Copper Gains as Industrial China Grows and US Budget Talks Remain in Focus

Copper gained in thin trading Thursday on the release of data showing that Chinese industrial companies’ profits grew 22.8 percent in November from a year earlier. Prices were also boosted by last month’s 4.4-percent climb in new home purchases in the US — the highest increase since April 2010.

“You have a recipe for higher copper prices with the home-sales numbers and strong Chinese industrial-profit data,” David Meger, director of metal trading at Chicago’s Vision Financial Markets, told Bloomberg.

If the US House of Representatives and President Barack Obama do not reach a deal to avert the automatic tax hikes and spending cuts set to come into effect in January, trading in copper and other metals could remain subdued over the next three trading sessions, Reuters cited RBC as saying in a note. US budget talks are also likely to dictate the direction of metals prices in the coming weeks.

On the London Metal Exchange, copper for three-month delivery rose to $7,915 per tonne, up 1.5 percent from Monday’s $7,801 closing price. COMEX copper for March delivery was up 0.2 percent, at $3.605 per pound, in late afternoon trading in New York.

Company news

Xstrata (LSE:XTA) will spend $300 million more than originally planned on developing the Frieda River copper mine in Papua New Guinea. The increase is the result of higher costs for skilled workers and equipment, particularly in remote locations, Reuters reported. Xstrata estimates that the mine will yield an average of 204,000 tonnes of copper per year at a cost of $1.11 per pound. Agence France-Presse also reported that local partner Highlands Pacific (ASX:HIG) said part of the cost increase is related to the depreciation of the US dollar in recent years.

Kazakhstan’s biggest copper producer, Kazakhmys (LSE:KAZ), secured a $1 billion pre-export finance debt facility from lenders including the Bank of China, Deutsche Bank, Societe General and UniCredit. The five-year loan will provide additional liquidity for the company as it develops the Bozshakol and Aktogay copper projects.

Freeport-McMoRan Copper & Gold (NYSE:FCX) said it will pay a quarterly cash dividend of $0.3125 per share on February 1.

Copper Mountain Mining (TSX:CUM) expects to produce approximately 80 million pounds of copper, 35,000 ounces of gold and 315,000 ounces of silver in 2013.

Southern Copper (NYSE:SCCO) and Newmont Mining (NYSE:NEM,TSX:NMC) will receive assistance from the government of Peru to help accelerate projects that have been delayed by community protests, Bloomberg reported, citing a report by local newspaper El Comercio. Meanwhile, Fox Business noted that unionized workers at Southern Copper’s Cuajone and Toquepala mines and at the Ilo smelter and refinery in Peru did a two-day walkout this week to back demands for salary increases. A general, indefinite strike could start on January 15 if the company doesn’t reach a deal on a new contract with unions.

Silver Lake Resources (ASX:SLR) and Integra Mining (ASX:IGRreceived court approval to merge and have lodged the approval with the Australian Securities and Investments Commission. The merger will occur by January 11.

Junior company news

Discovery Metals (ASX:DML) said it has resumed “normal development” of the Zeta open pit at the Boseto copper project in Botswana after authorities accepted the company’s report and lifted temporary restrictions that had prevented deepening of the pit. Discovery is working on lifting mine production and recovering lost development time.

Iron Creek Capital (TSXV:IRN) said that following a cash call by Hochschild Mining (LSE:HOC), to which Iron Creek declined to contribute, its stake in the Victoria joint-venture project in Northern Chile is now 33.88 percent, down from 40 percent. “Although the Victoria property remains highly prospective for both porphyry copper mineralization and precious metals mineralization … current market conditions dictate that Iron Creek must reduce its interest in the project in order to bring future financing commitments to a more manageable level,” Tim Beale, president of Iron Creek, said in a statement.

Copper Fox Metals (TSXV:CUU) said its Schaft Creek copper project in British Columbia will have a nominal milling capacity of 130,000 tonnes per day over a 21-year mine life, according to the most recent feasibility study. That is an increase of 30 percent from the September 2008 study, as well as a 20 percent increase in the capital expenditure expected on the project. The mine is expected to produce a total of 4.88 billion pounds of copper, 4.21 million ounces of gold, 25.1 million ounces of silver and 214.92 million pounds of molybdenum.

Southern Arc Minerals (TSXV:SA) agreed to sell its 90-percent share in the Taliwang gold, silver and copper project in Indonesia to Coke Resources in return for $500,000 and 15 million shares in Coke. The transaction is contingent on Coke completing an initial public offering on the Australian Stock Exchange. Coke expects to issue up to 21 million shares at AU$0.20 per share. Southern Arc will own about 8 percent of the company.

Redhawk Resources (TSX:RDK) plans to pursue an underground development plan for its Copper Creek project in Arizona. It said the underground option is expected to incur smaller capital costs, and the project can be developed in a shorter time. It expects to conclude a preliminary economic assessment based on new resources in the first quarter of 2013.

Copper North Mining (TSXV:COLraised $775,350 in a non-brokered private placement of 5.17 million shares at $0.15 apiece.

Yellowhead Mining (TSX:YMIraised $441,999 in an additional private placement of shares for $0.65 per share and $0.70 per share. The proceeds will be used for exploratory drilling at its Harper Creek copper, gold and silver project in British Columbia.

 

Securities Disclosure: I, Ragnhild Kjetland, hold no investment interest in any company mentioned in this article.