Copper miners are always looking for more. More ore, more mines, and more copper to refine and get to the market. The demand for copper is growing at such a fast clip that companies can’t keep up, so ‘more’ is the only word that matters now. For that, they need to go to the regions they are most likely to find the valuable red metal. One location is promising to deliver the copper necessary to meet the incredible demand over the coming decades.
The Andean Copper Belt
Northwestern South America, including Colombia, Ecuador, Peru, and Northern Chile is host to some of the richest copper deposits in the world. The area’s geology is among the earth’s most richly mineralized, making it an exciting area choice for the companies that are just testing the surface of hugely prospective sedimentary copper basins in those countries. This mineral-rich piece of prime mining real estate is referred to as the Andean Copper Belt.
The 2500-kilometre mineralized arc formed during the Lower Paleozoic eric around 300 million years ago. This mineral-rich multi-country zone has been sitting dormant for millions of years, and now copper miners are able to benefit from this region to help meet the current and coming copper boom.
Tip of the Iceberg
What’s impressive is that initial exploration of sedimentary basins in Colombia, Ecuador, and Peru might be the tip of giant icebergs of sediment-hosted copper-silver deposits sitting underneath. If the theory is proved, it would mean billions of pounds of copper and hundreds of millions of ounces of silver lay hidden just beneath the land in the Andean Copper Belt. Copper miners could be working on and extracting copper from the region for hundreds of years, and the work still wouldn’t be finished.
Exploration efforts are expanding quickly in countries like Ecuador at mines like Warintza, and while the pandemic may have slowed progress in 2020 a little, copper demand hasn’t. Mining companies in the area like Solaris Resources will be in a position to fill that demand as it increases over the next few years and into the coming decades.
Ocean basins composed of porous materials such as sandstone, limestone, and black shale area where copper deposits are formed. The copper and other minerals travel up and become trapped in the rock layers. This mineral deposition is different from a copper porphyry deposit, which is ultimately formed when a block of molten-rock magma cools. The magma might come from underground or aboveground volcanoes, or simply the earth’s crust as it is pushed upward over time.
The cooling then leads to a separation of dissolved metals into distinct zones of copper, molybdenum, gold, tin, zinc, and lead. By the time humans are ready to mine it, it has been sitting in the earth for millions of years, waiting for a capable miner prepared to put it to good use.
Copper porphyries are often visualized as a bag of flour, with millions of grains of rice (copper and other minerals). They are spread across a large area. Sedimentary copper deposits are much more concentrated, sitting underground on top of each other like a stack of books.
For miners operating in the Andean Copper Belt, both types present a wealth of minerals. The exploration and production efforts of the companies in the region are exciting and lucrative. Anyone paying attention to the area and the metal that is fast becoming one of the most valuable should pay attention to any and all progress on this front.
Ecuador in particular is positioning itself as a mining-friendly partner to Western mining companies. According to government officials, the mining industry could represent up to 4% of the country’s GDP this year, up from 1.6% in 2018.
Who Are the Players?
To accomplish this, Ecuador has opened the market to more business-friendly regulations in order to attract foreign capital. This has brought strong development partners in the private sector from countries like Canada, China, and the United States.
Lundin Gold (LUG.TO)
Lundin Gold is in the basin but does not expect to encroach on copper miner’s territory as their work is focused on the Fruta Del Norte gold mine in Ecuador. The company sent off its first industrial-scale exports of gold from the mine in December 2019, and despite a slight slowdown in 2020, is still producing regularly. The project and the company also have the support of a mining-friendly government that is ensuring Ecuador is a substantial mining partner.
EcuaCorriente owns the Mirador copper mine. The company is a subsidiary of Tongling Nonferrous Metals Group and China Railway Construction. The mine has estimated reserves of 3.2 million tons of copper, 3.4 million ounces of gold, and 27.1 million ounces of silver. The first copper exports from the company left the country in July 2019. EcuaCorriente has been a great test case for how profitable exploration and discovery efforts can be in the region.
Solaris Resources (SLS.TO)
Fulfilling the abundant promise of the Andean Copper Belt, Solaris Resources has made a significant new discovery at its Warintza copper project in southeast Ecuador. A geophysical study revealed a much more extensive porphyry system than anticipated, sparking a drill rig expansion that saw the rig count double from 6 to 12. Early results are promising, and the company will have its hands full in 2021, expanding the project and starting production soon after.
Solaris will have a grid for Warintza that includes clean, low-cost electric power and the ability to get supplies in and out of the site easily due to well-developed infrastructure. Ecuador’s abundant supply of freshwater eases the company’s work significantly as well. As a result, capital costs for the project will be much lower than average.
As drill results continue to come in and the company moves from discovery to production, their flagship Warintza project in this piece of prime copper real estate is set to be the launchpad for years and decades of significant results.