QMines Ltd (ASX:QML) (FRA:81V) is well placed to benefit from the expected uptick in copper demand over the next decade, driven by electric vehicle makers and green environmental policies – particularly in Europe.
The newly listed company, which aims to be Queensland’s next copper and gold developer, has an extensive drilling program planned at the Mt Chalmers Copper Project, funded by its recent IPO which raised $11.5 million.
Its exploration goal is to establish a strong copper development story over the next 18-24 months and to demonstrate that there is more copper and gold mineralisation underneath and around the historical high-grade mine.
And QMines looks on track to achieve this, with its maiden diamond drilling results from seven out of 11 diamond holes returning grades of up to 13.4% copper and 6.11 g/t gold and a 3,000-metre reverse circulation (RC) drilling campaign now underway at the project.
Copper a ‘critical mineral’
The company is building a European investor base, having listed on the Frankfurt Stock Exchange and securing three large European investors that took up around 40% or $4.5 million of the IPO.
QMines is also focused on becoming Australia’s first zero-carbon copper and gold explorer – with many German and European investors having a deep understanding of the green, decarbonisation trends and transitions occurring in the energy space.
Copper is expected to be a major beneficiary of these green policies as the energy transition will require significant additional supply over and above the current baseload requirements.
The amount of copper used inside an electric vehicle is several orders of magnitude great than it is in a standard petrol/gasoline-power car.
With the uptake in electric vehicles, automakers are going to be demanding more and more copper from their suppliers – and not just for the vehicles - the metal will also be required in the associated infrastructure, particularly in connecting all the charging points that will need to be built.
Demand drives price
The environmental addenda globally and the proliferation of electric vehicles, the increased use of renewable energy sources, energy efficiency and increased consumption of electronics are all driving the copper price.
Last month it peaked at US$10,724/tonne and the only other time in history copper peaked above US$10,000/tonne was in 2011 on the back of Chinese economic stimulus and a 2000s commodities boom.
This demand is also being driven by the world’s two economic giants: the USA and China.
The Chinese economy is using huge amounts of copper as infrastructure growth continues, and copper wiring for new homes and offices remains a high priority.
In the US, President Biden’s US$1.9 billion infrastructure program has lifted metals markets as a whole, with copper a major beneficiary.
Goldman Sachs stated that the green revolution is likely to create a record wide supply gap by 2030, while on the supply side not many big new projects are coming on stream.
It was only December last year that Goldman predicted copper could hit five figures by the first half of 2022 and it now believes it could reach as high as US$15,000/tonne by 2025.
Today copper is fetching US$9,852/tonne.
Locations of QMines’ projects and other major mines.
Mt Chalmers development potential
This anticipated surge in demand comes at a time when supply is likely to be constrained due to prolonged underinvestment in exploration and new mine development.
And QMines could be perfectly placed, with the company confident that Mt Chalmers has the potential to become a mine.
It was last mined between 1908 and 1982 with two large open pits around which the company believes there are several additional deposits that have not been mined.
The company has one deposit of VMS cluster at the Mt Chalmers pit but has also identified three exploration targets which it believes are individually separate deposits as well - all within a kilometre of the pits.
QMines has delivered a JORC inferred resource for Mt Chalmers and its three other copper-gold projects (Silverwood, Warroo and Herries Range) of 3.9 million tonnes at 1.15% copper, 0.81 g/t gold and 8.4 g/t silver.
The company believes the deposit has a lot more growth potential and could generate a lot of value for investors over time – with a strong chance of adding to that resource through exploration.
QMines believes that the strong results from its maiden diamond drilling clearly validate the mines development potential and is now undertaking a 3,000 metre RC drilling program with the aim of releasing a resource update in the near future.
Its long-term goal to establish a strong copper development story and to demonstrate that there is more copper and gold mineralisation underneath and around the historical high-grade mine.
If the company can grow the resource over the next 18-24 months it will be in a fantastic position to solidify its position as an Australian copper developer – and capitalise on the forecast demand for the highly sought-after metal.