NovaRed Mining Identifies A Large Copper-Gold Target Beside Hudbay's Producing Copper Mountain Mine

NovaRed Mining (NREDF) says it has detected two large anomalies ten kilometers from a producing copper mine, and pitches the target as a matter of national security. Copper is near record highs, and the $9 million explorer, with no reserve and no drill hole, is one of the riskiest ways to bet on it. The majors, Rio Tinto (RIO) , BHP (BHP) and Hudbay Minerals (HBM) , are the safer end.*

"This announcement identifies specific land within our land for further exploration, and we detected two anomalies, large anomalies we will be working on," Valentin Saitarli, NovaRed's technology chief, said in an interview. He does not pitch it small. "National security depends on it," he said. "The electricity that runs through your electrical wires, pretty much everything you touch in the modern world relies on copper." He reaches for the nearest object to make the point. "Even your wooden chair needs an electrical screwdriver to be assembled," he said. "So we live in an electromagnetic society. That's how we call it."

The pitch is size and location

Saitarli's case for the property starts with how big it is. "We are among the top 10, probably, exploration companies by size, by the land side," he said, describing a package he puts at "three times the size of Manhattan." The ground is real, about 16,000 hectares, but acreage is not a resource. The land is "located in close proximity to an already available mine," he said, and near the border and the coast. "US border is very close. Seaport is very close."

That mine is Hudbay's (HBM) Copper Mountain, ten kilometers east. "We have a tremendously amazing team of experts on board, with tremendous experience," he said, of a company that has yet to drill a hole.

Why he thinks it matters now

The urgency, in his telling, is a supply problem the West made for itself. "We live in the age when it takes 15 years to develop a gold copper mine," he said. "And we buy copper and gold from China. Rare earth minerals, 90% supplied by China. To have this type of a deposit in North America, in my opinion, is unprecedented." The price agrees: copper closed near $6.46 a pound in early August, up about 46% this year. "We will witness the world, pretty much how we call it, wrapped in copper," he said. "In Miami, almost every apartment is all electric."

What the geology actually says

"There are really two possibilities," NovaRed CEO Brian Goss said on August 3, of two alteration zones the company mapped above a magnetic anomaly on its Wilmac ground. "Either this is the shallow expression of an older porphyry system at depth, or it is a much younger epithermal system sitting in the cover rocks above it." The anomaly, the company argues, is the buried western continuation of the system feeding Copper Mountain, and a survey this year is meant to tell which. NovaRed says as much in every release: no mineral resources or reserves have been identified on the project.

Where the money goes

-Producers, the direct exposure to $6 copper: Rio Tinto (RIO) , BHP (BHP) , Freeport-McMoRan (FCX) , Southern Copper (SCCO) , Teck Resources (TECK) , Ero Copper (ERO) , Vale (VALE) . Hudbay (HBM) is the mine next door
- NovaRed (NREDF) , the speculative edge: no resource, no reserve, no drill results. C$8.5 million of exploration owed on a ~$9 million market cap, and the stock is down ~86% from its C$2.33 high.
 

For now there is no mine, just two anomalies and a copper price loud enough to fund testing them. Saitarli is unbothered by the odds. "To have this type of a deposit in North America, in my opinion, is unprecedented," he said.