AQM Copper Continues to Get Bigger and Richer
Apoquindo Minerals, who has recently changed its name to AQM Copper (TSX.V:AQM), continues to see expansion in size and improvement in grade at its flagship Zafranal copper-gold project near Arequipa, Perú. Zafranal is a joint venture with Teck Resources (TSX:TCK.B, NYSE:TCK) who first identified a mineralized target measuring 1200m x 250m x 100m and grading 0.9 % copper in 2003. AQM has the potential to earn up to 100% of the project based on staged exploration expenditures.
The company is in the midst of a 40,000 meter drill program, and excellent grades across long intervals through both step out and infill holes suggest that Zafranal may have the potential to be another “mega deposit” in the Arequia District.
From the company’s press release of June 8, 2010:
“Drilling through May has focused on a 2km long segment of the 3.5+km east-west trending intensely mineralized Main Zone, one of six porphyry copper-gold targets within the Zafranal project. The Company continues an aggressive drill program at Zafranal with the plan to drill 40,000 meters that will include grid drilling the Main Zone, testing of the east and west extensions of the Main Zone, deep drilling on the Main Zone, and testing several of the satellite targets during 2010.”
Toronto-based Clarus Securities issued research last week that was optimistic about the company’s progress:
“Positive results from the first 30,000m of Apoquindo’s 40,000m drill program at the Zafranal Main Zone will likely produce an initial resource estimate beyond the Company’s 2b pound goal. Our recent Zafranal site visit confirms there is potential to add resources to both the east and west of the Zafranal Main Zone deposit and visible phyllic alteration and leach zones at some of the exploration prospects could add substantial tonnage through future drilling. Our initial estimate of 220mt is on the conservative side and could grow to 300mt (all categories) by year-end.
Excluding the Company’s CA$40m in cash the market is implying a resource of 430 million pounds (40%) to Apoquindo, far less than the established mineralized envelope identified by Teck Resources. We feel the stock is significantly undervalued compared to its peers and should be trading between 75% and 100% above its current level. We also note that due to the project location, infrastructure and management team will likely result in Zafranal going into production before any of the deposits in its peer group.”
Drilling throughout 2010 has given investors cause for optimism. Recent highlights include high grade Hole 36 which intersected 200 meters of 1.78% copper and 0.35 grams per tonne gold for 133 meters; and Hole 14 which intersected 105m of 1.16% copper and 0.12 g/t gold including 64m of 1.55% copper and 0.11 g/t gold.
The company raised $40 million at $0.85 a share, making current prices an attractive entry level for risk-tolerant investors seeking to exploit the strength in copper prices.
Copper Demand Strong
Copper prices rose strongly last week capping the biggest weekly gain in two months, on speculation that demand will grow in China, the world’s number-one metals consumer.
Industrial production in China jumped 16.5 percent in May, and retail sales rose 8.7 percent, according to government reports. Copper also gained after a private survey showed confidence among U.S. consumers rose in June to the highest level in more than two years.
“China remains an unerringly bullish influence on the copper market,” analysts at Societe Generale, led by the head of commodity research, Frederic Lasserre, said today in a report.