Beyond the battery metals, vehicles still require good old copper
By: Shane McCune
Lorraine Copper counts on looming boom in electric cars
When investors talk about electric cars, much of the buzz surrounds lithium and cobalt, used in those big batteries. But almost every vehicle — electric or conventional — relies on good old copper, a mineral whose value has slumped in recent years but is poised to surge again.
The difference is that electric cars, especially plug-in electrics (PEVs), may have up to five or six times the copper content of an internal combustion vehicle. And while PEVs accounted for just a shade over 0.5 per cent of Canadian vehicle sales in 2016, plans are afoot elsewhere to make them the default choice of car buyers in less than 20 years.
As usual, “elsewhere” mostly means China. According to the International Energy Agency, 336,000 new electric cars were registered last year in China, which accounts for 42 per of the world’s all-electric fleet.
China is cranking out hundreds of thousands of EVs, with a target of seven million in annual sales by 2025. That would be one out of every five vehicles sold. China is also one of several nations that has vowed to ban sales of internal combustion vehicles, although it hasn’t set a date.
The Hangzhou-based Zhejiang Geely Holding Group, which bought Volvo in 2010, announced its entire fleet will be electric or hybrid by 2019.
(On a per capita basis, Norway is leading the electric charge with a 32 per cent jump in EV sales in 2016. Electrics accounted for 29 per cent of new car sales last year, according to HybridCar.com.)
From motor to transmission to headlights and wipers, that’s a lot of electrons in search of a copper path. You might think this would be good news for copper producers — and it will be, once they find their feet.
Unfortunately, for the last few years copper prices have been depressed, to the point where exploration has languished and some marginally producing mines have been mothballed.
The combination of depressed markets and anticipated demand is a major impetus behind renewed activity at Lorraine Copper Corp. (TSX.V: LLC), a Canadian public mineral exploration company concentrating on copper, gold, molybdenum and base metals.
“The electric motor has always been the number one use for copper,” says Glen Garratt, Vice President and Director, “but now traditional cars have gone from the 40–80 pound range up to 200–250 pounds per electric car — that’s a really big difference.”
Garratt and his partners have been acquiring copper ore bearing properties in anticipation of resurgent demand. “We’re starting to see the supply side diminish quite a bit, and that’s a product of a lack of mine development over the last decade,” Garratt says.
“We’ve seen all the major companies go into disaster mode, release assets, and try to fix their balance sheets. Their exploration dollars waned, and so we’ve had quite a lag in exploration and development.” All of which has given Lorraine a chance to pick up new projects and revive old ones mothballed during the downturn.
In 2016, the company purchased the Lustdust, soon to be renamed to Stardust, project for 5.5 million shares and $50,000. The Lustdust property, located in the north central British Columbia, is a carbonate replacement type deposit which has had 358 drill holes, totaling more than 71,000 metres completed on it with recent expenditures of about $9 million, Garratt says.
The metals of significance at Lustdust include copper, zinc, gold, and silver. Lorraine Copper thinks the Lustdust deposit styles are analogous to those in Bingham Canyon in Utah and Grasberg in Indonesia.
“A small area of the skarn style mineralization has been assessed in an initial resource calculation which identified a combined indicated and inferred resource of 4.4 million tonnes grading 1.18 per cent copper, 1.38 g/t gold and 32.86 g/t silver, containing 96 million pounds of copper, 177,098 ounces of gold and 4,210,000 ounces of silver,” Garratt says.
In September 2017, Lorraine Copper announced an option agreement with Oxygen Capital Corporation, led by Donald McInnes and Mark O’Dea. This will allow Sun Metals Ltd., a company managed by Oxygen Capital, to earn a 100 per cent interest in the Lustdust project in exchange for 30 per cent of its issued capital, following a $6 million expenditure. A two per cent royalty on precious metals, and a one per cent royalty on base metals is reserved for Lorraine Copper Corp. A $500,000 exploration program funded by Sun Metals that included three diamond drill holes was launched in August — results are expected in late December or early January.
Lorraine Copper also holds a 49 per cent interest in the 50,000-hectare Lorraine copper-gold property about 35 kilometres north of Lustdust. Teck Resources owns the other 51 per cent.
“Lorraine has several zones of mineralization with a maiden resource calculated for the central area where 35.2 million tonnes of resources, consisting of 6.4 million indicated tonnes grading 0.61 per cent copper and 0.23 g/t gold and 28.8 million inferred tonnes grading 0.45 per cent copper and 0.19 g/t gold, have been established,” Garratt says.
A third project, owned 100 per cent by Lorraine Copper Corp. (TSXV: LLC), is the Okeover (OK) copper-molybdenum property in southwestern B.C. near Powell River.
“At OK six zones of mineralization extend for more than five kilometres,” Garratt says. “Resources have been calculated for one zone, the North Lake Zone, at 86.8 million tonnes inferred grading 0.31 per cent copper and 0.014 per cent MoS2 (molybdenum disulphide). All of the zones remain open laterally and to depth.” An induced polarization survey was completed in November that indicates a probable continuation of mineralization south and southwest of the current North Lake resource.
Metal price peaks and valleys are nothing new to Garratt. “We’ve just been through one of the longest downturns that I’ve seen in 45 years. The signs are all there for us to be going forward into a better metals cycle.”
And he expects copper to lead the way. “They call it ‘Dr. Copper,’ you know. It’s always been at the center of the industrial cycles, and is a leading indicator of bull metal cycles.”