Trash to Treasure: The Copper Junior Disrupting the Mining Industry

Over the past year and a half, Gerardo Del Real, John Carl have occasionally spotlighted a “Blue Water” emerging copper mining company in their promotions. Though I have just covered the story, it’s time to address that gap. Since Spring 2023, we’ve seen multiple iterations of similar pitches for this concept, with consistent themes and visuals across various campaign versions. For this discussion, I’ll focus primarily on the most recent presentations they’ve shared.

Without giving too much away, here’s some reassurance: if you missed out when these promotions began in 2023, you’re still catching up. The stock experienced fluctuations but remains within about 10% of its price from when Digest Publishing first introduced it.

Shall we dive deeper into the details?

Here is how it’s presented in the purchase form.

The pitch revolves around two central ideas. First, copper demand is poised to surge due to global trends like electrification, the rise of electric vehicles (EVs), upgrading power grids, AI-driven growth, and ongoing industrial growth and progress. Second, large, high-grade copper mines are becoming increasingly scarce, creating a need for innovative technologies that can efficiently extract copper from low-grade materials, such as leftover tailings piles.

Naturally, the spotlight is on “one tiny firm” leading this innovative approach.

Here’s a glimpse of their pitch, starting with copper’s promising future:

And then beginning to highlight “blue water” extraction technology…

Significant promise, no? Don’t worry, it gets bigger…

And then we get into some specifics:

More clues about the company and the project:

And the size of the project…

And how easy it is to get started:

In more detail:

The big argument is…

The presentation includes videos and photos showcasing the site, highlighting the massive tailings dumps and the setup in their testing facility. The visuals emphasize the scale of the operation and feature equipment like tubes designed for experimenting with various leaching chemicals on different types of ore.

But hold on—there’s even more to uncover!

The stock is ASGU.TO, a modest firm valued at just over $100 million. The company is aiming to revitalize and expand the historic Cactus Mine, located roughly 50 miles from Phoenix.

The link to Rio Tinto is through its Nuton subsidiary, which holds a partnership opportunity on Cactus Mine. Nuton is probably supplying both the resources and expertise for “biological extraction process”. This is how Nuton explains its innovative method:

The connection to Rio Tinto lies in their Nuton subsidiary, which holds a collaborative partnership opportunity for Cactus Mine. Nuton is likely providing resources for their “biological process,” often called “blue water.” However, it’s worth noting that there’s no clear evidence that ASGU has exclusive rights to this leaching technology, aside from their collaboration with Rio Tinto. They might benefit from proving its effectiveness in a real-world mine setting, but the company doesn’t appear to “own” the technology outright, which investors should consider.

That said, Arizona Sonoran Copper’s Cactus Mine project remains promising. It’s located about 50 miles from Phoenix and can potentially expand. The project was historically an open-pit mine that produced roughly 400 million pounds of copper from the 1970s through the mid-1980s. Now, Rio Tinto’s involvement, the venture is working to redevelop the site and integrate new technologies.

The partnership venture specifies a preliminary viability analysis that includes Nuton’s biological leaching technology by the end of the current year. However, recent updates suggest that the timeline has been delayed, with the required metallurgy, drilling work now expected to conclude by mid-2025. This delay may also reflect positive developments, as the project’s scope is expanding to include additional deposits.

Should Rio Tinto exercise its option for up to 40% ownership, the project would likely gain momentum, benefiting from Rio’s resources, expertise, and potential financing support. The updated schedule includes:

• Completing the viability assessment by late 2025.
• Making a planned construction project in 2026.
• Starting production in 2027 or 2028.

As with most mining projects, these timelines should be taken cautiously, as delays are common in the industry.

In theory, the numbers look encouraging. The current preliminary economic analysis (PEA) projects profitability if copper prices remain above $2 per lb, with an estimated a mine life of 31 year. The project’s NPV has increased significantly in recent assessments, climbing from $500 million to approximately $2 billion due to the inclusion of additional deposits. If copper prices rise further, the project’s value could exceed $5 billion.

Nuton’s leach technology could enhance efficiency, but it’s not exclusive to this project. Nuton is testing similar approaches with other companies, including Excelsior Mining, Lion Copper & Gold, and others across North and South America.

While the partnership with Rio Tinto and the promising projections make this a compelling opportunity, there are inherent risks, especially given the capital-intensive nature of mining projects. Still, Arizona Sonoran Copper’s favorable location, large-scale potential, and collaboration with a major industry player like Rio Tinto provide optimism.

Would you take a chance on this junior copper miner? Share your thoughts in the comments below. Thanks for reading!