By Anmol Choubey (Reuters) -Goldman Sachs lowered on Thursday its global copper mine supply forecast for 2025 and 2026 following a disruption at Indonesia's Grasberg, the world's second-largest copper mine. The incident, which occurred on September 8, trapped workers underground due to heavy mud flow, prompting operator Freeport-McMoRan to declare force majeure. The bank estimates there will be a total loss of 525,000 metric tons of copper mine supply as a result of the disruption, reducing its global m ...

Core Viewpoint - Freeport-McMoRan (FCX) shares have experienced a significant decline of over 16% following a catastrophic mud rush incident at its Grasberg Block Cave mine in Indonesia, which has resulted in fatalities and operational suspensions [1][3]. Financial Impact - The Grasberg Block Cave incident has led to a 6% reduction in the third-quarter sales forecast for gold and a 4% reduction for copper [3]. - Long-term production estimates for 2026 could fall approximately 35% below previous forecasts, with a full recovery not expected until 2027 [4]. Operational Significance - The Grasberg Block Cave is critical, representing 50% of PTFI's proven reserves and 70% of projected production through 2029 [4]. Insurance and Financial Stability - Freeport-McMoRan has insurance coverage of up to $1 billion, but this is limited for underground incidents, with a cap of $700 million after a $500 million deductible [5]. - The company maintains a healthy current ratio of 2.47 and a moderate debt-equity ratio of 0.31, indicating financial stability [6]. Market Context - Despite the incident, copper prices have increased by 2% due to supply concerns, with futures rising above $4.82 per pound, which could help offset production losses from Grasberg [6][7]. - The long-term fundamentals for copper remain strong, driven by rising demand from electric vehicles and renewable energy infrastructure, suggesting potential investment opportunities in FCX shares [7].

Group 1 - Freeport-McMoRan declared force majeure on contracted supplies from its Grasberg Block Cave mine in Indonesia, leading to a significant increase in copper prices, with three-month futures trading above $10,496 per ton, up 2.74% for the day [1] - Following the declaration, Freeport's shares fell by as much as 10.4% in New York, while competitors such as Glencore PLC, Teck Resources, and Antofagasta saw their shares rise by 3%, 5%, and 7.4% respectively [2] - The Grasberg mine, the world's second-largest copper mine, halted production after a tragic accident on September 8, which resulted in the death of two workers and the ongoing search for five others [3] Group 2 - The Grasberg Block Cave ore body accounts for 50% of PT Freeport Indonesia's estimated proven and probable reserves as of December 31, 2024, and approximately 70% of the company's previously forecast copper and gold production through 2029 [4] - Freeport updated its third-quarter guidance, expecting consolidated sales to be about 4% lower for copper and approximately 6% lower for gold compared to previous estimates made in July [5] - In addition to Freeport's challenges, Hudbay Minerals Inc. announced the shutdown of operations at a mill at its Constancia mine site in Peru due to ongoing political protests, indicating broader disruptions in the copper industry [5]

Group 1 - The International Finance Corporation (IFC) and McEwen Copper Inc. have signed a collaboration agreement to align the Los Azules copper project with IFC's environmental, social, and governance (ESG) standards for potential future financing [1][4][5] - Los Azules is one of the largest undeveloped copper deposits globally, located in Argentina's San Juan province, with Environmental Impact Declaration (EIA) approval and a feasibility study expected to be completed by October 2025 [2][9] - The project aims to be Argentina's first regenerative copper mine, targeting carbon neutrality by 2038, and has an estimated after-tax NPV of $2.7 billion at $3.75/lb Cu, with a mine life of 27 years [7][9] Group 2 - The collaboration emphasizes integrating IFC's Performance Standards into the project's development to de-risk it and align with international investor criteria, promoting transparency and community benefits [3][4] - The World Bank Group supports Argentina's mining sector to unlock its potential sustainably, aiming to create jobs and enhance local economic development [4][6] - McEwen Copper aims to enhance the project's appeal to global investors through proactive ESG integration and a solid financing framework [5][9]

Group 1 - Copper prices experienced slight fluctuations, closing up by 0.03%, supported by supply and demand dynamics despite cautious remarks from Powell [1] - Hudbay Minerals announced a temporary closure of its Constancia copper mine in Peru due to safety issues, but stated that this would not impact the company's annual production levels significantly [1] - Domestic copper concentrate processing fees remain low, and recent declines in sulfuric acid prices necessitate monitoring of domestic copper smelting operations [1] Group 2 - Jin Yuan Futures noted that Powell's recent comments maintain a hawkish stance, indicating that the current monetary policy is moderately restrictive, complicating the assessment of the job market's tight balance [2] - Codelco has lowered its production guidance for the Teniente mine, and the Panama copper mine is unlikely to resume production this year, contributing to a negative outlook for spot TC [2] - Domestic refined copper is expected to see production cuts in September, with social inventories remaining low, leading to a forecast of stable copper prices with limited downside adjustment [2]

Core Viewpoint - Gunnison Copper Corp. has signed a non-binding Letter of Intent with Lunasonde Inc. to explore advanced technology for identifying copper and other critical minerals in Arizona's Cochise Mining District [1][2]. Group 1: Partnership Details - Under the LOI, Gunnison will allow Lunasonde to access its land package in southeastern Arizona to test and refine its remote sensing technology [2]. - The partnership aims to enhance the identification of new targets for copper, critical minerals, and rare earth elements within Gunnison's assets [2][3]. Group 2: Technology and Exploration Potential - The geology of the Cochise Mining District is known to host at least 12 critical minerals essential to the U.S. supply chain, much of which remains unexplored due to alluvial cover [3]. - Lunasonde's technology is expected to penetrate this cover and facilitate new discoveries [3][4]. Group 3: Funding and Future Plans - The parties plan to apply for funding under the U.S. Department of Energy's ROCKS Program to support this venture [5]. - The transaction is contingent upon the negotiation of definitive agreements and the successful submission and approval of the DOE funding application [5]. Group 4: Company Overview - Gunnison Copper Corp. is a multi-asset copper developer and producer, controlling the Cochise Mining District, which contains 12 known deposits within an 8 km radius [6]. - The flagship Gunnison Copper Project has a Measured and Indicated Mineral Resource of over 831.6 million tons with a total copper grade of 0.31% [7]. - The preliminary economic assessment (PEA) for the Gunnison Project indicates a net present value (NPV) of $1.3 billion and an internal rate of return (IRR) of 20.9% [7][8]. Group 5: Additional Assets - Gunnison's Johnson Camp Asset is currently in production, fully funded by Nuton LLC, with a capacity of up to 25 million lbs of finished copper cathode annually [10]. - Other significant deposits in the district, such as Strong and Harris, South Star, and eight others, have the potential to serve as economic satellite feeder deposits for the Gunnison Project [10].

Core Viewpoint - Hudbay Minerals Inc. is currently facing social unrest in Peru, impacting its operations, particularly at the Constancia mine, due to protests and illegal blockades [1][2][3]. Group 1: Operational Impact - The safety of personnel is prioritized, leading to the temporary demobilization of non-essential workforce and a shutdown of the Constancia mill for safety and maintenance [2][3]. - Despite the disruptions, Hudbay believes that these temporary issues will not affect its ability to meet production and cost guidance for 2025 [3]. Group 2: Community Relations - Hudbay has a history of engaging with local stakeholders since the start of operations at Constancia in 2014, focusing on sustainable long-term operations and building strong community relationships [4]. - The company is committed to being a responsible operator and contributing to the prosperity of local and regional communities [4][9]. Group 3: Company Overview - Hudbay is a copper-focused mining company with operations in Canada, Peru, and the United States, and has a pipeline of copper growth projects [7][8]. - The company produces copper as its primary metal, along with gold, zinc, silver, and molybdenum as by-products [8].

Core Insights - Oroco Resource Corp. is hosting a live virtual Town Hall to update stakeholders on the Santo Tomás Copper Project, focusing on management, permitting progress, community engagement, and next steps [1][2] Project Overview - The company holds an 85.5% interest in the Core Concessions of the Santo Tomás Project, covering 1,173 hectares, and an 80% interest in an additional 4,948 hectares, totaling 6,121 hectares [3] - The project is located in northwestern Mexico, near the Jinchuan Group's Bahuerachi Project, approximately 14 km away, and has significant copper porphyry mineralization identified through prior exploration from 1968 to 1994 [3] - Oroco's Phase 1 drill program commenced in 2021, resulting in 48,481 meters drilled across 76 diamond drill holes [3] Recent Developments - A revised Mineral Resource Estimate (MRE) and updated Preliminary Economic Assessment (PEA) were published in August 2024, available on the company's website and SEDAR+ [4] - The project is strategically located 170 km from the Pacific deep-water port at Topolobampo, with access via highway and rail, and a 32 km access road originally built for Goldcorp's El Sauzal Mine [5]

Core Insights - Midnight Sun Mining Corp. has mobilized a third diamond drill rig to its flagship Dumbwa Target, part of the Solwezi Project in Zambia, to enhance exploration efforts [1][3] - The drilling contract has been awarded to Chibuli Investments Limited, with a commitment to complete a minimum of 6,000 meters of core drilling focused on the southern 11.5 kilometers of the approximately 20-kilometer Dumbwa Target [2] Company Overview - Midnight Sun is focused on exploring the Solwezi Project, located in the Zambia-Congo Copperbelt, which is the second largest copper-producing region globally [7] - The company aims to find and develop Zambia's next generational copper deposit, leveraging its experienced geological team [7] Exploration Details - The Dumbwa Target is characterized as a near-surface, low-strip, bulk-tonnage exploration target, with geological features resembling Barrick's Lumwana Mine, located approximately 60 kilometers to the west [4] - Previous drilling has confirmed the presence of sulphide copper mineralization, and further drilling is required to define the system's characteristics [4] Recent Developments - A recent dipole-dipole IP survey has provided insights into the structural framework of the Dumbwa target, revealing a horizon with varying geological features, including folding [5] - The interpreted IP results correlate strongly with mineralized intervals from prior drilling, indicating a promising relationship between the target horizon and the overlying soil anomaly [5]

Summary of Key Points from the Conference Call Industry Overview - The report discusses the performance of various commodities, particularly focusing on Gold and Oil, within the context of current macroeconomic conditions and market sentiment [1][2][3]. Core Insights and Arguments - **Gold Performance**: Gold has seen a significant rally, delivering a +12% return over the past month, placing it in the 98th percentile for monthly returns since 1980. This surge is attributed to rising futures positioning, ETF inflows, and increased central bank demand [2][3]. - **Oil Market Dynamics**: Oil prices have underperformed relative to their implied beta to macroeconomic pricing over the past year. The commodities team anticipates further declines in oil prices due to strong supply growth, projecting a decrease in 2026 [2][3]. - **Copper and Economic Growth**: The copper/oil ratio has been increasing since the 2022 trough, indicating a potential correlation with improved growth expectations in China. Basic resources stocks have rallied due to higher copper prices, although European basic resources have lagged behind their US counterparts [3][4]. - **Market Sentiment**: The overall market sentiment remains mildly pro-risk over a 12-month horizon, with tactical neutrality in asset allocation. The S&P 500 targets have been adjusted to 6800, 7000, and 7200 for 3, 6, and 12 months respectively [4]. Additional Important Insights - **Speculative Positioning**: There has been a notable increase in speculative positioning in commodities, particularly in gold, which may indicate a potential overshoot in prices relative to macroeconomic fundamentals [2][3]. - **Equity and Bond Forecasts**: The rates team has revised their 10-year Gilt forecast to 4.4% for year-end 2025, reflecting changing expectations in the bond market [4]. - **Valuation Metrics**: Current valuation metrics for various asset classes indicate that equities are at high percentiles compared to their 10-year history, suggesting potential overvaluation in some sectors [4][64]. Conclusion - The report highlights a complex interplay between commodity performance, macroeconomic indicators, and market sentiment, with specific attention to gold and oil as key areas of focus for investors. The insights provided can guide investment strategies in the current economic landscape [1][2][3][4].