After showing signs of recovery this year, copper prices have once again fallen sharply. Last week, copper fell to a six-year low of $5,240 a metric ton.
The sharp decline in copper comes as a surprise, given the improving fundamentals. Indeed, the head of Rio Tinto’s copper division had said two months ago that he expects the copper market to move into a deficit sooner-than-expected.
The recent plunge in copper was sparked by the turmoil in China’s equity market. Copper’s fundamentals continue to remain strong. In fact, this week, economic data from China showed that the world’s second largest economy is not doing as badly as it seems, although it’s anyone’s guess how accurate the numbers actually are coming out of the communist country.
China’s GDP expanded 7% in the second quarter. Importantly, industrial production has also picked up, which is a positive for copper. Also, the monetary easing measures announced by China’s central bank will eventually have a positive impact on the construction sector.
While copper miners will continue to face challenges in the near-term, the medium-term outlook is much better. This morning, Copper Lake Resources Ltd. (TSX-Venture:CPL), a Canada-based exploration stage company, announced that it reached an agreement to expand its earn-in-option on the Marshall Lake Property until July 15th, 2017.
The company said that the decision to extend the option was taken partly due to reprocessing of airborne VTEM™ data, which showed seven priority conductivity anomalies located adjacent to current known VMS copper, zinc, gold, silver mineralized zones.
According to a report prepared by Caracle Creek International Consulting and Orix Geoscience, there are numerous chargeable and conductive anomalies on the property aligning with currently defined near surface mineralized zones.
Based on the report, CPL said that it is designing its next program to further prioritize the VTEM™ target areas all of which lie adjacent to existing mineralized zones. CPL also said that its joint venture partners Marshall Lake Mining Limited and Rainy Mountain Royalty Corp. will each receive 500,000 common shares of its common stock as consideration for the extension of the option.
Copper Lake has a 37.5% stake in the Marshall Lake property. Following regulatory approval of the extension, CPL can increase its stake in the venture to 50% by spending an additional $1 million by July 15, 2017. On completion of a bankable feasibility study, the company can increase its stake by a further 25%.
Commenting on the latest development, John Kowalchuk P. Geo, Chairman of Copper Lake, said that the Marshall Lake property, with its existing near surface copper, silver, gold mineralization and very good road access, and proximity to rail, is emerging as a first-class asset.
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