Phoenix Copper, could be very big quite quickly
Phoenix Copper (LON:PXC) is a start up mining project in Idaho. I'm a holder and had the fortune of being asked to participate in a webinar with a couple of board members, link attached.
The company is interesting: a few of the board members took OXUS from nothing to a billion pound company before it was seized by the state. So when they started again they wanted something with no jurisdiction risk. They found this land in Idaho which had been a profitable copper mine until WW2 and has lain dormant since. But due to advances in technology, there looks to be lots of copper, and a fair amount of zinc, gold, silver and cobalt on the site.
They had a very large fundraise last month with a view to getting enough cash to see them through to production. The finances, based on much lower copper prices, was that they would be able to repay any debt they need to construct the mine within about a year of coming into production. It will be an open pit at Empire, which is their focus, but their is a vein system at the nearby Red Star plot and a Carlin style gold deposit adjacent at Navarre Creek. They have drilled enough holes to know there is enough to make a very profitable copper mine here, but it looks like there is also a huge porphyry system below.
Shares currently around 38p, market cap a little over £40m. My suspicion is that this will be much, much bigger than that. And because there won't be any more placings for some time, if at all, it won't be the usual AIM pump and dump 3 steps forward 4 steps back. The aim is squarely to get into production, make big profits and better understand the geology all around them.
DYOR, but if copper continues to be strong, this company looks like the right place, right time, and are well managed and incredibly attractive value at the moment.
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115 comments
Up 42% today??!!
Fantastic! Now it’s only down 80% since the article was written…
It was only 5p.
Wow - Donald Pond - I am amazed. Seem PXC finally got its financing sorted, knocking out the biggest hurdle/risk, but the market hasn't really responded. I would expect this to be on 50p+ by now. Do you have any ideas why?
Seems that Phoenix Copper (LON:PXC) is now right at the bottom of the second trough... let's see what tomorrow's AGM yields: if the BoD gets the green light for share issue required the bond finance, the share price should have a lot of upside over the next year.
Well, the company said that they were expecting to issue the first economic study for the mine in early Q2, so the expectation is that it is imminent, and with the price of copper so strong, it will be much better than might have been anticipated a few months ago. That leads people I believe to think that the copper bonds are going to be more attractive and so funding for the mine may be achieved.
Disclosure: I am employed by Phoenix Copper to manage investor relations. Which is not straightforward, as I can only communicate material information in the public domain, so I can't wait until the study is published and there is plenty I can talk about!
I look forward to that - thanks, donald.
Currently up 20% today on no news. Any ideas?
OK - this original post was perhaps 2.5 years premature donald pond. I guess today you would write it with far more confidence: Phoenix Copper (LON:PXC) is very likely just about to secure significant financing from its Copper Bond issue. With its safe jurisdiction, very profitable and enterprising business model and lots of valuable metals in the ground, it will likely skyrocket within the next 10 days or so and then for the next 10 years or so.
That would be great, Retireyoung - fingers crossed. I've let my holding sleep for the last 2 years on a boom-or-bust basis.
Any comments on today’s drilling results?
(I hold.)
Pretty irrelevant by the sounds of it imo, other than it's sounding like a pretty complex ore body (read expensive to operate in). At this stage of the economic and mining cycle, you want to own companies that are actually producing something, not jam tomorrow explorers that haven't secured project funding. So many better options at good prices just now. This share is pure speculation.
Useful, thanks Snowbum.
One thing is for sure and this is, if you are retired from employment the you are too old to buy Phoenix Copper (LON:PXC) shares. I've had a bellyful of metal prospectors and by coincidence bought Atalaya Mining (LON:ATYM) which is actually getting copper out of the ground much nearer to home.
Except if you had bought two months ago you would already have a 100% profit, and the same might be said again in another two months time…
Not so ... if you are retired from employment, you need to be careful that you do not risk more of your capital than you can afford to lose. There's still a place for risky, potentially high reward, investments in a well-balanced retirement portfolio.
Can someone, please explain what is going on, shares are down 21% today. I know about "The Company is finalising discussions with a number of parties with a view to placing up to $80 million of corporate copper bonds" Are Phoenix Copper (LON:PXC) paying 8.5% interest?
I thought funding was in the bag?
Re Phoenix Copper (LON:PXC) Funding not in the bag! Though that's no great surprise. The initial notes on the proposed copper bond were made before the world moved into a higher rates last summer. I'd assume there have been talks and negotiations going on and today's remarks on the bond conditions reflect those. But clearly there is disapointment at the delays in funding, particulalry as the co has said several times it was expected to be finalised soon. And the short term funding - to keep the explo drilling - is clearly not viewed positively.
Potentially it's all still on track, with delays on the funding. But it's hard to judge at present how much what's reported today is a reflection of negotiations, or an attempt to get them going.
Shares have taken off this week, can't see any news, anyone know why?
Donald Pond tweeted this on Monday. Funding in the bag is expected to result in a re-rate. DYOR.
https://twitter.com/DonaldPond...
I see, thanks.
Results of metallurgical core drilling out today - seems positive?
(I hold)
Having traded in and out over the last few years, I have a small spread position just now from 23p.
To hit the big momentum move, I think this one has turned into a bet on finding a porphyry system or not, the drill results whilst ok didn’t ‘strike gold’ this time around. The search continues….
"Management have said they expect a strong flow of news over the coming months.."
Hmm, glad I sold half when they shot up 2 weeks ago, not sure whether to hold on or not.
Interim results - jam tomorrow?
(I hold)
Phoenix Copper (LON:PXC) has always been about 'jam tomorrow'. I guess what we are now seeing is a shift towards 'jam the day after tomorrow'. I hold and am ready to wait a good while.
But what 'if tomorrow never comes'?
Well put, DaviStoVest.
For me, it’s the old battle between two fears: tomorrow never coming, and tomorrow coming the day after selling.
Holding a future copper mine in the USA still makes sense to me - but I know this is naïve and ignorant optimism - ”Who are a little wise, the best fools be.”
Phoenix Copper (LON:PXC) (I hold) is on the move North after a slow drift downwards on no news and negative market conditions. Management have said they expect a strong flow of news over the coming months.... I expect the last weeks could have been the buying opportunity of a lifetime.
I saw gone up 45%, can't see any news, anyone know why?
Stongly advocated in a tip sheet earlier this week (Tuesday, I think). But it's been drifting steadily downwards on no news and very low trading volumes. There's no real explanation for that and there may be just as little obvious explanation for its sharp rise this week.
@DaviStoVest - do you know which tip sheet?
Shareprophets
Thanks, can't see much on the BBs, something about Biden funding EVs.
There's a pretty presentation on their website today, but does it say anything new? Nothing jumped out at me - have any of you experienced people had a look?
(I hold)
Since I made my last post I've done a deep dive into the company, and decided to exit my position.
Now that I've looked a bit closer, I don't feel the risks stack up well against the rewards.
As always, do your own research, but this one raised several factors that I regarded as a red flag, including the share dilution Silver Moon pointed out.
Some tips for anyone researching this company:
* have a look into OXUS, the accounts are available from companies house. These may give some insight as to what you may expect from Phoenix Copper.
* At Meetings between Phoenix Copper and local residents, the figures quoted by the CEO didn't sound great for investors.
The following articles are blocked if you are in the EU (I wonder why?), but it's easy to bypass the restrictions with a VPN.
https://www.postregister.com/messenger/news/copper-mine-town-hall-draws-crowd-questions/article_edd78c8c-a42c-5e17-b40e-c9a20689b539.html
https://www.mtexpress.com/news/state_regional/in-mackay-mine-redevelopment-puts-a-small-town-at-a-crossroads/article_92eff76a-5cfd-11ec-926c-4fd4c2cf4229.html
Hi Brian
I’m not on Stockopedia much anymore so missed your earlier message congratulating me on my appointment, but I saw todays post referenced somewhere else so am here to respond.
Firstly, my appointment came about after I met the board at one of the lunches they hold for shareholders periodically. We got on well and they recognised that their skill set is in mining and face to face meetings with institutional investors rather than social media and PIs, their existing IR chap was looking to step back a little, they asked if I could help, which I was happy to do.
As far as Oxus is concerned, the story is well known. They took a company from near nothing to a billion market cap only for the Uzbek government to seize it. So the next time they looked for a resource in a mining friendly jurisdiction with a strong legal system and alighted on the Empire project in Idaho
As far as the local position is concerned, there are always a small number of people who object to change. Their views will be considered by the authorities as part of the permitting process. I understand the mayor is supportive as are the overwhelming majority of the population in the area. Idaho is a state that has a long history of mining. Phoenix are looking to produce on the site of a previous mine. The town needs jobs and the country needs copper. The environmental and historical aspects of the site could not be more favourable. But the authorities have a process to follow and will do so as they see fit. The original application to the Bureau of Land Management was over 3,000 pages long and included a huge amount of data. If this project doesn’t go ahead it is hard to imagine any project ever getting approval, but the authorities will still examine it thoroughly and this is not the only project on their desk.
As far as the returns for investors is concerned, that will depend upon how the mine is funded and how profitable it is. The company has been clear for 12 months that it does not intend to raise further funds through equity and is seeking to fund development through debt. The likelihood of that happening, of the permit being granted, and of the profitability of the mine are the “known unknowns” that you have to form a view on.
Those in first get diluted the most.
I don't hold Phoenix Copper (LON:PXC) but have very sore fingers from other highly speculative miners.
You should probably read what PXC have to say about finance arrangments and dilution.
Here is what Stocko thinks and that is good enough for me, peterg.
Silver
I was just reviewing my portfolio tonight and came across the following announcement on the Phoenix Copper (LON:PXC) twitter account.
Congratulations to Donald Pond (who started this discussion). This sounds like a fantastic opportunity.
I'm taking it as a bullish sign on this stock. It's evident to anyone who's been here a while that Donald has been following this stock closely for some time, and is a much earlier investor than I am.
@Donald Pond I'm not sure if you're free to comment, but I'd love to hear the back-story
- how did this come to be?
- any advice for investors when reaching out to companies?
- what your plans are for the future?
- any hints as to when the company will begin generating revenue? It's got to be soon!
- will there be a podcast episode?
Good luck in your new position!
A positive share price reaction to today's news about the proposed fundraising.
(I hold)
More encouraging news today:
Exploratory drilling at Red Star encounters further copper, gold, silver, zinc
and lead mineralisation
Today’s update sounds positive to a novice (me; I hold).
Exploratory drilling encounters further high-grade oxide mineralisation
Further positive sounding update from the drill bit at Empire.
https://www.investegate.co.uk/...
Gus.
Yet the shares are down 9%.
Drilling results update from Red Star sector released this morning. Promising indications of healthy silver/lead deposits identified.
https://www.investegate.co.uk/....
Gus.
9% gain today on no news. Anyone any idea why?
Share price has been volatile lately. However Copper prices are up today so I suspect that has something to do with today's rise. Many commodities are up also, Sylvania Platinum (LON:SLP) is up 6%.
This could be to do China's lower inflation figures today.
I just bought in today with a modest starting position - I have been watching Phoenix Copper (LON:PXC) for some time and wish I'd bought sooner, but I didn't have any spare cash. I now decided to take the plunge based on the last couple of week's weakness.
Does anyone know of a Bulletin Board or Telegram group where this is discussed in more depth?
You can follow Donald Pond on Twitter for all the latest updates plus Donald's opinion.
Thanks Wilkonz. Given the big drop again today, I wish I had waited!
Does anyone know why the shares are tanking so much post what seem to be reasonable the drill results?
Technical pullback imo. I sold some after a solid gain from 30-40p area.
Copper explorers will always be volatile until in production. I also find this to be a feature when investing in small cap explorers, buy the rumour sell the news type action often plays out. I think it will likely retrace to the pivot point around the 50p area now, what happens there is key. I would look to add some again on a bullish candle day with volume at that level or get out completely on a weekly close below the pivot area lower range around 40-42p area.
Hope it helps,
Forbsy.
there is an excellent telegram group, I’ll try to dig out a link later when I’m on desktop
Thanks Donald.
Here you go https://t.me/joinchat/I5hNdxg-...
Donald, I used the link and joined then was removed within a few hours, I hadn't posted, and nobody contacted me. I'm a member of several other groups on Telegram, and they are usually very friendly so not sure why this has happened. Any chance of posting on the group to find out what their problem is?
Finally caught up this group, been lots of scammers recently and I was mistakenly removed with the rest!
Glad to hear this. The Telegram group is a little over-earnest and too much composed of devotees. But it is incredibly well-informed and hugely civilised. Pleased that you were eventually able to get on board.
Phoenix Copper (LON:PXC) is a fantastic punt. It's my current main hope that I will somehow get very rich. No matter it fails on this account, I think it is a great (risky) investment to have in my portfolio.
Further positive update on recent drill results from Empire mine workings.
https://www.investegate.co.uk/...
Gold in them there hills …. and copper, zinc and silver for that matter.
Gus.
Yet the shares are down 6%, are the results that good?
Most of the miners are down a bit this morning - possibly reflecting overnight softening in several precious and industrial metals. Personally thought the Phoenix Copper (LON:PXC) drill results were pretty decent so surprised at the market reaction. May just be a tree shake from the MM’s as the shares appeared to be marked up initially.
Gus.
Thanks Gus. Yes some miners are down 2-3%, copper is down around 1.3% but Phoenix Copper (LON:PXC) was down 8% which is a surprise, maybe the market was expecting better drill results?
PXC SP has moved up a lot. 6 weeks ago it was in the 40s, and has brushed 80 in between. There's a lot of new speculative money in there, so I'm not sure the fall should be that big a shock, though I confess to initial surprise! The drill results look pretty decent to me, but they are only from the 1st drill, and there's a long way to go to build a picture. And lets not forget - these drills are to investigate the underlying sulphites - which appear to be present as expected. They don't really impact on the existing plans for open pit mining on the oxide deposit above, which should more than support the current mcap.
Phoenix Copper (LON:PXC) announces it has increased its Navarre Creek land holdings by about 1/3 to roughly 15km2. Details in this release.
https://www.investegate.co.uk/....
Gus.
Thanks Gus. Although I’m unclear why the share price has risen 9%.
Looks as though the newly acquired land adds quite a bit of additional quality gold potential. Not sure this necessarily justifies today‘s rise. Stock price has been very volatile of late - it peaked at 79p last week before a sharp pull back - I suspect today‘s rise is largely down to punters chasing limited supply and the brokers obligingly fleecing them.
Gus.
Many thanks Gus.
FR.
They've staked more land based on early internal analysis of EM Survey results. Costs very little for PXC to do this. There's only one reason they'd do this in my view as they believe it will add to their mineral resources once official EM Survey results released later in month and drilling takes place to firm up the resource. With recent RNS news this is leading up to a period of potential transformative news in next few months. Red Star EM survey results too later this month all being well. Last week's RNS re the US ADR programme from end Sept has not been fully appreciated in my view but suspect it will do by Oct after the programme launched.
My highest conviction holding and the risk reward is even better after recent news IMO.
All sounds much more promising than my very speculative Helium One Global (LON:HE1) holding!
FR
Phoenix Copper (LON:PXC) announces intention to appoint BNY Mellon to set up an ADR program in the US.
https://www.investegate.co.uk/....
Intention is to issue ADR‘s off the back of existing shares so no dilution/new share issuance and should open up the company to US domestic investors previously unable to buy AIM shares. Presumably good for liquidity and hopefully raises the demand for shares so can’t immediately see any downside and plenty of upside. Also addresses my initial concern from my first comment on this thread (about why is a domestic US miner issuing on AIM).
Gus.
Hi Donald...so, which company is your next comment write up on Stockopedia going to be about? :-) It was down to you that I came across Phoenix Copper (LON:PXC)! Thank you once again. I'm moving toward a concentrated portfolio of 8 to 10 shares down from around 20 holdings, LON:PXC is my now my largest holding with Jadestone Energy Inc (LON:JSE) and and KIST:LON 3rd in size.
I see you like LON:AAZ
Any others like PXC you believe have really good risk reward to the upside?
Thanks
Dom
I'll have a good think, though Phoenix Copper (LON:PXC) is in my opinion a pretty remarkable coming together of events. I don't have any Kistos (LON:KIST) for reasons I can't explain, having done really well out of RockRose. As for Jupiter 2nd Enhanced Inc (LON:JSE), that one is so frustrating, but it looks so cheap. If they can just get the NZ acquisition approved and break 80p, that could go on a great run. But it looks like we are fishing in similar pools.
I've got quite a lot of 4d Pharma (LON:DDDD) and Emmerson (LON:EML), which I fortunately bought at much lower than current levels. I'm sure there is value there, but realising it is taking a huge amount of time. And which 4D being pharma, it has a risk of the sort of binary outcome that just doesn't apply to Phoenix Copper (LON:PXC) or £JSE.
Hello Donald, how do you feel now about Mirriad Advertising (LON:MIRI), I think you were keen on it last year.
Thanks Donald. Yes I think (LON:JSE) Jadestone Energy will move up on any positive news re completion of Maari NZ asset from OMV. I think it will happen but maybe by end of year., it's not priced in the sp in my view and the company will receive a substantial cheque and good profitable asset. Will keep an eye on China and stricter lockdowns which could affect oil price, I'm in Indonesia and the Delta variant causing huge issues in Asia currently due to low vaccination rates. That said, (LON:JSE) Jadestone Energy has a low operating cost and premium pricing to Brent.
Talking Rockrose Energy (LON:RRE), when I researched Phoenix Copper (LON:PXC) few weeks back, I claimed it was the most interesting risk reward I'd seen since investing in Rockrose Energy (LON:RRE) when I bought in on a PE of 1 a few years back around the £6 level so was relatively late to that one. My brother and couple of friends who followed me into Rockrose Energy (LON:RRE) have followed my into Phoenix Copper (LON:PXC) too.
I'll check out the others you mention above, thanks.
Good luck to us all in Phoenix Copper (LON:PXC), big few months of significant news coming up!
Good luck Dominic, but I think what is unique about Phoenix Copper (LON:PXC) is that they have a clear strategy which they have explained to investors and which only minimally relies on third parties. 4d Pharma (LON:DDDD) and Emmerson (LON:EML) and even Anglo Asian Mining (LON:AAZ) rely on getting results in the lab, or permits from slightly dodgy countries (in reality, Morocco and Azerbaijan are business friendly, but they ain't Idaho). Whereas PXC, like RRE, isn't really at the mercy of the discretion of any government: if they tick the boxes they will get the permits. It should of course be like that in NZ, so I'm surprised its taking Jupiter 2nd Enhanced Inc (LON:JSE) so long but there you are.
Price of Phoenix Copper (LON:PXC) up 10% today on good volume. Topped up at 78.2 pence. Probably FOMO... but worth a punt all the same.
Came across Phoenix Coppers Twitter account whilst researching. I’d hope that any updates come through RNS but you never know.
https://mobile.twitter.com/Pho...
Motoring along again today. Many thanks indeed for flagging the investment case, Donald.
I hold.
FR
Nice write up by Michael Taylor in the IC today. With only 116m shares in issue and board saying they aren't planning to issue any more, the upside potential remains significant. Exciting times! Thanks for your thanks all!
Cynical hat on... of course they're saying they're not planning to issue any more - it means the share price will be higher when they do have to issue some, so less dilution.
Often a time to take some profits, looks like some investors have done so this morning.
A good move up today. I presume due to copper prices?
I hold.
FR.
Donald, I'd just like to say thanks for bringing PXC to my attention here...I went away and did a lot of DD and have to be honest, I couldn't believe the opportunity and risk reward here. I spent some time trying to find a major negative issue/downside. Downside risk is low due to planned Empire production in short term...permitting and project finance I consider low risk with only question being the cost of debt finance which given recent equity raise and strong project financials shouldn't be too onerous. Macro environment and metallic prices are risks also but they have metal optionality and I expect the prices for the key metals for a green future to remain strong. If all goes as planned this could be 5x to 10x over the next 5 years. I expect it to become clear that PXC are sat on significant and even possibly world class deposits. Regards
May I echo Dominic's thanks to Donald for bringing this to our attention. I've topped up today and yesterday. It's achieved a new 52 week high and looks like going higher. A potential multibagger but no sign of significant institutional buying yet.
Does anyone know how long the permitting process may take?
Around 12 months, but the land PXC owns is a combination of patented and unpatented land and my understanding is that you don't need permits for the former, so there is lots of prep work they can do during the permitting process. The process itself is largely dictated by statutory timetables, so x weeks for consultation, y weeks for company to respond etc. The company can reduce the timescale by responding quickly and they don't expect much opposition as the local town is overwhelmingly supportive and there are no rivers around that would be polluted. So it should be a formality, but who knows?
Thanks very much Donald.
Indeed, its a bit of a 'how long is a piece of string' question: however this gives an order of magnitude. Much appreciated.
Encouraging early update from the Phoenix Copper (LON:PXC) Empire mine drilling program this morning.
https://www.investegate.co.uk/....
Gus
For those interested in resource plays, Tirupati Graphite (LON:TGR) is currently breaking out into blue sky territory, I hold from 95p avg but looks like a multi bagger in the making so plenty left to go imo. Worth a look
Great write up here. https://shreysnotepad.com/2021/06/05/an-%E2%80%A6 I have to say I'm especially impressed by the management. They have regular webinars with private investors and they listened to private investors by changing the terms of their recent option awards to include them only vesting when certain milestones are achieved. Not many boards would recognise they made an error in judgement and fix it within a few hours.
I've just opened a comment after the news "Biden looks abroad for electric vehicle metals, in blow to U.S. miners" - but might Phoenix be ok as it's an existing mine?
(I hold Antofagasta (LON:ANTO) but not Phoenix Copper (LON:PXC) )
£PXR great rns today with the buy in by First Cobalt to one of their non-core prospects. Makes a lot of sense as we wouldn't have been able to spend much time/money on it for quite some time.
Not great in current copper market. Try srh2 for a copper upśide
Not much happening to price or volume today. Copper prices up around 1.5%. I've doubled my holding (from very small to slightly less small). Festina lente.
Thanks for the tip Donald and I have invested at 39p and will tuck away for a year or so . I recall suggesting to you sometime ago a Canadian copper mining company owned by a friend of mine . First Quantum Minerals FM.TO Mainly operate in Zambia . Up significantly in last few months .
Seconded. Thank you Donald for putting this up on the screen. Well worth looking into and, after some research, I also bought into this stock a few days ago. Now I just need to try to forget about it for a year or two.
All looking very promising for Phoenix Copper (LON:PXC), I bought in a while back after reading up when seeing it highlighted here, thanks for the tip Donald.
Solgold (LON:SOLG) also still a highly prospective play in this space, recent board changes should help to move things there I hope as a LTH. The discussion on jurisdiction is relevant here as they have rights across Ecuador sown up.
Worth a look if interested in copper plays.
Phoenix Copper (LON:PXC) up 11% today. I've bought some at 45 pence. Definitely worth a punt now IMHO.
Do you know why the price has gone up 13% today?
My guess is that it's the surge in copper prices. High grade copper is up 2.64% today and looks like going higher. There doesn't seem to be any news specific to £PXC.
There are few copper plays on the LSE, and not only has the price of copper gone up, there have been issues in Peru and Chile that pose question marks over those jurisdictions. PXC is very much under the radar too, but that has started to change this weekend, and there has been a bit more discussion on Twitter.
But I'd throw in a couple of points:
1) On the webinar Ryan, who runs operations in Idaho, said the mine will be profitable based on the resource they have already proved up. The only risk is metal prices, and he said with copper at $4/lb he was "turning cartwheels". It is currently 20% higher than that. So the risk seems very low.
2) As well as the open copper mine there is a seam of silver and gold bearing magnetite that has been measured at 350m, but which the board think could extend 3km. It shouldn't be hard for the survey to find that quickly, as magnetite shows up very clearly. So that could increase the potential PM resource 10 fold very quickly.
3) Just a reminded, only 1% of the Empire mine has been explored, and in the 40s they were pulling out copper at 7/8% head grade.
Jurisdiction is a massive point here - along with a very mining friendly micro-location. Many of the local residents have family that worked in the pre-war mine - they are desperate to see it back and boosting the local economy.
The directors have come up with a very sensible strategy - developing the starter Empire mine to fund the exploration of the other exciting assets at Red Star, Navarre Creek, and the Beast of the Deep - the possible porphyry that lurks at depth under Empire. These guys have done it once and I am betting they are going to do it again - except this time, no one is going to take their hard won prize from them. Or us a shareholders.
This has been a quiet share due to lack of PR. That has changed of late. I think we are starting to see PXC emerge from the shadows and I expect to see the SP climb steadily from here. My shares are locked away in the bottom drawer...I'd like to see many multiples from here, and dividends.
Just putting a marker down for this morning’s audited annual results release.
https://www.investegate.co.uk/...
Nothing especially new but a good summary of the current state of play with extensive Chairman and CEO commentaries.
Gus.
I have a small stake here as I agree that it looks like things are coming together nicely. My biggest concern, and what stops me making it a larger position, is the permitting process. I know Idaho is a solid mining state, but, as with most developed jurisdictions, there is an active (and well-funded) NGO circuit opposed to new mines. While they may not have the capacity to block a mine, they do have the ability to make the permitting process hell and string it out. I was a little concerned that in the recent video this was highlighted as a risk by the company (circa 2:30) but then they didn't really have much further to say on it. Something to dig into further, I guess. Thanks for the interesting article, Donald. All the best, Will
A few points on permitting. The first is that the area is incredibly sparsely populated. Then, there was a historic mine there. There are no rivers around and so no rusk of downstream pollution. The mine is principally for copper, which is needed for the green revolution. And Ryan is a local and the project has local support. Also, it’s in Idaho, which is a very red state. Finally, the land is already patented, which means the state has granted ownership of all mining rights to the owner. None of this is decisive, but it is hard to think of a stronger claim to get a permit. Idaho is, btw, ranked the number 1 jurisdiction in the world for mining: if they can’t get a permit for this project it is hard to imagine any mining project being permitted in the US
The directors allowed the government to steal a billion pound company from them, it doesn't sound like they are very good.
It might be difficult to trust any director who was involved in a company which lost a billion pounds.
Found this historic curiosity. It’s an upbeat article in Proactive Investors from about 2008 three years or so before Oxus Gold (former home of some of the Phoenix Copper (LON:PXC) founders) went into administration after falling foul of the Uzbekistan government.
https://www.proactiveinvestors...
Salutary lesson for investors in any primary resource prospector - doesn’t matter how many variables in a project look good it only takes one material spanner in the works to bring the whole thing crashing down. A chain is only as strong as its weakest link and all that .....
Gus.
There are 2 aspects to this. Is copper a good punt? Is Phoenix Copper a good punt? With regard to copper, yes, I think this is likely to enjoy huge demand over the next decade. With regard to Phoenix Copper (LON:PXC) I'm not so sure. Like all small miners it's very high risk coupled with potential astronomic rewards. I've put my money in COPX - boring but safe.
Worth saying that in the recent webinar Ryan, who is the director running ops in Idaho, said that the only risk to the company was metal prices and at anything over $4/lb he was turning cartwheels. It was a productive mine 80 years ago, and technology has improved massively since then. It is going to be productive and profitable within 18 months provided metal prices do not crash: the real question is how much upside is there? Always pays to be sceptical, but the amount of cash on the balance sheet, the experience of the board, the quality of the assets and the safety of the jurisdiction are all huge positives.
One other thing...market cap of £40m. They have just appointed a guy to their advisory board who is an NED at Sibanye-Stillwater, which has a market cap of $14bn. How to interpret that!
Hmmm. Thanks Donald. That's got me thinking. Maybe my first reaction was overcautious. The price is just below the rising 40 week MA. If it pushes significantly higher at, say, 45 pence, and stays there for a week, it might be worth a shot. The spread is 267 bps which isn't too bad for a small company. And there's been some energetic buying over the last month. I'll keep it on my radar.
Hi again.
Sorry if my question about the AIM listing came across as being a bit chippy - just naturally wary of overseas companies choosing to play „pump and dump” on the junior U.K. market if their local investors won’t touch them with a barge pole. Not implying that’s the case here - successful companies like Somero Enterprises Inc (LON:SOM) have ploughed a similar furrow to the benefit of U.K. investors (including me) and hopefully Phoenix Copper (LON:PXC) will be one too.
Have now had the chance to go through the Podcast and followed up with bit of digging on the company website. The recent Edson and Angel research pieces are useful, albeit with the usual caveat about them being paid for by the company itself. Overall it does seem a very good prospect. US is a much nicer jurisdiction than many of the more exotic mining/mineral sites around the world (albeit with tougher environmental regime although the company seem to be well on top of this) and access to infrastructure and trained personnel is good. It’s a proven resource both in terms of the historic mining operations (completed using primitive resource location and processing methods that are now much improved) and the recent drill testing results and I especially like the range of prospective metals they can target - obviously it’s a primary copper play but the zinc, gold and silver all give a good bit of diversity to mitigate specific commodity market risk. Management appears strong, especially after the two recent board appointments.
My main concern is that as with any prospecting company there is still a significant debt financing risk. Although they have successfully raised equity in the recent past, they still need minimum $40m+ in project finance debt to get the first stage Empire mine into production. Recent experience with the likes of Sirius Minerals (LON:SXX) in the U.K. suggests that even with a proven massive resource and strong equity backing this shouldn’t be taken as given. Likewise, even if they get the funding, caveat to shareholders of the terms on which it is made available. Too many resource companies, both mining and O&G, get hooked in with funding (with strings attached) that’s great when the sun shines and then shareholders get skewered when the project gets delayed or there are cost overruns and the debt holders dilute the equity holders to next to nothing (look what happened to Hurricane Energy (LON:HUR) shareholders last week and there are many other examples). At least here the stage 1 pay back period is expected to be very short (1 to 2 years) which should make it bankable and the “variables” seem a bit more finite. I particularly like the strategy of staging the development by getting initial production going to bring revenues in to fund further development and/or initiate a JV or possibly takeover by one of the bigger miners if the project takes off with the more speculative additional prospects as hoped for. Slightly surprised the Edson base case DCF suggests a 60p value for stage one (not a lot of headroom against a current share price of about 38p for a speculative development project) although I fully accept theirs is a reasonably conservative base case of only the initial stage.
All told, I think there’s a lot to like here. Plenty of potential upside and there are good mitigants against the usual pitfalls with this kind of project. Will watch with interest. Thanks for sharing.
Gus.
Hi Gus,
Always good to be sceptical. I think the main reason for the London listing is that the board are mainly UK based. They've done projects before and were looking for a new site that would probably see them through to retirement and found the opportunity in Idaho.
The recent fundraise was much bigger than expected, which was a bit of a blow for shareholders who had been buying at higher prices, but does mean there shouldn't be any need for further equity and the project should become self-funding. I see a lot of similarities with Anglo Asian Mining (LON:AAZ), in terms of a well run small, shallow mine providing the profits to prove up a much bigger resource.
Also, it is important to note that everything to date is very conservative. So at Red Star, for example, they have found a 350m vein of resource, but believe it could well extend to 3km. And at Empire, they have only explored 1% of the resource.
Hi DP.
Thanks for the write up. Not familiar with the company or the management team. Obvious question that must have been asked/addressed before (possibly even in the video that I’ll look at over the weekend): why does a domestic US copper mining company choose to list on AIM?
Gus.
Far better prospects out there in copper.. eg srhi.. huge value..low cost producer