Red Canyon Leads Exploration Push as Copper Becomes Critical for Energy Transition

By Peter Kennedy

Optimistic forecasts about the outlook for copper in recent years have been driven by the accepted wisdom that global production of the red metal will struggle to keep up with a long demand boom.

However, after reaching a record high above US$5.10 per pound in May 2024, Copper traded in a narrow range during October 2024, before rallying in early November 2024, on the prospect of economic stimulus measures from Chinese authorities. Still short term, Chinese investors remain concerned that the newly elected Trump administration will impose tariffs on Chinese products, a move that could be bearish for commodities.

China’s demand growth appears more tempered, in the five years up to 2030 it is expected to average 1.1%, down from 3.9% in the five years to 2025, Antaike analyst Yang Changhua has said.

Still, many industry leaders see room for optimism.

“As the world moves to electrify, we’re all going to need a lot more copper,’’ said Adam Lundin, Chairman of Lundin Mining Corp. [LUN-TSX, LUMI-Nasdaq Stockholm], which has secured access to vast deposits of copper in the San Juan Province in Argentina, partnership with BHP Billiton Ltd. [BHP-NYSE]

The transition to renewable energy and electrification will require tons of metals, and copper is considered the most essential. Goldman Sachs predicts copper demand for low-carbon technologies will grow by 5.4 million tonnes by 2030, up from around 1.0 million tonnes in 2021.

On the supply side, as the transition to renewable energy and electrification speed up, so will the pressure for new copper projects in the pipeline, industry officials say.

However, recent research by S&P Global Commodity Insights points to a dearth of recent discoveries, a scenario that is attributed to the industry’s focus on brownfield assets – extending known deposits and assets – rather than the generative exploration that could yield brand new discoveries.

S&P is warning that its five-year outlook shows a significant refined copper deficit beginning in 2027. It said the concentrate market is currently in deficit and is expected to remain so for the next five years.

“Further out, as noted in our updated report of the copper project pipeline, we are expecting mine supply to peak in 2029, and forecast a potential concentrate deficit of 2.2 million tonnes by 2032,’’ S&P said.

Due to the long lead times from discovery to production, filling this supply gap will be challenging. S&P notes that for mines that started production in the 2020 to 2023 period, the average lead time from discovery to production was just shy of 18 years. Long lead times are attributed to the increasing amount of time needed to obtain financing and construction permits.

Red Canyon Resources [REDC-CSE, REDRF-OTCQB] said a maiden drilling program has confirmed the discovery of a significant copper-molybdenum system at its flagship Kendal project in west-central British Columbia.

The announcement comes after Red Canyon completed an inaugural drill program consisting of five diamond core holes (2,562 metres) that were designed to test the northeastern area of the Kendal surface alteration system, and where the company is targeting an interpreted copper porphyry system.

“Assays received from the first drill hole [RCKD-24-001] at Kendal returned 0.10% CuEq (copper equivalent) starting from surface to 601.7 metres, including 123.0 metres of grade 0.16% Cu Eq.

News of the discovery marks a key step for Red Canyon, a company that is focused on impactful, value-added exploration that aims to make discoveries of copper and copper-gold deposits in established mineral belts in North America with good associated infrastructure.

A member of the NewQuest Capital investment group, the company holds a portfolio of seven 100%-owned, internally generated copper and copper gold projects located in British Columbia and the western United States (Nevada and Utah).

The aim is to offer investors a window on early-stage exploration for copper, a metal that is expected to play a crucial role in the electrification of global energy and transport systems.

Published reports have noted the downward trend in the rate and size of major copper discoveries over the past decade, a scenario that only adds to the value and importance of any major new find.

“I think we are doing all the right things to make a discovery in critical metals,’’ said Red Canyon CEO Wendell Zerb. A well known former Canadian mining analyst, he was President and CEO of Exeter Resources Corp., when the company was scooped up in a $247 million deal by Goldcorp in 2017.  Exeter’s key asset was the Caspiche project in Chile., one of the largest gold-copper deposits in the Americas.

It is worth noting that management and insiders own 44% of the 44.9 million shares Red Canyon shares outstanding. Priced at 23.5 cents on November 4, 2024, the shares currently trade in a 52-week range of 31 cents and 15 cents.

Back in September, 2024, Red Canyon said it had begun drilling a previously unrecognized copper porphyry system on its 100%-owned Kendal property. The project covers 2,738 hectares and is located 25 kilometres northeast of the city of Terrace, a regional infrastructure hub with a well serviced airport. The project benefits from direct road access, hydroelectric power and rail corridors. Port facilities are available approximately 120 kilometres to the west in Prince Rupert.

The five-hole inaugural program aimed to test a portion of the upper 250 to 450 metres of the Kendal system measured vertically from surface and over an area covering 1.0 kilometres by 0.50 kilometres of a mapped 2.5 kilometre by 1.5-kilometre footprint.

Strong alteration is pervasive in all drill holes with multi-generational porphyry related veining identified throughout, the company said. Drill intercepts are interpreted to represent zones of mineralization above or adjacent to an anticipated central higher grade core within the mineralized calc-alkaline copper-moly porphyry system.

“This first ever drill program at Kendal has not only confirmed a new copper-moly discovery, but it has also immensely expanded our confidence and understanding of the size and overall strength of the greater mineral system,’’ said Mr. Zerb. “Every drill hole, from top to bottom, is significantly altered with multiple vein sets representing a very robust mineral system.’’

Mr. Zerb said this initial scout drill program has only scratched a portion of the copper-moly system, in a small subset of the overall Kendal project area.

He said it is worth noting that copper-moly porphyry systems worldwide are some of the largest, high value sources of metal and it’s especially rare for a small cap mineral exploration company to discover and control 100% of potentially a large copper moly system, with importantly exceptional infrastructure.

The company has said additional work is required to find the best of the Kendal system.