Drilling Confirms High-Grade Copper at Kazhiba With Expansion Potential

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Midnight Sun Mining Corp. (MMA:TSX.V; MDNGF:OTCQB) has announced significant high-grade oxide copper drill results from the Kazhiba Target, part of its Solwezi Project in Zambia. The 2024 drilling program was designed to validate the resource potential of the oxide copper mineralization, with results confirming multiple high-grade intercepts.

Key results from the drilling program include 10.69% copper over 21 meters in drill hole MSZ22-028, 5.60% copper over 26 meters in drill hole MSZ22-020, and 3.01% copper over 15 meters in drill hole MSZ22-012. These results provide further confirmation of high-grade oxide copper mineralization at Kazhiba, supporting the potential for future resource development. 

The program comprised 54 reverse circulation (RC) drill holes, totaling 2,005 meters. According to Midnight Sun, mineralization at Kazhiba remains open to the north-northeast, with 13 additional drill holes planned to further delineate the deposit. Part of a broader follow-up exploration program is scheduled to begin in April 2025. 

The company also conducted a 3,250-meter induced polarization survey and collected 625 Partial Ionic Leach™ samples, with assay results expected in the first quarter of 2025. These efforts aim to refine the geological model and explore potential extensions and sulfide sources of oxide copper mineralization. 

Midnight Sun's President and CEO, Al Fabbro, stated in the news release, "We believed that high-grade, at-surface oxide copper mineralization encountered during previous work programs at our Kazhiba and Mitu Targets was significant. We now have proof of concept." He added that the company intends to "leverage the opportunity toward significant potential near-term cash flow" while continuing exploration efforts.

The Kazhiba Target, located approximately six kilometers southwest of First Quantum Minerals' Kansanshi Copper Mine, is one of four key targets within Midnight Sun's Solwezi Project. Two of the four targets that make up the project are being explored under a Cooperative Exploration Plan with First Quantum Minerals, aimed at identifying potential feed sources for First Quantum's solvent extraction-electrowinning (SX/EW) oxide copper circuit. Midnight Sun continues to explore the larger underlying sulfide copper targets on its own across 3 of the targets while working to explore a fourth target called "Dumbwa" under an earn-in agreement with Bill Gates-backed KoBold Metals.  

Copper Sector Overview: Supply Constraints, Market Volatility, and Future Demand Drivers

On January 16, Market Research Future reported that the high-purity copper market was experiencing steady growth due to increasing demand from sectors such as semiconductors, electric vehicles, and renewable energy. The market was projected to expand from US$19.41 billion in 2023 to US$28 billion by 2032 at a compound annual growth rate (CAGR) of 4.15%.

The report noted that "the ongoing transition to electric vehicles is a significant factor influencing the demand for high-purity copper," as electric vehicles require significantly more copper than traditional internal combustion engine vehicles. Copper's role in solar panel production and wind turbines was also highlighted as a key driver of demand.

Malcolm Shaw of Hydra Capital highlighted Midnight Sun's potential as an acquisition target, citing its proximity to Kansanshi and the cost-optimization benefits such a transaction could offer First Quantum. 

In a report dated January 20, Reuters cited an analysis from Goldman Sachs indicating a 50% probability that the U.S. would impose a 10% tariff on copper imports by the end of the first quarter.

The report noted that uncertainty surrounding U.S. trade policies contributed to fluctuations in copper prices, with three-month copper on the London Metal Exchange easing 0.3% to US$9,167 per metric ton after reaching a one-month peak earlier in the week.

The following day, on January 21, Technavio projected that the global copper market would grow by US$70 billion between 2024 and 2028, with a CAGR of 6.78%. The report stated that demand from the Asia-Pacific region was expected to drive this growth, particularly in industries such as construction, telecommunications, and electronics. "Copper's excellent electrical conductivity and heat transfer properties make it an essential component in electronics, construction, transportation, and renewable energy," the report noted. Additionally, the renewable energy sector was highlighted as a key driver of demand, with solar panels, wind turbines, and electric vehicle infrastructure requiring significant copper inputs.

SMM then reported on January 23 that copper prices had closed the previous year with overall gains, with LME copper rising by 2.6%, SHFE copper increasing by 6.96%, and SMM #1 copper cathode climbing by 6.59%. The report highlighted that "although the final growth in copper prices was not as dazzling as that of precious metals, the volatility of copper prices in 2024 was truly dramatic." Price fluctuations were attributed to macroeconomic factors, tightening copper ore supply, expectations of copper cathode production cuts, and increased demand from artificial intelligence applications.

SMM also reported that global copper concentrate supply growth was expected to come primarily from existing mine expansion projects, with large-scale, newly commissioned mines becoming increasingly rare. Concerns over copper concentrate shortages led to treatment charges (TC) turning negative at times, reflecting the scarcity of raw materials. Meanwhile, China's copper cathode production rose by 620,500 metric tons year-over-year, a 5.42% increase. Inventories remained historically low, with domestic stockpiles falling below 100,000 metric tons by mid-December. On January 23, LME copper cathode inventory stood at 259,050 metric tons, while domestic inventories in China showed a contrasting trend, highlighting supply chain dynamics between the two regions.

Market Trends and Industry Perspectives on Copper

On January 14, Malcolm Shaw of Hydra Capital provided a positive outlook on Midnight Sun Mining, citing its strategic position near First Quantum Minerals' Kansanshi Mine as a key advantage. According to Shaw, "Midnight Sun Mining presents a compelling copper opportunity," with its location offering natural synergies for future development. He emphasized that the company's upcoming oxide drill program and geophysical results had the potential to unlock further exploration value.

Shaw also noted that Midnight Sun had already attracted interest from KoBold Metals, a well-capitalized exploration specialist, which committed US$15 million to earn a 75% stake in the Dumbwa license. He stated that KoBold's involvement positioned the project as a candidate for a significant copper discovery, describing their goal as "hunting for Zambia's next billion-tonne development project."

In addition to exploration upside, Shaw highlighted Midnight Sun's potential as an acquisition target, citing its proximity to Kansanshi and the cost-optimization benefits such a transaction could offer First Quantum. He described the investment case as one with a "free call option" on additional exploration potential, indicating that as development progresses, the company could see further value appreciation.

Catalysts: Advancing Oxide Copper Exploration and Development at Kazhiba

Midnight Sun's investor presentation lays out a number of catalysts driving them. The company's near-term exploration strategy focuses on expanding the Kazhiba Target and advancing the Solwezi Project's broader oxide copper potential. The planned 2025 drilling program will seek to extend mineralization along the identified north-northeast trend and further test the potential for additional high-grade occurrences.

The company's partnership with First Quantum Minerals represents a key strategic advantage, offering potential synergies in developing an oxide copper resource that could complement Kansanshi's processing infrastructure. This collaboration provides a potential pathway for material from Midnight Sun's near-surface mineralization to be processed at First Quantum's SX/EW facility, presenting an opportunity for near-term production and resulting cash flow. 

Beyond Kazhiba, Midnight Sun's exploration portfolio includes the Mitu Target, where past drilling has identified high-grade copper, cobalt, and nickel mineralization. The company has planned an initial oxide and sulfide copper exploration program at Mitu for spring 2025. Additionally, Midnight Sun has secured a US$15.5 million earn-in agreement with KoBold Metals to advance its Dumbwa Target, leveraging advanced data science and artificial intelligence to accelerate discovery across a 20 km long copper-in-soil anomaly, which reaches peak grades of 0.73% copper at surface. Dumbwa is one of the largest and highest-grade soil anomalies on record in Zambia, representing an outstanding target for a large Domes-style sulfide copper deposit. 

As the copper market continues to face supply constraints and increasing demand driven by electrification trends, Midnight Sun's exploration efforts in Zambia's copper-rich Solwezi region position it as a potential emerging player in the sector. Further assay results and exploration updates in early 2025 will provide additional insight into the scalability of the Kazhiba Target and the broader resource potential of the Solwezi Project.

Ownership and Share Structure

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%. 

According to Refinitiv, 5.75% of Midnight Sun Mining is owned by management and insiders with Brett Allan Richards holding the most at 4.47%. Insitutions hold  1.32%. The company has a market capitalization of approximately CA$62.28 million, with 168.85 million shares outstanding. 

The stock has traded in a 52-week range between CA$0.21- 0.72.