked upon monetary tightening in July of that year," wrote Michael Ballanger of GGM Advisory Inc. "Recently, however, the compelling fundamentals brought about by the looming structural supply deficit propelled copper to new recovery highs above (US)$4.00."

Vortex Metals owns 100% interest in two drill-ready high-potential copper volcanogenic massive sulfide (VMS) properties (Riqueza Marina and Zaachila) in the state of Oaxaca, and a third high-potential gold property (El Rescate) in the state of Puebla.

The Oaxaca projects incorporate the most highly prospective areas of high-grade copper mineralized surface exposures and prominent gravity anomalies along an

emerging copper VMS belt that includes Minaurum Gold’s (TSXV:MGG) Santa Marta project, Vortex said.

In an alert on Thursday, Ballanger said he added 250,000 shares of VMS to his trading account "as a surprising amount of supply came into the market." Total volume on the day was 3,162,123 shares, he noted, with the next most-active session for the company being May 17, 2023, at 423,235.

"On the premise that 'volume precedes price,' I added the extra trading position in order to have liquidity, which I did not have with the 1,000,000 units I bought on the offering at CA$0.09/US$0.065," Ballanger wrote.

Electric vehicles (EVs), their charging infrastructure, solar panels, wind, and batteries all require much more copper than fossil fuel-based technology. EVs themselves use more than three times as much copper as gas-burning cars.

The Catalyst: Metals Markets Entering 'Major Bull Market'

Technical Analyst Clive Maund noted the metals markets "at large are entering a major bull market, with strong gains already being seen in copper, gold, and silver over the past month or two."

But "copper is a special case with a huge supply shortfall incoming due to the combination of an explosion in demand due the expanding use of copper in batteries for EVs and power storage etc. coupled with a supply shortfall due to the dearth of major new copper discoveries in recent years," Maund wrote. "It just so happens that Vortex is exploring for copper (and) gold in highly prospective areas."

Despite some cooling due to slower-than-expected EV sales, the global copper market was worth US$304.1 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 5.1% from 2023 to 2032 to US$496.8 billion, Acumen Research and Consulting reported.

"The increasing demand for copper could be met through developments in mining technology, well-organized designs for ore processing, and the discovery of new copper reserves," Acumen's report noted. "According to the United States Geological Survey (USGS), international copper reserves rose by approximately 720 million tons in 2017, and undiscovered copper reserves are estimated to be approximately 3,500 million tons."

Haywood Securities noted in a January 2024 report that based on the long time it takes for new copper supply to come online, the market for the metal "will be tightening for the foreseeable future [and] that could eventually lead to a new copper cycle." Haywood noted predictions are for a copper deficit this year, marked by supply shortfall of about 500,000 tons.

CNBC reported in January that copper supply is low, and the world's ongoing transition to renewable energy will continue to drive high demand for the metal.

"Some of the major factors driving the growth of this market include the upgrading of living standards and the growing purchasing power of people, especially in developing economies. This will propel the copper market," Acumen's report said. "The incredible growth in the number of electronic gadgets such as laptops, cell phones, smart devices, and television sets across the globe is increasing the demand for the product." 

Co. About to Start Major Bull Market?

Catalysts for Vortex this year will include continuing exploration with a drilling program at Illapel in Chile and the advance towards permitting for the Mexico projects.

The former came closer to fruition in March when the company announced that the Santiago Astata Agrarian Community in Oaxaca, Mexico, has granted authorization to Vortex to carry out mineral exploration activities, including drilling holes on their lands.

"The company has committed to forming an environmental monitoring committee with active community participation to oversee the activities and ensure environmental protection throughout the exploration program," Vortex noted in a release.

"We are grateful for the trust placed in us by the Santiago Astata Agrarian Community," Vortex co-founder and Chief Executive Officer Vikas Ranjan said at the time. "This authorization reflects our commitment to transparent communication, environmental stewardship, and fostering mutually beneficial relationships with local communities."

Maund noted that the company's investor presentation "almost makes the case for buying the stock on just one page" that notes the imbalance expected between supply and demand of copper.

"This combination of surging demand and sticky supply has reinforced current deficit conditions and foreshadows large open-ended deficits from mid-decade," according to a Goldman Sachs quote included on the page. "We now estimate a long-term supply gap of 8.2 Mt (million tons) by 2030, twice the size of the gap that triggered the bull market in copper in the early 2000s."

Maund said Vortex was still "at a very good entry point," and there are powerful signs that a major new bull market is incubating for the company.

"With Vortex Metals very close now to embarking on a major bull market, it is rated a Strong Buy here for all timeframes with an awareness that it could dip a little more short-term towards the funding price at 9 cents, which would provide an excuse to buy more," he wrote.   

Ownership and Share Structure

The company said founders and insiders owned about 46% of the company. Reuters said about 1.25% is with institutional investors. The rest is retail.

Top shareholders include Paradex Inc. with 15.89%, co-founder, Chairman, and Director Michael J. Williams with 3.51%; the CEO Ranjan with 3.33%; AIPM Azure International Portfolio Managers with 1.25%; and Director John E. Larson with 0.73%.

Vortex has about 60 million shares outstanding, and its market cap is CA$6.01 million. It trades in a 52-week range of CA$0.18 and CA$0.07.

Important Disclosures:

1. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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Contributing Author Disclosures:

Author Certification and Compensation: [Clive Maund of clivemaund.com] is being compensated as an independent contractor by Street Smart, an affiliate of Streetwise Reports, for writing this article. Maund received his UK Technical Analysts’ Diploma in 1989.  The recommendations and opinions expressed in this content accurately reflect the personal, independent, and objective views of the author regarding any and all of the designated securities discussed. No part of the compensation received by the aut

Clivemaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be  only be construed as a recommendation or solicitation to buy and sell securities.