Explorer Gets Conditional Approval for Chile Copper Project Deal

Canadian copper and gold explorer Vortex Metals Inc. (VMSSF:OTCMKTS;VMS:TSX;DM8:FSE) announced it has received conditional approval from the TSX Venture Exchange to acquire up to 80% interest in the Illapel copper project in Chile.

The milestone follows a Letter of Intent (LOI) signed last June and a definitive agreement executed in November and will likely be a catalyst for the company's stock.

"VMS is rapidly moving to the forefront in terms of project reading and Illapel is currently drill ready," wrote Michael Ballanger of GGM Advisory Inc. last month. He has rated the stock a Strong Buy. Illapel is "fully permitted and has already fine-tuned its targets of which three have been prioritized and are ready for immediate probing."

"I feel very confident about the current sub-(CA)$0.20 prices will be a distant memory later this spring," Ballanger also wrote.

Vortex Metals also 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.

Copper has shifted into its own spotlight during the energy transition, as 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.

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 to 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."

The Catalyst: Energy Transition Driving Need for Red Metal

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."

"Vortex is exploring for copper (and) gold in highly prospective areas," Technical Analyst Clive Maund wrote.

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." 

Still a Very Good Entry Point

Vortex said it would inform the market once it receives final approval for the Illapel deal.

Once that happens, it plans to initiate a first-pass exploration program that will include testing of high-priority, drill-ready targets north and south of the Rio 27 mine; detailed mapping, sampling, and drilling of the epithermal vein targets in the western concession area and initiation of mapping and sampling across promising structures.

"This program aims to swiftly evaluate high-priority targets while expanding our regional geological exploration to discover new drilling sites," the company said in a release.

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 on April 23 when the stock was CA$0.13 per share. As predicted, it has dipped a bit and was CA$0.115 on Friday afternoon.

Ownership and Share Structure

The company said management, insiders, and key affiliates own about 35% 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 80 million shares outstanding, and its market cap is CA$9.2 million. It trades in a 52-week range of CA$0.18 and CA$0.07.

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 Vortex Metals Inc.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
3.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Contributing Author Disclosures

1. 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 author was, is, or will be directly or indirectly related to the specific recommendations or views expressed.

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.