Mining Startup Unlocks AI-Powered Copper Discoveries

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What better tool to use to find more energy to power the world's increasing obsession with artificial intelligence (AI) than AI itself?

With the tech industry driving much of the need for more energy to funnel to its masses of AI servers, big industry names like Bill Gates and Jeff Bezos are backing a private company called KoBold Metals, which uses AI itself to search for the copper and other critical metals needed for the energy transition.

According to a report in the Financial Times by Camilla Hodgson on January 1, the Berkeley, Calif.-based company "said its series C funding round valued the company at US$2.96 billion, and was co-led by existing investor T Rowe Price, which has been joined by Durable Capital Partners."

"Existing investors, including Gates' Breakthrough Energy Ventures and U.S. venture capital group Andreessen Horowitz, also participated in the round, along with new backers, including private capital group StepStone," Hodgson continued. "KoBold, which has raised US$1 billion to date, is among the western mining companies seeking to compete with Chinese rivals to produce metals such as copper, lithium, and nickel."

KoBold is a battery metal exploration and mining company that combines geoscience, data science, machine learning, and AI to search for the critical minerals needed for the clean energy transition. It said it has already made a discovery and has also entered into an earn-in agreement for another project in Zambia with Midnight Sun Mining Corp. (MMA:TSX.V; MDNGF:OTCQB).

Technology companies are spending billions quarterly on AI accelerators, "which has led to an exponential increase in power consumption," according to a report last June in Forbes by Beth Kindig.

Newer processing chips being used with the technology are increasingly power hungry as well, with some increasing their energy consumption up to 300% in one product cycle.

"It's important to note that each subsequent generation is likely to be more power-efficient than the last generation," Kindig wrote. "However, GPUs (graphics processing units) are becoming more powerful in order to support trillion-plus large language models. The result is that AI requires more power consumption with each future generation of AI acceleration."

With the same critical minerals also used in everything from batteries for electric vehicles (EVs) to the defense industry, "western governments have been increasingly seeking to diversify away from supply chains dominated by China," Hodgson wrote for Financial Times.

New Discovery, Earn-In Agreement

The company has already made a discovery. In 2024, KoBold said it found a massive high-grade copper deposit in Zambia that would cost US$2 billion to develop and add some 300,000 tons to global copper production starting in 2030, OilPrice.com reported.

The Mingomba deposit, currently under further exploration by KoBold, has copper ore grades of approximately 5%, according to a report by Mining Technology.  

"This places it on par with the quality found at Ivanhoe Mines Ltd.'s (IVN:TSX; IVPAF:OTCQX) Kakula deposit in the Democratic Republic of Congo," the site said. "According to KoBold, the Mingomba deposit could represent the most significant Zambian copper discovery in a century."

In addition, the company signed the earn-in agreement with Midnight Sun to explore the Dumbwa Target at Midnight Sun's Solwezi Project in Zambia. The agreement allows KoBold to earn a 75% interest in Dumbwa by incurring US$15 million in exploration expenditures and making cumulative cash payments to Midnight Sun of US$500,000 over 4.5 years. In December, the companies mutually agreed to extend the long-stop date of the agreement.

According to Midnight Sun, the 506-square-kilometer project is surrounded by other world-class copper mines, such as First Quantum Minerals Ltd.'s (FM:TSX; FQM:LSE) Kansanshi Mine, Barrick Gold Corp.'s (ABX:TSX; GOLD:NYSE) Lumwana mine, CMOC Group's Tenke Fungurume mine, and Ivanhoe's Kamoa-Kakula copper complex.

KoBold is also collaborating with mining giants BHP and Rio Tinto on exploration initiatives in Australia and Canada, Mining Technology reported. It is also considering going public in the next several years.

A Favorite 'Alpha' Story in Copper

Malcolm Shaw of Hydra Capital Partners on January 4 wrote that Midnight Sun "remains one of my favorite 'alpha' stories in copper."

The company is in a cooperative exploration plan with mining giant First Quantum Minerals aimed at finding resources to serve as feed for FM's nearby Kansanshi Mine. Shaw noted that a buyout of MMA by First Quantum "would be a win-win for all involved."

"FM holders would see their copper production costs at Kansanshi drop and their exploration potential would blossom with MMA in their stable," Shaw wrote. "FM will see this as a stack of money waiting to be picked up, so for me this is also about 'when, not if.'"

Zambia is now "the premier geopolitical mining jurisdiction of choice, Midnight Sun Director Brett A. Richards told Streetwise. Mine officials in the country are "making investors feel welcomed to invest in growing the Zambian mining sector together."

The proximity to FM's Kansanshi means "all ore from any of the licenses could be tolled and trucked to Kansanshi," he said.

Richards also noted that the company's grades in excess of 3% and 4% copper (Cu) are "literally 10X better than current mining in Chile, Utah, Arizona, and British Columbia."

Midnight Sun investor Michael Khorassani also shared his optimism with Streetwise Reports, writing, "Midnight Sun is easily my favorite copper play. It’s exceptionally rare to find a Junior Minor that has as much upside AND has very near-term catalysts AND does not need to raise money."

Geologist: Never Lose This Property

The Dumbwa target sits in the southern portion of the Solwezi project and features a 20-kilometer-long soil anomaly with a peak grade of 0.73% copper, the company noted.

"It's the highest copper in soil anomaly on record in Zambia," Midnight Sun's Vice President of Business Development and Communications Adrian O'Brien said on Mining.com. "If you look at the operating mines in the area, the average grade is around .59% copper, so the grades we see at surface at Dumbwa are almost astronomical by comparison."

Drill highlights from Dumbwa include 13 meters of 0.63% copper, including 3 meters of 1.3% copper (Cu) starting from 85 meters downhole in drill hole DC15-03; 12 meters of 0.65% copper, including 6 meters of 1.06% Cu starting from 0 meters in drill hole DCAC-39; 13.5 meters of 0.77% Cu from 5.0 meters in drill hole SDDD06; 16 meters of 1.24% Cu from 164 meters in drill hole SDRC13; and 15 meters of 0.71% Cu from 34.0 meters in drill hole SDRC05.

Leading the exploration team is copper deposit expert David Broughton, KoBold's chief copper geologist. Broughton is credited with Ivanho Mine's Kamoa and Platreef discoveries and has been keeping a close eye on the Solwezi license area.

"He identified this as a Tier-One exploration asset, and he's very excited," O'Brien noted. "He told our CEO years ago never to lose the property; it's incredibly valuable . . . We've been wanting to hire Broughton for seven years, and all of a sudden, we've got him working with us on one of his top copper picks in Zambia."

More Electricity Than Some Cities?

According to a report by CNBC's Spencer Kimball last November, the energy needs of AI and cloud computing are growing so large that "individual data center campuses could soon use more electricity than some cities, and even entire U.S. states, according to companies developing the facilities."

The electricity consumption of data centers has exploded along with their increasingly critical role in the economy in the past 10 years, housing servers that power the applications businesses and consumers rely on for daily tasks.

"Data centers are growing so large that finding enough power to drive them and enough suitable land to house them will become increasingly difficult, the developers say," Kimball reported. "The facilities could increasingly demand a gigawatt or more of power — 1 billion watts — or about twice the residential electricity consumption of the Pittsburgh area last year."

And the growth does not seem to be slowing. Technology companies are in a "race of a lifetime to global dominance" in AI, Ali Fenn, president of Lancium, a company that secures land and power for data centers in Texas, told Kimball.

"It's frankly about national security and economic security," she said. "They're going to keep spending" because there's no more profitable place to deploy capital.

Surge Isn't Temporary

Frank Holmes, chief executive officer and chief investment officer of U.S. Global Investors, noted that the shift is leading to a strong rebound in utility stocks, saying the Energy Information Agency (EIA) predicts global electricity use could rise as much as 75% in the next 25 years.

In his newsletter, "Frank Talk," on January 6, he said it was good news for energy providers like Vistra and GE Vernova, "the number two and number four best performing S&P 500 stocks of 2024."

This is good news for providers like Vistra and GE Vernova, the number two and number four best-performing S&P 500 stocks of 2024.

"Vistra, which joined the S&P 500 in May of last year, saw its stock price skyrocket by 261% in 2024," Holmes wrote. "GE Vernova, General Electric's energy spinoff, also saw remarkable growth in 2024, with its stock rising 150% after going public in April. The company's gas turbines have seen strong demand as providers seek to address the growing energy needs of data centers."

GE Vernova has projected sales of US$45 billion in 2028, up from previous estimates of US$43 billion, Holmes noted.

According to a December report by the Deloitte Center for Energy & Industrials, the U.S. is "experiencing a surge in electricity demand, driven in part by a confluence of unprecedented electrification, artificial intelligence-driven data center expansion, and a resurgence in industrial reshoring or manufacturing."

The surge isn't temporary, the firm said. "It is expected to be sustained growth after two decades of stagnant demand," the report's authors wrote. "This will likely fundamentally change the electricity landscape."

Ownership and Share Structure

KoBold is a private company. According to the company, management and insiders own about 10% of Midnight Sun Mining, institutions own 16%, and the rest is retail.

Major shareholders include Zambia Goldcommon Mining Ltd. with 5.72%, Brett Richards with 4.66%, Zambia-Zhengyuan Mining Company Ltd. with 2.1%, Cambrian (Camcap Resource Offshore Master Fund) with 2.07%, and MacKenzie Financial (held between 7 funds) with 1.38%.

Midnight Sun Mining has a market capitalization of approximately CA$97.73 million, with 167.58 million shares outstanding. The company trades on the TSX Venture Exchange under the ticker MMA.V. The stock has traded in a 52-week range between CA$0.21- 0.72.