We have written about our bullish stance on copper in a few recent reports – most recently here. We currently own Sandfire Resources (SFR) in both the Emerging Companies and Active Growth Portfolios, sitting on a good profit, though the copper miner has strongly outperformed the move by the commodity price and many peers, up ~30% since mid-January, partly because it is the only mid to large cap pure copper play on the ASX, but more importantly, they are delivering operationally and ramping up production at the right time.
There are, however, a few interesting smaller-cap junior miners and developers, including AIC Mines, which is producing out of their Eloise mine in Queensland. The company produced a record 7.2kt of copper in the first half from the high-grade mine with an all-in Sustaining Cost (AISC) of $4.89/lb, resulting in EBITDA of ~$25m. AIC left FY24 guidance unchanged, suggesting a slight slowdown in production in the second half and a subsequent increase in costs. However, these estimates look conservative.
The company is also drilling out the Jericho site ~4km south of Eloise, with early results looking promising. They also have several other exploration sites in the area. With continued strong operational performance at Eloise and a tailwind from higher copper prices, A1M will likely be able to tap debt markets to expand operations if they can secure offtake agreements. This shows a clear path to 20kt of copper a year with some upside of some secondary gold/silver production.
- A1M is a leveraged way to play copper that is currently lagging behind the share move by its larger peer, Sandfire (SFR).
MM is bullish on A1M
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