Copper 360’s big plans

Copper 360

Copper 360 was listed on the JSE’s Alternative Exchange (AltX Board) on 21 April 2023, the second company to list on the JSE this year.

Copper 360 is a copper mining company with operations based in the Northern Cape, building South Africa’s next major copper producer.

The company was formed in November 2022 following a reverse take-over of copper producer Big Tree Copper and copper mining company SHiP Copper.

The company’s mining rights cover 19,000 hectares to the north of Springbok and hold 12 copper mines and 60 copper prospects.

“Coming to the market means we give South Africans exposure to the only pure copper exposure available to them with further major growth,” Copper 360 CEO Jan Nelson said.

Within the first week, Copper 360’s share price increased from the listing price of R5.00 per share to R12.25 per share. However, it has plummeted to under R3.60 per share since then.

The volatility in the share price after an initial public offering (IPO) is understandable. However, it left many investors wondering if the company offers good prospects.

Daily Investor delved into the company’s reports and spoke to Nelson to better understand Copper 360 and its plans.

Broadly speaking, Copper 360 has two main operations:

  • Cape Copper Oxide (CCOC) and O’Okiep Copper Company (OCC)
  • Shirley Hayes IPK Pty(Ltd) (SHIP)

The Cape Copper Oxide and O’Okiep Copper Company initially fell under a company called Big Tree Copper.

Big Tree Copper acquired 91% of SHIP in September 2022 through a reverse takeover and changed its name to Copper 360.

Copper 360 CEO Jan Nelson
Copper 360 CEO Jan Nelson

Cape Copper Oxide (CCOC) and O’Okiep Copper Company (OCC)

Cape Copper Oxide (CCOC) operates in the Nababeep area. It constructed South Africa’s first Solvent Extraction and Electrowinning (“SX-EW”) copper processing plant to produce primary cathode copper sheets. This process forms a high-grade copper that is 99.98% pure.

These copper sheets are made from copper oxide found primarily in surface deposits around the Nababeep region.

These surface deposits were formed from previous mining activity around Nababeep before 1994. The previous company discarded any ore that contained less than 5% copper.

During the 1990s, the global price of copper fell from about $3,000 per metric ton to close to $1,500 per metric ton.

This made mining any ore with a lower copper concentration cost inefficient and halted further mining in this area.

The global copper price has increased significantly since 2020 and moves between $8,300 per metric ton to around $8,900 per ton.

This has made copper much more valuable and worthwhile to mine lower concentration deposits.

According to Nelson, these remaining deposits contain between 1% and 3% copper, a high concentration relative to global players.

Nelson said that Chilean copper mines have copper concentrations closer to 0.2%, making the Nababeep region very attractive.

CCOC acquired 100% of O’Okiep Copper Company (OCC) for R30 million. OCC owns the rights to process the surface deposits around Nababeeb from previous mining, which are processed into copper plates by COCC.

OCC also owns the properties on which CCOC operates, valued at R8 million. They also own a geological database valued at R6 million, water licenses, and equipment.

However, OCC and COCC don’t own rights to mine underground copper – mostly copper sulphide – and only have the rights to process the loose surface rocks containing copper oxide.

Shirley Hayes IPK (Pty) Ltd (SHIP)

Shirley Hayes IPK (Pty) Ltd (SHIP) was acquired by Copper 360, previously known as Big Tree Copper, through a reverse takeover.

SHIP and Big tree copper formed one single entity, Copper 360, under which all the companies (COCC, OCC, and SHIP) now fall.

SHIP owns rights to mine copper below the surface over a 19,000-hectare area with 12 pre-mined copper mines and 60 copper prospects.

Copper 360 acquired a 91% interest in SHIP for R1.8 billion in September 2022. It was settled by issuing 452,728,378 Copper 360 shares at R3.88 per share to the owners of SHIP – Shirley Hayes, Orontro, and Element 29.

SHIP will mainly focus on mining copper sulphide found below the ground surface, which is used to create a liquid concentrate with a 35% concentration of copper. This concentrate would be the final product from SHIP.

COCC will process any surface copper (copper oxide) mined by SHIP in the production of copper sheets through the SX-EW process.

Growth expectations

Nelson said they expect copper production to increase to 1,500 tons in the next year and 7,800 tons in 2 years. By year three, they want to produce 15,000 tons annually.

He said within ten to twenty years, Copper 360 can potentially mine up to 50,000 tons of copper per year. However, it will depend on many factors acting in the group’s favour.

Nelson told Daily Investor that he expects the company’s revenue mix to be 80% from copper concentrate and 20% from copper sheets in the long run.

Nelson said that the company aims to become one of the largest copper producers in Africa within the next 3 years and expects a strong performance from the company going forward.

Total minable copper from all sites

Copper 360’s pre-listing statement cited a SAMREC report indicating that all the mining sites combined had a total potential of 95,846 tons of copper.

However, Nelson told Daily Investor that he estimates that with further drilling and exploration, the combined copper from all the mining sites is closer to 2.5 million tons.

The company conducted its own drilling to determine the copper levels at its Rietberg mine and found copper concentrations between 2.5% and 3.5%. These confirmed the historic database results from drilling done in 1980.

Copper 360 also conducted a sampling of its surface deposits over a 15,000 square meter area, and it delivered samples with an average copper concentration of 5%.

The company described this as a major surface copper discovery.

Initial investor agreements

Before the SHIP acquisition, Copper 360 sold 17.19% of the revenue royalties to initial investors during the Cape Copper Oxide’s plant construction for R31 million.

This agreement provided funding for the plant’s construction and initial operating expenses.

The terms of this contract stated that all revenue generated under the Cape Copper Oxide leg of the business needs to pay out 17.19% of the revenue to investors before any costs. The contract is valid until all of COCC’s copper ore is depleted.

CEO Jan Nelson explained that the company had to make this agreement worthwhile to investors that initially invested in the company, giving away a larger chunk of revenue before costs instead of profits after costs.

This contract only applies to copper processed in Cape Copper Oxide from the surface deposits in Nababeep and not to any copper produced or sourced from SHIP.

The holders of these revenue royalties include many related parties listed in the table below.