Copper’s Dead Cat Bounce Was Short-lived

Copper’s Dead Cat Bounce Was Short-livedCopper prices have recovered slightly from early-week lows. However, the red metal has once again fallen victim to concerns over federal stimulus plans, sliding back from a nine-day high to $7,080.25 per tonne on the London Metal Exchange.

Copper kicked off the first week of December sporting a low of $6,775 in London. By midweek, support in the form of positive US jobs data sent prices rallying to $7,128.75. However, the dead cat bounce was short-lived, and investors have since revised their stance on the metal; many are concerned that the Federal Reserve’s support for the American economy will result in lower metal demand.

The red metal is basing its losses today on US unemployment claims and gross domestic product figures that were better than expected. While these figures tend to offer support for the red metal as far as manufacturing activity is concerned, The Wall Street Journal states that “traders at times this year have been more focused on the prospect that an improving economy will push the Federal Reserve to withdraw its stimulus.” That being said, any improvements in the economy are likely to urge federal regulators to curb the stimulus program, in turn weighing down the metals market.

Company news

Desert Fox Minerals, a wholly owned subsidiary of Copper Fox Metals (TSXV:CUU), provided investors with an update on recent activities at the Van Dyke oxide copper deposit in Arizona’s Globe-Miami mining district. The company has been looking into all historical exploration and test leaching data with the help of Moose Mountain Technical Services. Desert Fox is exploring that data in order to deduce what further work, including diamond drilling, is needed to confirm the deposit’s historical mineral estimate of 112 million tons grading 0.53-percent copper. The company has also engaged the services of Knight Piesold to review all historical technical data, including engineering, geochemical and hydrogeological.

According to President and CEO Elmer Stewart, “[t]he Van Dyke oxide copper deposit is a significant under explored copper asset of the Company. The historical estimation, in-situ leaching test work and production data from an in-situ leach mining operation completed between the early 1970′s and 1989 yielded positive results.” He said, adding “Our immediate objective at Van Dyke is to complete the geological, engineering, geotechnical and environmental work necessary to prepare a Preliminary Economic Assessment there by establishing a valuation for this project. The Van Dyke oxide copper deposit complements our 25% interest in the large Schaft Creek copper-gold-molybdenum-silver deposit.”

This week, Nevsun Resources (TSX:NSU) reached commercial production at its Bisha mine in Eritrea. The company started commissioning in Q3, and produced roughly 60,000 tonnes of copper concentrate. Now that commercial production has been reached, Nevsun is on target to produce 30 to 50 million pounds of copper in 2013. As per the company’s press release, “[i]n the past month the plant has been achieving over 80% of its targeted metrics of feed grade, recovery rates, and copper produced in concentrate. The transportation logistics from site to Massawa port are working well and Bisha has made three ocean shipments totalling approximately $60 million in value, with another ship loading this week in Massawa.”

Explor Resources (TSXV:EXS,OTCQX:EXSF) completed Phase 1 of its 2013 exploration program at the Chester copper property. The intent of the program was to explore the possibility of finding additional near-surface mineralized zones similar to the known Chester Copper and VMS zones. The program included grassroots exploration, including line cutting, geological mapping, ground magnetometer and VLF EM surveys, as well as soil sampling.


Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned in this article.