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Top 5 Copper Stocks on the TSX in 2023

Low supply and high demand saw copper open the year at US$9,450.11 per metric ton (MT) on January 25. Supply issues in particular supported prices, including in Peru, where protests continued on from 2022.

As the year wore on, a supply deficit turned into a surplus as the copper market felt the decline of the Chinese real estate industry, with two of the country’s biggest companies faltering. However, copper shortfalls are expected to become the norm in the coming years as demand from the energy transition increases, mine development slows and older mines continue to decline — good news for mining and exploration companies focused on the red metal.

What about 2023? Copper had retreated to US$8,099 by October 30, but some companies focused on the metal have performed well. Read on to learn which have been doing the best and why.

1. Northern Dynasty Minerals (TSX:NDM)

Company Profile

Year-to-date gain: 50.82 percent; market cap: C$243.78 million; current share price: C$0.46

Northern Dynasty Minerals is an exploration and development company focused on the Pebble project, a copper-molybdenum-gold-silver project located 200 miles southwest of Anchorage in the Bristol Bay region of Alaska.

Northern Dynasty describes the site as “one of the greatest stores of mineral wealth ever discovered.” The project has measured and indicated resources of 6.5 billion MT of copper and inferred resources of 4.5 billion MT. For gold, it contains 53.82 million measured and indicated ounces and 28.1 million inferred ounces, and silver resources for the site stand at 249.3 million ounces measured and indicated with 121.7 million ounces inferred. Lastly, Pebble holds molybdenum resources of 1.26 million MT in the measured and indicated category with an additional 821,000 MT inferred.

The project stalled in 2020 during the permitting phase following a US Environmental Protection Agency veto that suggested the proposed mine would damage the Bristol Bay watershed. Shares of the company surged following Northern Dynasty’s July 26 announcement that the State of Alaska has appealed to the Supreme Court of the US to reverse the veto.

The case has yet to make its way before the court, and Northern Dynasty reported on September 27 that the federal government has asked for an extension until November to file its brief with the court. The court is expected to make a decision to hear the case by the end of the year.

2. Sierra Metals (TSX:SMT)

Company Profile

Year-to-date gain: 48 percent; market cap: C$60.9 million; current share price: C$0.37

Sierra Metals is a mining company focused on the production of copper, as well as additional base and precious metals as by-products. Its primary operations are the Bolivar copper mine in Mexico and the Yauricocha polymetallic mine in Peru. It also owns the Cusi silver mine in Mexico, but as of September 20 the mine was on maintenance and the company had entered into discussions for its sale as it transitions into a primary copper producer.

Sierra’s gains early in the year represented a stabilization for the company following a two year period that saw its share price decline nearly 90 percent. The company’s production fell near the end of 2022 following the deaths of three workers at its underground Yauricocha mine and a subsequent 20 day closure. The mine was further impacted by protests that affected output across Peru. Following the shutdown of Yaurichocha and losses it was incurring at its Bolivar and Cusi mines, Sierra announced in October 2022 that it would undergo a strategic review process.

This marked the second strategic review by the company following one initiated at the end of 2021; the result was that the company decided to move away from silver and focus on its base metals business. Soon after the second strategic review was announced, Compañia Minera Kolpa, controlled by Alberto Arias, Arias Capital Resources’ (ARC) founder and Sierra’s former board chair, sent a letter of intent for a merger with Sierra. Sierra decided to continue to pursue its restructuring.

2023 saw the company improve its financial position as it began to divest its operations away from silver and focus on copper. Sierra achieved year-on-year gains in both the second and third quarters.

Despite improved production during those periods, investor interest has remained flat, and ARC, Sierra’s largest shareholder, announced on May 1 its intention to replace the board’s leadership. On June 12, ahead of the company’s annual general meeting, ARC released a dissident proxy circular encouraging investors to vote for the ARC selections. Sierra, through proxy advisor Glass Lewis, countered with its own press release on June 14 encouraging investors to maintain the current board. Shareholders ultimately voted in favor of keeping the existing board as reported on June 28.

3. Foran Mining (TSX:FOM)

Company Profile

Year-to-date gain: 37.46 percent; market cap: C$1.16 billion; current share price: C$4.11

Foran Mining is an exploration and development company focused on copper, zinc, silver and gold. It has eight properties across 140,000 hectares in the Hanson Lake district, which is located west of Creighton, Saskatchewan. Its primary project, McIlvenna Bay, is a mineral-rich deposit and part of the Flin Flon Greenstone Belt.

Initial drill results announced on February 16 from the Tesla target at McIlvenna Bay were positive, with a highlight interval of 10.1 meters grading 3.1 percent copper, 3 percent zinc, 32 grams per metric ton silver and 0.25 grams per metric ton gold, respectively. The winter 2022 program tested six holes over a 300 meter by 300 meter zone.

Foran has continued drilling at its Tesla target throughout the year. As of its most recent results on October 5, the target zone has been expanded to 750 meters and assays have indicated substantial zinc, copper and precious metals mineralization. Foran has also identified a mineralized zone, dubbed the Bridge zone, that connects the main McIlvenna Bay deposit with Tesla; according to the company, the new zone represents a significant area for growth. Moving forward, Foran will continue drilling into the winter with a goal of identifying high-grade deposits.

In addition to exploration at the McIlvenna Bay project, the company has secured significant financing in 2023, with a C$100 million private placement closing on March 27; Foran also secured a C$67 million equipment financing deal on September 7. Both will be used to develop Foran’s projects in Saskatchewan.

4. St. Augustine Gold and Copper (TSX:SAU)

Company Profile

Year-to-date gain: 33.33 percent; market cap: C$80.91 million; current share price: C$0.08

St. Augustine Gold and Copper is a mining development company focused on its King-king project in the Mindanao province of the Philippines. Its annual production target for the site is 62,595 MT of copper, 236,169 ounces of gold and 506,504 ounces of silver.

Shares of St. Augustine rose sharply in June when the company secured funding through a private placement with Queensberry Mining and Development. Queensberry will receive 91,778,683 common shares for C$3,785,741.63 and will increase its ownership of St. Augustine to 49.48 percent. St. Augustine reached its year-to-date high on August 2, closing at C$1.

The most recent news from St. Augustine came on August 14, when it filed its interim financial statements on SEDAR+ for the three and six months ended on June 30. The report shows significant growth in cash on hand, which grew from US$150,000 to US$998,090 between December 31, 2022, and June 30, 2023.

5. Imperial Metals (TSX:III)

Year-to-date gain: 14.36 percent; market cap: C$326.78 million; current share price: C$2.07

Imperial Metals is a mine development and operations company with projects in BC. Its operations include a 30 percent interest in the Red Chris mine in BC’s Golden Triangle, with the remainder being owned by Newmont (TSX:NGT,NYSE:NEM). Imperial also has 100 percent ownership of the Mount Polley mine, which reopened in June 2022, and the Huckleberry mine, which has been on care and maintenance since 2016.

Shares of the company have seen substantial gains twice this year. The first big increase came in January following the release of Imperial’s 2022 production report; it showed that Imperial’s portion of production at Red Chris saw year-on-year increases of 3.3 percent for copper and 5.8 percent for gold, bringing the company’s share of ouptut for the year to 296.4 MT of copper and 1,049.4 ounces of gold. Imperial notes in the report that Mount Polley’s restart brought in 2,815 MT copper and 12,078 ounces of gold in 2022.

The company’s second large gain for the year came in July after it released an exploration report for Mount Polley on July 18; it was followed by a production report on July 24. Results from drilling in an underexplored region of Mount Polley were positive; they indicate good copper mineralization and reveal several targets for additional drilling. The company believes the mineralization in this area could be upgraded to reserves, which would ultimately help extend the mine’s life.

Operations for the second quarter saw the company produce 3,203 MT of copper and 10,185 ounces of gold from Mount Polley; meanwhile, Imperial reported production of 1,868 MT of copper from its share of the Red Chris mine and 4,104 ounces of gold. Additionally, the company notes in its Q3 release that exploration is underway at Red Chris with a feasibility study in progress; it is expected to be completed by the end of 2023.

FAQs for investing in copper

Is copper a good investment in 2023?

As of midway through 2023, copper’s price was up slightly from the end of 2022. Although many experts have a positive long-term outlook for the red metal based on supply concerns and its growing role in the energy transition, recession worries in countries across the globe are creating short-term headwinds for copper, which is heavily used in industry.

Investors who are interested in copper should make sure to perform their due diligence, as the volatility and unpredictability of markets and economies at the moment means that nothing is guaranteed.

What is copper used for?

Copper is used in many industries, from construction to electronics to medical equipment. In fact, in 2020, 32 percent of copper globally was used in equipment manufacturing and 28 percent in building construction.

Two other growing sectors for copper are the burgeoning electric vehicle and green energy industries. Electric vehicles require a significant amount of the red metal per vehicle.

How to invest in copper?

Investors can get exposure to copper in a variety of ways. Holding physical copper is possible, but plenty of storage would be required to hold any significant value of the metal.

For investors looking to invest in the metal without physically holding it, there are a few options. Copper stocks such as those on the TSX, TSXV and ASX are worth looking at. Additionally, there are copper exchange-traded funds and the copper options and futures markets on the London Metal Exchange

How to invest in a copper ETF?

Copper exchange-traded funds (ETFs) can be a good way to diversify an investment portfolio, and they can be a more stable option compared to individual copper miners or explorers. There are multiple options available on the market, and they can usually be purchased in the same way one could purchase stocks through a broker or trading platform.

In May 2022, Horizons launched Canada’s first copper equities ETF, the Horizons Copper Producers Index ETF (TSX:COPP), which is focused solely on pure-play and diversified copper-mining companies.

There are two ETFs available on the US ARCA exchange as well. The Global X Copper Miners ETF (ARCA:COPX) tracks the Solactive Global Copper Miners Index, which includes copper miners, as well as copper explorers and developers. The other option is the United States Copper Index Fund (ARCA:CPER), which gives investors exposure to copper futures contracts by tracking the SummerHaven Copper Index Total Return (INDEXNYSEGIS:SCITR).

How much is copper worth?

The copper price is tracked in two ways: COMEX copper and London Metal Exchange (LME) copper. The COMEX and LME are both options and futures metal exchanges, with the former being headquartered in New York and the latter in London. COMEX copper is priced by the pound, while LME copper is priced per MT.

Copper saw historically high prices in the first half of 2022, and although it fell in the second half, 2023 has seen them move back up. In Q1 and into Q2, copper prices on the COMEX ranged between US$3.74 and US$4.27 and for the same time period on the LME, copper moved between US$8,200 and US$9,436.

Where is copper mined and how is it processed?

Copper is mined throughout the world, with significant production found on every continent besides Antarctica. Chile was the top producer in 2022, putting out 5.2 million MT of the metal. Rounding out the top five are Peru and the Democratic Republic of Congo with 2.2 million MT each, China with 1.9 million MT and the US with 1.3 million MT.

Once copper is mined, the ore goes through multiple steps to reach a market-ready state. First, the ore is ground to roughly separate the rock from the copper, as copper typically only makes up 1 percent of the mined rock.

The resultant copper is then slurried with water and chemical reagents, after which air is used to float the copper to the top of the mixture. After the copper is removed from this, it is typically at 24 to 40 percent purity.

Article by Charlotte McLeod; FAQs by Lauren Kelly.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Securities Disclosure: I, Lauren Kelly, hold no direct investment interest in any company mentioned in this article.

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