Kincora Copper: understanding the importance of adaptive planning

This article is a sponsored feature from partner Kincora Copper Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.

If mining is a tough game, the exploration juniors out there have it the toughest. The road to discovery and, ultimately, to production is a long one with no shortage of pitfalls.

As if funding issues and the cyclical nature of the industry weren’t enough, there’s finding — and keeping — the right team, discovering an economically viable resource, managing ESG complexities, and gaining access to infrastructure, plus all the geopolitical, sovereign and economic bunk that comes with running a business.

In the end, success comes down to having the right plan. And as President and CEO Sam Spring explains to, Kincora Copper (ASX:KCC) has a good one.

Benefiting from an industry-leading technical team with multiple tier-one copper-gold discoveries to their CVs, the company holds an impressive portfolio of copper-gold assets in New South Wales’ Macquarie Arc and Mongolia’s Southern Gobi — 2 of the most prolific porphyry regions the world has to offer.

Those in NSW include the Trundle, Fairholme, Nevertire, Nyngan, Mulla, Jemalong, and Condobolin projects, as well as the Cundumbul project, where Kincora’s recently appointed exploration alliance partner, Earth AI, is leveraging some clever technology in its fieldwork. Collectively, these assets represent a pipeline of 13 copper-gold targets already primed for drilling.

Indeed, that is a hefty opportunity itself. But it’s Kincora’s assets in Mongolia that could make all the difference.

Mongolia vs New South Wales

Prior to 2012, Kincora was no more than a private equity group with a deal to acquire the Bronze Fox project it now owns in full, located in the south of Mongolia — within trucking distance from China — and previously held by Canadian resources giant Ivanhoe Mines.

At the time, Spring was involved in the broking side of things.

“The original vendor didn’t have a management team, they didn’t have a vehicle. We helped form that in 2011, helped structure what became Kincora,” Spring tells this news service.

“The Bronze Fox project was previously held by Ivanhoe and had some really encouraging early results. It was highly rated, but it was Oyu Tolgoi that really took over. In 2012, Kincora drilled 1,000 metres of 0.4% copper equivalent, with 37 metres of over 1%. And that’s when I joined Kincora and made the move to the corporate side. This was driven by looking to assist run an exit strategy, having had a large cash offer for the company, a significant 8-figure deal and multiple of our current market cap, and in total 14 NDAs with the major copper industry players.”

But then things took a turn. Mongolia’s economy “overheated”, and a government corruption case resulted in the cancellation of 106 licences. Though Kincora managed to regain the two licences it lost after 2.5 years, by late 2019 the commodity cycle had turned, and Kincora had resolved to look at opportunities closer to home.

The focus these days might be on NSW, but while economic and political conditions in Mongolia have been through certain phases, the prospectivity of the region hasn’t changed. Bronze Fox still hosts 3 large, underexplored porphyry systems, and boasts an inferred mineral resource estimate of 426,000 tonnes of copper and 437,000 ounces of gold.

Xanadu Mines (ASX:XAM) has recently started a 54,000m drilling program at its flagship Kharmagtai porphyry project, located in the same belt and age rocks as Kincora’s Bronze Fox project. This further illustrates the prospective and underexplored nature of Bronze Fox. Kharmagtai has already had over ten times the amount of drilling as just the existing JORC resource area, which is a small portion of one of three very large porphyry systems at Bronze Fox.

In the past 12 months, there has also been a resurgence of investment activity in Mongolia, largely off the back of a reset deal between the Mongolian Government and Rio Tinto (ASX:RIO) for the Oyu Tolgoi project. Some of the world’s biggest players — including Rio, BHP (ASX:BHP) and Zijin Mining (SHA:601899) — have forked out monster fortunes. Rio’s investment alone exceeds US$10 billion ($15.4 billion).

With that in mind, Spring is looking to pull the trigger on an externally led strategic review of Kincora’s Mongolian portfolio — the ultimate aim being to land a third-party investor to assume the funding of the assets and potentially provide Kincora with the capital to expand its operations in NSW. As Spring notes, such an arrangement could also see Kincora retain its exposure to the substantial geological potential that still exists in the Southern Gobi.

“This strategic review will consider all the different options and will include recent inbound interest, with the fundamentals of: how do we maximise shareholder value, and how do we try and streamline our focus on NSW?”

“This strategic review will consider all the different options and will include recent inbound interest, with the fundamentals of: how do we maximise shareholder value, and how do we try and streamline our focus on NSW?

Because, really, the focus of the business for the last three years has been on NSW, where we’ve drilled about 30,000 metres and confirmed our geological concepts. We’ve got a pipeline of 13 high-impact and large-scale copper-gold targets that we’re in the process of drilling at the moment across five projects.

It’s really hard for a junior to do two district-scale portfolios, in two jurisdictions, justice. Recently we have been patiently adding value to the Mongolian asset portfolio — gaining a mining license, defining a JORC resource, discovering a new, third porphyry system — but with these expressions of interest for the portfolio, it’s the right time to run a formal review process.”

At home in NSW

Given the swings-and-roundabouts nature of mining and exploration in Mongolia, Spring was forthcoming when asked what advantages zeroing-in on NSW presents.

“It certainly doesn’t hurt when you move from an emerging jurisdiction to a more developed one.

There’s fantastic ability in New South Wales to get historical exploration records, get public sector surveys, get access to pegging, and secure ground. That really has helped us streamline how quickly we’re able to do project reviews, generate targets, leverage historical expenditure, drill, and get positive results… But also, we’ve been on the right end of some meaningful cooperative funding grants from the government.”

NSW is also where the Kincora team feels it has a competitive advantage. Spring attributes a portion of the successful shift away from Mongolia to Technical Director John Holliday, who joined Kincora in 2017, and whom Spring described as “one of the foremost figures in this part of the world”.

Spring notes: “John was principally responsible for the origination, management and discovery phases of Cadia, which is the largest porphyry project in Australia and the largest alkalic porphyry system in the world. When John was at Newcrest, he really had a good look at most of the projects within central-west New South Wales.”

The drill rig is currently turning at the Condobolin project, where Kincora has seen some high-grade, near-surface gold and base metal results, with further assays to come. Before that, the company completed 5 diamond drill holes at Trundle, which confirmed an extensive, multiple-system copper-gold complex across a 3.2km mineralised strike, up to 900m wide and with a vertical depth — which remains open — exceeding 800m.

In an exploration update on 10 May 2023, Holliday noted that the results “illustrate the very extensive scale of the mineralised zone at the southern portion of the Trundle licence”, with assays measuring up to 2.24% copper and 1.75 grams per tonne of gold.

“It’s execution. That’s the stage we’re at”

As far as Spring is concerned: “It’s execution. That’s the stage we’re at.

We have applied very systematic and detailed exploration, made the most out of the previous drilling and exploration results that we’ve had over two and a half years of pretty aggressive drilling across NSW.

There is now nothing else we can do except drill these targets, assess whether our exploration concepts are correct. And can we make a new, globally significant discovery — or even two?”

The dark art of exploration

It’s the same question Kincora’s exploration partner, Earth AI, seems to be asking.

Few industries remain untouched by the rapid advancements in technology of recent years. Rather than resisting — as the temptation seems to be — producers and explorers are leaning into it, looking to leverage the embryonic but potentially game-changing powers of things like artificial intelligence.

“I guess there are certain areas where you can see that it makes sense. Like, how do you optimise throughput from a mining operation, or how do you optimise an existing orebody — how do you, effectively, better engineer a solution?” Spring says.

“You can grow a lot more power through these systems, and you’ve got good quality data that goes in, and you’ve got good quality outcomes that come out.”

Headquartered in San Francisco, US, with a field base in Young, NSW, Earth AI employs a vertically integrated approach to metals exploration, including targeting, testing and verifying discoveries with its proprietary predictive AI platform and Mobile Low Disturbance (MLD) diamond drill rig.

The exploration alliance was signed in October 2022, outlining a ‘success-based’ relationship under which artificial intelligence and machine learning would be used to generate and drill test targets at Kincora’s Cundumbul project. Earth AI has committed up to $4.5 million in expenditure and stands to earn a 3% royalty should it make a new discovery.

Since technological platforms of this kind are more commonly used to optimise existing mining processes, Spring admits that “exploration is a little bit more of a dark art, and a lot more subjective”.

“We’re very keenly learning how Earth AI go about their exploration approach. One thing that we’ve really liked is there’s a good team of experienced geologists involved with Earth AI and they’ve gone out and taken a boots-on-the-ground approach to ground truthing.

They’ve identified these targets and areas with their AI process. They’ve field-checked that, they’re updating their model, trying to work out if their hypothesis is correct and applying geology to that to then refine and de-risk the targets.”

Bridging the valuation gap

In the end, all this work is part of a broader mission to bridge what Spring calls “the valuation gap”.

With such successful neighbours in central-west NSW — including Newcrest Mining (ASX:NCM), Evolution Mining (ASX:EVO), Alkane Resources (ASX:ALK), CMOC Group (SHA:603993), and Fortescue Metals (ASX:FMG) — Kincora has identified a clear path to a loftier market capitalisation.

Even its junior peers with similar landholdings and drilling results — like Magmatic Resources (ASX:MAG), valued at roughly $27 million, and Superior Resources (ASX:SPQ), at almost $53 million — far exceed Kincora’s current valuation of just under $10 million.

Magmatic’s Corvette prospect, for example — which sits within its broader Myall project — is located around 60km from CMOC’s Northparkes project, where recent drilling confirmed an extensive porphyry system across a 700m strike. It’s therefore considered a close direct peer to Kincora’s Trundle project, located 30 kilometres from Northparkes, where an extensive porphyry system exists across a 3.2km strike.

“We pegged our Nyngan and Nevertire projects when the Boda discovery happened,” Spring says. That discovery landed Alkane Resources (ASX:ALK) the NSW Minerals Council’s Explorer of the Year award in 2021 and 2023.

“Then Inflection came in and pegged the ground around FMG and us, and they made a new discovery within two-and-a-half kilometres of our licence boundary at Nyngan. And off the back of that, they’ve got this Heads of Agreement that they’re working to convert into a definitive earn-in agreement with AngloGold Ashanti (ASX:AGG), which contemplates up to $135 million worth of exploration expenditure.”

“So, catalysts to bridge what we think is a clear and large valuation gap are some of the things that hopefully people can keep an eye out for, driven by both our strategy with the drill bit and corporately”

Prior to that agreement with AngloGold, Canadian-listed Inflection Resources (CNSX:AUCU) had been sitting at a market capitalisation of about CAD$8 million ($9 million), but that figure is closer to CAD$20 million ($23 million) today.

“For us, we’d like to think that the ground that we’ve got is district scale and very strategic in that part of the world. And based on the Inflection deal, it provides a great direct peer group comparison for us, in addition to Magmatic’s Corvette prospect,” Spring adds.

“So, catalysts to bridge what we think is a clear and large valuation gap are some of the things that hopefully people can keep an eye out for, driven by both our strategy with the drill bit and corporately.”

Where to from here?

For now, it’s just a matter of doing the work — trudging through an encouraging pipeline of targets in the hope of making a meaningful discovery and pursuing corporate opportunities to create shareholder value.

“As mentioned, in Mongolia we’re contemplating this external strategic review, so I’d expect that there’d be some news flow there,” Spring explains.

“But beyond those immediate work programs, it’s on to Nevertire next, in terms of the next project that we drill after Condobolin. And we expect to see some decent numbers there from what we have seen come out of the ground. It’s working through that pipeline of 13 targets across the 5 projects, plus Earth AI’s work and expected near-term drilling at Cundumbul. And then at the same time, are there some synergies and technical endorsements that can also be unlocked — like Inflection’s deal with AngloGold Ashanti?”

Sam Spring is indeed a man with a plan — what seems to me a good plan. But, of course, the proof of the pudding is in the eating. Whether it works or not remains to be seen.

There is, however, one small certainty — we’d be wise to pay attention.

Write to Oliver Gray at

Images: Kincora Copper Ltd
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Written By Oliver Gray
Originally from Perth, Oliver has a keen interest long-form journalism. He has written for a number of publications and was most recently Contributing Editor of The Market Herald’s opinion section, Art of the Essay.