Faraday Copper Corp (TSX:FDY)(OTCQX:CPPKF) is poised to create one of the largest copper mines in the United States. Investors should take notice.
The C$1.42 billion market cap company is developing its 100% owned, flagship Copper Creek Project in Arizona. The porphyry copper deposit consists of a three-kilometer-long resource area, open in all directions.
Copper Creek contains 4.2 billion pounds of copper, Measured and Indicated, according to a resource estimate from 2023. In addition, a Preliminary Economic Assessment (PEA), completed in the same year, outlined a 16% Internal Rate of Return for the Project based on a copper price of US$3.80 per pound. Copper is currently trading at more than US$6 per pound.
Furthermore, Faraday kicked off a 40,000-metre drill program in September, the largest drilling operation to date. The most recent results (released on March 24) included six drill holes in the American Eagle area that intersected near-surface mineralization above the open pit cutoff grade. Final results from the current drill program will be included in an updated resource estimate.
The sweetener to this story could come from the company’s recently announced, non-binding letter of intent to acquire the historic San Manuel mine from BHP Group Limited. In consideration of the transaction, BHP would receive a 30% equity stake in Faraday Copper.
San Manuel, which is located near Copper Creek, was one of the largest underground copper mines in the U.S. when it began operating in 1955, producing more than 4.5 million tonnes of copper to date. The mine closed in 1999 following a period of sustained low copper prices. It has been on care and maintenance ever since.
Unfortunately, there is no National Instrument (NI) 43-101 compliant resource estimate published for San Manuel but, according to BHP, “a significant mineral inventory remained in-situ upon closure in 1999.” Unconfirmed reports suggest the property has substantial resource potential below 3,500-foot depth for its two primary deposits: San Manuel and Kalamazoo.
As a former producing mine, San Manuel has existing road, rail, and power infrastructure, which should translate into capital cost savings when re-starting mining operations.
Faraday Copper also has the backing of the wealthy and influential Lundin Group, which has a successful track record of making money for its shareholders. The Lundin Family Trust owns about 18% of Faraday and participated in the company’s recent C$100 million equity financing, along with BHP.
Faraday is led by CEO Paul Harbidge, former head of GT Gold, who also previously served as Senior Vice President of Exploration at Goldcorp.
Faraday Copper’s stock price closed recently at C$4.89. The company has approximately 290.2 million shares outstanding.
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