Positive indications of renewed copper demand coming from China have helped the red metal keep its losses to a minimum as the US dollar gains strength. The dollar hit a seven-week high against the euro after the European Central Bank President said the bank’s Governing Council expects ECB interest rates to stay at their current levels, if not lower, for an extended period.
In London, three month copper remained untraded at the close, with a last bid at $7,108 per tonne — down from Wednesday’s close of $7,134.
Don’t get too excited
Even though copper has made some impressive gains over the last couple of months, the red metals’s overall performance in 2013 has yet to impress. Copper was down nearly 20 percent earlier in the year, and has only seen positive activity since indications that China is on firmer ground started trickling in. Despite the gains that copper has made, analysts are still cautioning investors that the red metal’s rebound might not last long.
David Wilson, director of metals research at Citi, told CNBC that “Copper still looks like a market moving into oversupply.”
Echoing Wilson’s statement, Goldman Sachs analysts Max Layton, Roger Yuan and Jeffrey Currie pointed fingers at a medium-term bear case for copper.
“Although Chinese and developed market economic indicators have improved, this has not been significantly out of line with our base case for copper demand. Our base case outlook remains for solid but unspectacular global copper demand growth, with limited upside risks,” the analysts told investors in a research note.
Paranapanema SA (BVMP:PMAM3), which has the largest copper smelter in Brazil, climbed higher on Thursday after its chief executive announced that the company will be revising plans to install a new plant, in order to reduce costs. According to Bloomberg, shares of Paranapanema were up 1.3 percent in Sao Paulo. The company is looking into installing a processing plant in Santo Andre in the state of Sao Paulo, a potentially more profitable option than in Espirito Santo.
Gold Reach Resources (TSXV:GRV) has intersected 124.4 meters of 0.56-percent copper equivalent within 258.4 meters of 0.46-percent copper equivalent at its Ox deposit near Smithers in British Columbia. The company has been focusing on drilling infill holes and expanding the near-surface mineralization along a higher-grade core that is present along the length of the system. Gold Reach is aiming to increase its resource at the Ox deposit as well as the tonnage and grade.
From the current program, Gold Reach has seen long intercepts of near-surface mineralization that include 170.6 m of 0.43-percent copper equivalent from 16 to 186 meters depth; 258.4 meters of 0.46-percent copper equivalent from 7.1 to 265.4 meters depth, and 226.8 meters of 0.43-percent copper equivalent from 53 to 279.8 meters depth.
Augusta Resource Corporation (TSX:AZC) has closed the first tranche of a $10 million convertible note financing. The first $2 million closed on September 4 and has a conversion price of $2.87. According to Augusta’s press release, the notes have a five-year maturity date from the time of issuance and bear interest at 7 percent per year.
“This flexible financing allows the Company to advance our project needs and corporate interests as we solidify the project financing and construction planning for Rosemont, CEO Gil Clausen told investors.
Augusta is advancing its Rosemont copper deposit near Tucson, Arizona. The deposit hosts a large reserve of copper and molybdenum that could reportedly account for 10 percent of US copper output should it reach production.
Earlier this week, Eurasian Minerals (TSXV:EMX) optioned out three porphyry copper projects in Arizona to Desert Star Resources (TSXV:DSR). Desert Star has the option to earn a 100-percent interest in each property — Red Top, Copper Springs and Copper King — by delivering Eurasian 350,000 shares of Desert Star upon TSX Venture approval, incurring a minimum of US$5 million in exploration spending by the seventh anniversary of the signing date, and making additional payments to Eurasian Minerals.
On Tuesday, Aston Bay Holdings (TSXV:BAY) released a summary of historical drill results and technical data for several zones at the Storm copper project. Highlights from the data include a 110-meter core with a grading of of 2.45-percent copper from surface from the 2200N Zone as well as 56 meters of core with a grading of 3.07-percent copper from 12.2. meters at the 2750N Zone.
“These drill results clearly demonstrate the exceptional potential of the Storm Copper Project. The Property has a solid foundation of historic data from which the Aston Bay team can build and we are eager to continue advancing the project,” explained Bruce Counts, COO of Aston Bay.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.