WINDSOR, ON / ACCESSWIRE / APRIL 22, 2015 / The Wealthy Venture Capitalist, an investment newsletter focused on showing everyday investors new opportunities in rapidly growing, little known stocks, would like to discuss a new and exciting company in the natural resource and mining space: KAT Exploration Inc. (KATX).
Of all the base metals, copper has to be the most underappreciated and unsung. Yet historically, and in a very real-world sense of application, copper has proved its worth. Gold and silver has its place for sure, but as a chief component, copper has by far the most diversified application and reach of all the base metals.
As stated in an "Admiral Metals" article, "Copper has long been considered a leading indicator of global economic health. More than any other base metal, copper is tied closely to manufacturing, electrical engineering, industrial production, information technology, construction, and the medical sector. In general, rising copper prices have indicated strong demand and global economic strength; lower prices, a weaker economy. Historically, the price of copper has been strongly correlated with the price of gold, the Chinese economy, world trade, and most consistently, with the price of oil."
Kat Exploration Inc. (KATX) is an explorer and developer of mineral properties in Canada with a focus on precious metals and the company just this year announced the staking of two new copper discoveries "Deer Harbour and the Hodderville" copper projects in the eastern portion of the province. The find is important for several reasons but there's a nuanced understanding that has to be made for investors to really unlock the opportunity inherent in companies like Kat Exploration Inc.
It all lies in the way copper is distributed and used.
The real secret to copper is its very high thermal and electrical conductivity. This means it is used extensively to conduct heat and electricity, and it is a major source of building material. The prevailing price of copper belies its real-world importance and few investors would know for instance that it takes around 23 kg of copper to make a car. Or that it takes around 181 kg of copper to build a house.
Name it and copper is a key part of that thing's DNA. Everything from piping, shipbuilding, roofing, tiling and everyday consumer products has some element of copper.
Investors have not had a full education of the red metal, due largely in part to its shinier cousins (gold and silver). As a result, only a true historical understanding of copper prices can shine the light on the opportunity.
The price of copper was below $1 for much of the late 1990s and only breached the $4 per pound mark in the second half of 2006. Since then copper has been on a roller-coaster ride but a lateral look at copper's ups and downs offers the insight that could be worth a lot of investor profits.
Copper rises and falls with the global economy and its symbiotic ties with the housing and automobile industries is a key marker for any short term or long term investing strategy.
Both the housing and automobile industry has been experiencing a renaissance since the downturn of the global economy started in 2008. Early reports in 2015 pointed to a slow, but steady growth in house prices and the automobile industry had its biggest year in 2014 since 1996.
The strong outlook for both industries outlined above means any current pricing outlook for copper has to be viewed through a very finely-calibrated lens. This is the nuanced hole that many investors will fall through as copper again takes center stage.
What cues should the smart investor be looking at?
Copper discoveries remains the single biggest factor for gauging growth potential of any mining or exploration company that looks like a bet – even in the slightest.
Kat Exploration's latest discovery is therefore an important variable in the mix of things. The company's recent discovery of the Hodderville Copper property on the Bonavista Peninsula is comprised of 180 claims totaling 11,000 acres.
What's even more important from a practical perspective is that Kat Exploration's claims have been staked through months of due diligence. The company confirmed that since late summer of 2014, its field crews has been doing extensive foot work to grab samples from outcrop and float rocks over an extended area.
Kat Exploration's deep-level sampling has for the first time provided evidence of native copper in the discovery belt known as the Rocky Harbor group. The company believes that the definitive evidence of native copper in the area which is accompanied by a 13KM NE/SW fault zone is a strong indicator of a possible feeder zone for other copper discoveries.
More importantly, Kat Exploration is confirming that assay results from the old field's pit ran as high as 2.5% Cu – an important factor when it comes to drilling in the newly staked area.
Looking at the global picture for copper, investors would be wise to keep their eyes and ears on the ground. The recent downturn of copper prices in recent months has caused a stir among some analysts but the world's biggest suppliers of the red metal continue to be very bullish. These suppliers believe that strong demand from BRIC nations will continue to fuel demand for copper, rendering Wall Street's estimates null and void.
In the grand scheme of things, it is starting to look like copper may end up saving the mining industry after all. Of course companies like Golden Star Resources, Ltd. (NYSE MKT: GSS) continue to play a supporting role. The company in an updated listing of its mineral reserves confirmed proven and probable mineral reserves at 1.9 million ounces of Gold. Golden star also confirmed that total measured and indicated mineral resources increased 5% to 6.6 million ounces. A gold price assumption of $1,400 per ounce was used.
Asanko Gold Inc. (NYSE MKT: AKG), another mining company playing its part in keeping mining alive, was recently tipped as a "better-ranked" stock in the mining space. Asanko has seen its valuation rise after hitting a bottom of 1.25 in the last year. The strong resurgence back to around 1.48 is a proving to be a strong draw for analysts who have some faith in the long term prospects for gold.
McEwen Mining Inc. (MUX) is also strengthening its position on Wall Street's radar. The company's exploration budget for Mexico is now set at $5.5 million and an update has been issued on its El Gallo 1 gold mine. McEwen has confirmed drill results which it expects will improve the life of El Gallo 1 which has since been slated for an updated resource estimate in Q3 2015.
Can it get better? Yesterday Kat Exploration Inc. announced the purchase of RED HILL mines in Lordsburg, New Mexico. By the company's own account, this is an investment into a potentially enormous deposit of both silver and gold, indicated by the survey analysis and preliminary vein deposits. The company will be further exploring the mining district by engaging a geological firm to carry out a comprehensive and thorough survey of the tailings to closely determine the true size (tonnage) along with significant sampling.
Gold and silver will continue to tease investors but the smart money will also be on copper. Companies like Kat Exploration Inc. will therefore continue to present themselves as attractive, smart and relevant investment alternatives.
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