Kincora Copper: The rise of the Lachlan Fold Belt as majors, funds seek copper

Not content with last year’s $9.6 billion acquisition of Oz Minerals and already being on track to becoming the largest producer of copper, BHP’s (ASX:BHP) recent play for Anglo American only further emphasises the favourable outlook for, and scarcity of, the red metal.

It comes at a time when the diversified majors, gold majors, resource specialist funds and generalist investors are increasingly seeking exposure to copper given its role as the most important metal in the global effort to decarbonise.

Understandably, the failed $75 billion offer from BHP has gathered significant attention. However, on the home front the acquisition of Australia’s two largest porphyry copper mines and four large-scale earn-in and joint venture deals in one district in less than 12 months has largely gone under the radar.

The Lachlan Fold Belt in New South Wales is a pretty well known area within the exploration and mining community, but both its key geological districts, the Cobar Superbasin and the Macquarie Arc, have recently been attracting significant investment and underpinning some very attractive returns.

According to Geoscience Australia, the belt has a long history of mineral production including gold, copper, lead, zinc, silver and tin. The region has produced around 80 million ounces of gold and 13 million tonnes of copper.

In the east of the Lachlan Fold Belt is the Macquarie Arc, which has been described as Australia’s foremost porphyry belt, and that is where you will find several large operating copper and gold mines.

These include Evolution Mining’s (ASX:EVN) Cowal Gold Mine and recently acquired Northparkes Copper-Gold Mine, and, the former Newcrest-owned Cadia Gold-Copper Mine (the flagship project of last year’s $26 billion takeover).

In the west of the Lachlan Fold Belt is the Cobar Superbasin, where last year Metals Acquisition (ASX:MAC) acquired Australia’s highest-grade copper mine, the CSA mine, for US$1.1 billion from Glencore.

The Macquarie Arc

With the large Cadia and Northparkes buyouts in the last 12 months, Cowal in 2015, and Alkane Resources (ASX:ALK) having recently made the Boda-Kaiser discoveries (now hosting a 14.7Moz gold equivalent resource inventory), the district has been witnessing an influx of majors dropping millions of dollars on exploration partnerships with the juniors.

Four deals in less than 12 months support potentially over $200 million in exploration expenditure.

The most recent of these was the $50 million earn-in agreement between US$10 billion ($15.1 billion) gold producer AngloGold Ashanti (NYSE:AU) and small cap explorer Kincora Copper (ASX:KCC), including two projects covering just under a 1,000km2 landholding.

It is not the first exploration partnership AngloGold has done in the region, having last year inked a $135 million deal with Canada’s Inflection Resources (CSE:AUCU) to earn into up to five of its projects covering over 7,000km2.

Interestingly, iron ore producer Fortescue Metals Group (ASX:FMG) has also recently completed an earn-in with Magmatic Resources (ASX:MAG).

Then there is the $6 million deal between juniors S2 Resources (ASX:S2R) and Legacy Minerals (ASX:LGM) to test a Cadia-style porphyry magnetic and under cover target 55km from the Cadia Mine.

Kincora President and CEO Sam Spring explains to Mining.com.au why he thinks this region is attracting this level of attention.

“The remaining untested intrusive complexes of the Macquarie Arc porphyry geology are a globally significant exploration opportunity, particularly within the dynamics of the current copper market, global geopolitics and increasing ESG considerations,” he says.  

“Regional magnetics has proven very effective in mapping the volcanic belts of the Arc and the major deposits have identifiable intrusive complex signatures, they are very large systems.

“This is evidenced in the southern and more mature sections of the Arc that already hosts over 160Moz gold equivalent endowment. The magnetics supports the northern extension potentially hosting the largest volcano-intrusive complex of the whole Macquarie Arc.

“Our view, supported by increasing investment by the various majors, is this offers new district potential and to host a cluster of deposits and large, Cadia-scale, discoveries.

“There are not many other regions like this around the globe, particularly in a proven Tier-1 jurisdiction and with the level of existing infrastructure that is already in place.”

Cobar district: High grades re-rating juniors to majors alike

The recent uptick in M&A in the Lachlan has also included the Cobar Superbasin. Metals Acquisitions listing on the ASX in February was the largest since July 2023 and the largest resource IPO in over half a decade.

Despite pricing at the top of the indicative price range investors in the IPO are currently up 21.6%.

Just last month, junior explorer Australian Gold and Copper (ASX:AGC) announced high-grade precious and base metals results from its Achilles target, resulting in its share price rocketing from 9c to as high as 61c.

Similarly Talisman Mining’s (ASX:TLM) exploration success at its Rip N Tear and Durnings discoveries, supported a 120% increase in share price.

Earlier this year Kincora announced gold and base metals intercepts from the first drilling program at its wholly owned Condobolin Project, including 9m at 1.3g/t gold and 79g/t silver from 39m. This was part of a broader 110m at 0.3g/t gold intercept, testing a new geological concept, and where there have previously been a series of intervals such as 4m at 20g/t and 14g/t gold.

Spring says he is keen to follow up these positive initial results given the reward Kincora’s direct Cobar peers are gaining in the current market.

Copper also a major drawcard for funds

Besides the established copper producers, now the diversified majors, gold majors and funds are also starting to boost their exposure to copper.

Earlier this year, Sprott Asset Management launched an exchange traded fund focused exclusively on the copper miners, including Freeport-McMoRan, Antofagasta and Southern Copper. Similarly Crescat, a key backer of Inflection Resources and a long-term gold focused investor, is seeking to increase its exposure to copper juniors and explorers.

“One of the things that I think maybe hasn’t really been emphasised is the change of that dynamic in copper. It’s not just the copper groups that are actively exploring and investing money into that space,” Spring explains.

The biggest drivers of this is the rising demand coupled with a dearth of new discoveries, which coupled with supply shocks returning to historical averages, has started copper on a run earlier than expected.

This year the expectation was that the red metal would be in surplus, but instead has shifted to a deficit, which in turn has seen the price climb as much as 27% since the start of 2024.

Spring says a key reason Kincora has always liked copper is the supply side story is so compelling.

“The industry is struggling to now keep production flat, with the large capital programs from the last commodity cycle having largely come on stream with very little of more recent significant capital investment in new projects,” he says.

“As such it is likely we are in the early stages of a new cycle for increasing M&A for more advanced copper projects and increasing investment for exploration projects offering large-scale potential and new targets.

However, and very positively for returns, we are currently not seeing new investments for potentially near to medium term new copper units, also acknowledging the lead time for such new supply. It appears the industry needs a much higher and more sustained incentive price.”

Foundations in place for increased Kincora news and value

Against this rising tide of sentiment and capital emerging for the copper sector, Kincora’s news flow has similarly increased, and is expected to remain this way.

“During the weak markets for juniors last year we bought out our asset level partner for the NSW projects, refined our geological models and targets for all our projects, and started proactively speaking to new funding partners at the asset level,” Spring explains.

“This is to support testing the 26 drill targets we have defined, which warrant over 30,000 metres of potential drilling.

“The focus was not selling the farm at the bottom of the cycle, retaining our core projects, but bringing in funding partners for our earlier stage, higher risk projects, and unlocking value we feel these have.

“By achieving this, it provides creditability for our exploration methodology and targets, and we think will provide extremely attractive value parameters for Kincora and our core projects.”

Spring says that while this resulted in a very light period of news flow, impacting the share price and liquidity, the results are starting to become evident now, offering significant catalysts.

AngloGold is expected to begin exploration at the Northern Junee-Narromine Belt Project shortly, with a key focus on drilling large-scale virgin intrusive targets.

News of the partnership has been well received in the market, with Kincora up over 55% since.

“Despite the recent appreciation since our earn-in deal, we still remain about half Inflection’s market cap, and noting their deal with AngloGold is their core project and value driver, and ours (for the Nyngan and Nevertire projects) are not our flagships,” he says.

Within the last month, Kincora also announced drilling had started at the wholly owned Cundumbul Project, with targets generated and exploration funded by partner Earth AI.

Earth AI has started drilling a series of newly identified intrusive targets within an open 2.2km by 800m anomalous copper zone associated with a hydrothermal quartz breccia system.

Interestingly, it is the hydrothermal breccias that are often associated with the higher-grade zones at the Boda and Kaiser discoveries further to the north in the same belt of volcanic rocks.

Write to Angela East at Mining.com.au 

Images: Kincora Copper
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Written By Angela East
Managing Editor Angela East is an experienced business journalist and editor with over 15 years spent covering the resources and construction sectors and more recently working as a communications specialist handling media relations for junior resources companies.