This article is a sponsored feature from Mining.com.au partner Magmatic Resources Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
If the need for green sources of energy is as dire as we understand it, it’s perhaps unhappy news that copper supplies — a key determinant in the push for net zero — are not what they should be.
According to a February 2023 report by McKinsey, global demand for copper is expected to hit 36.6 million tonnes per year by 2031. Even taking into account new projects and mine restarts, projections suggest the best we can hope for is 30.1 million tonnes per year — a shortfall of almost 20%.
That much of our current supply comes from regions broadly considered to be less than stable is at least some of the problem. The world’s largest copper producer, Chile, has been labouring under regulatory uncertainty that makes it difficult for explorers and junior miners to break new ground. Political instability in Peru, which holds the number two spot, has caused a wide range of upsets, including anti-government protests that in some cases led to project shutdowns.
It’s potentially an opportunity for the world’s number 3 producer, the Democratic Republic of Congo — which accounts for 10% of global supply — to raise its export profile. But then again, the central African nation’s own turbulence has been well-documented, having dodged an alleged coup d’état against President Félix Tshisekedi only last year.
For Australia, however, the opportunity is a real one. The federal government is ‘mining friendly’ in a way that sometimes seems totally love-struck, and a number of major discoveries in recent years have cemented some regions Down Under as notably emergent.
One of those is central New South Wales, home not only to some of the country’s most significant copper assets — like Newcrest’s (ASX:NCM) Cadia and CMOC’s (SHA:603993) Northparkes mines — but also a number of promising explorers.
Perth-based Magmatic Resources (ASX:MAG) is one such explorer. It owns 3 projects — Wellington North, Parkes and Myall — roughly 300km north-west of Sydney, in the company of some “pretty high-powered neighbours”, according to Managing Director Adam McKinnon.
Listed in 2017, the company originally had four assets that came out of South African mining giant Gold Fields (JSE:GFI) — all in NSW. One has since been spun out into Australian Gold and Copper (ASX:AGC), in which Magmatic retains a 5.6% stake.
“And we sort of had a strategic review and decided that there’s a hell of a lot of potential at Myall that hadn’t been explored”
In the first few years post-listing, much of the exploration work was focused on the Wellington North and Parkes projects. But when McKinnon joined in 2022, he did so with a reappraisal of Magmatic’s portfolio at the top of his to-do list.
“I came on last year in March, from a company called Aurelia Metals (ASX:AMI), where I had some success making a number of discoveries in central-west New South Wales,” McKinnon says.
“And we sort of had a strategic review and decided that there’s a hell of a lot of potential at Myall that hadn’t been explored.”
As the data below illustrates and reaffirms the McKinsey report, Chile, Peru, the DRC, and China currently account for the lion’s share of global production.
Though Myall had until then suffered a little neglect, the existence of those high-powered neighbours meant it was inevitable there would be some baseline exploration activity at the project, located 25km south-west of Narromine and, importantly, 60km north of the Northparkes mine.
“The area that we decided to focus on, a prospect we now call Corvette, was last drilled in 2003 by Newcrest,” McKinnon explains.
“At the time, they actually hit some decent mineralisation that had never been followed up — they hit 77m at 0.55% copper and about 0.15% gold. The really interesting thing about those numbers is that’s basically the resource grade of Northparkes. That was what made us think we should put some work into the Corvette prospect.”
The reason such an impressive result was never followed up? Myall sits under a hefty degree of cover, which requires the long reach of a diamond drill rig — decidedly more expensive than reverse circulation or air core drilling — to sufficiently test the underlying system.
When Magmatic eventually drilled its first hole less than a year ago, it reached a depth of 1000m and returned a whopping 722m mineralised intercept. Since then, 14 holes have been drilled totalling 11,000m.
But Corvette remains open in all directions, and Magmatic’s current focus is a tiny 4km-square slice of a much larger 250km-square land package. Beyond it, no diamond drill hole has reached a depth more than 150m
“Outside of that area, there’s almost no diamond drilling. It’s almost non-existent,” McKinnon says.
“We know the tenement has huge amounts of copper anomalism. We also know it has huge amounts of gold and molybdenum anomalism, which are pathfinder elements for porphyry mineralisation. We can see from the geophysics that we’re over what we call an igneous intrusive complex, which has a similar size and scale to the Northparkes intrusive complex.”
It’s for these similarities that McKinnon believes Myall “absolutely has the potential to be a Northparkes 2.0”. And as far as bold assertions go, it’s not a particularly outlandish one.
The porphyry advantage
Magmatic’s dominant focus, after all, is on porphyry-style mineralisation — the behemoth geological structures that account for roughly 75% of global copper production.
“When we talk about a gold deposit, we’re talking anywhere from 1 to 10 million tonnes,” McKinnon says.
“In terms of porphyries, we’re talking anywhere from 100 million to several billion tonnes of rock. They really can be quite enormous. They can also host enormous amounts of gold, molybdenum, silver and a whole number of other elements as well.”
Not only that, but porphyries often occur in clusters around structural corridors. If you find one deposit — as Magmatic has at Myall — the odds are that you’ll find others too.
As McKinnon explains, Northparkes, for example, is by no means a single deposit: “Over the last 40 years, they’ve discovered a total of 22 deposits. Now they’re mining, or plan to mine, five of these so far, and most of their production to date has come from a single one of these deposits.
“So, I think when we talk about these styles of discoveries, what we’re talking about are these clusters of porphyry deposits”
So, I think when we talk about these styles of discoveries, what we’re talking about are these clusters of porphyry deposits. We’re only exploring one deposit at the moment, but it really does open up the rest of the area. We’re only a small company, we can only focus on one area at a time. But we really think that given the appropriate attention, this area could explode.”
Myall: the best of a good bunch
If Magmatic is focused largely on Myall, the temptation would be to assume its other projects just aren’t up to scratch. But the truth simply tells of Myall’s standout potential.
In September 2019, exploration hype in NSW exploded after Alkane Resources (ASX:ALK) unveiled an intercept of freakish proportions from the Boda prospect at its Northern Molong Project: 502m at 0.48 grams per tonne (g/t) gold and 0.2 per cent copper.
“We sort of surround the Boda discovery,” McKinnon says.
“In fact, our (Wellington North) tenement boundary comes to within about a kilometre of the actual deposit. In the past we’ve actually drilled porphyry mineralisation of very similar style to the Boda discovery. So, we know we’ve got similar rocks and we know we’ve actually got similar mineralisation on our tenement.”
Moreover, Boda — which now hosts a resource estimate in excess of 10 million gold-equivalent ounces — “absolutely put a rocket under exploration in central New South Wales,” McKinnon adds.
“We were able to raise some money off the back of that discovery and since that time we’ve been doing a lot of drilling, probably more drilling than most juniors in our part of the world. And when we get a chance, when we get more resources, we will definitely be coming back to Wellington North to look for those Boda-style porphyries.”
‘A very major large-scale copper discovery’
As McKinnon says, Magmatic is most assuredly in “an enviable position”.
“We’re on the verge of a very major large-scale copper discovery, perhaps one of the biggest in New South Wales in recent times.”
And with a global mining sector that desperately needs more copper resources, one can’t help but see dollar signs.
“When you look at the number of major copper deposits coming online, they’re just not there. The supply is not coming in to meet the demand”
“When you look at the number of major copper deposits coming online, they’re just not there. The supply is not coming in to meet the demand,” McKinnon adds.
“I think we see the advantage of Magmatic’s recent discoveries are that, number one, there’s potential for very large scale. Probably more important than that, we’re in New South Wales, we’re in Australia. We’re in a jurisdiction that is safe and stable. And that’s pretty important in these times.”
Write to Oliver Gray at Mining.com.au
Images: Magmatic Resources Ltd