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TICKERS: ALCU; ALCUF, CAVU; CAVVF; 5EO

Copper Junior Closes on Deal To Buy Competitor

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Alpha Copper Corp. closes on its acquisition of CAVU Energy Metals Group to create a company with four major copper projects.

Alpha Copper Corp. (ALCU:CSE;ALCUF:OTC) has closed on its acquisition of CAVU Energy Metals Corp. (CAVU:CSE; CAVVF:OTC; 5EO:FSE) to create a company with four major copper projects just as the red metal is in high demand to help fuel the new green economy.

Last week, the Supreme Court of British Columbia and CAVU shareholders both approved the sale.

“We believe this transaction should create a large, well-funded new entity with four copper assets in B.C. and the Yukon (Territory),” Red Cloud Securities said in its Rocks Daily newsletter on Thursday.

Even before the purchase, CAVU was “well positioned to potentially make a significant copper discovery,” wrote Red Cloud Securities analyst Taylor Combaluzier in a note on Aug. 11.

“We believe the company stands to benefit from the global trend toward electrification, which will require increased copper production to meet the demands of the worldwide green economy,” Combaluzier wrote.

Alpha Copper President and Chief Executive Officer Darryl Jones said he expects both CAVU’s star properties to be “company makers in their own right.”

Under the terms of the arrangement approved by CAVU shareholders and approved by the court, CAVU shareholders are receiving 0.7 common shares in the capital of Alpha for each CAVU share held. CAVU shares are expected to be delisted from the Canadian Securities Exchange. According to Red Cloud, at the time of the transaction announcement, the offer valued CAVU at about CA$12.8 million and represented a premium of 65% based on the closing price of CA$0.22 on Aug. 19.

The Catalyst: The Future Needs Copper

According to a recent report from S&P Global, copper, “the metal of electrification,” is essential to all energy plans, but demand is expected to double from about 25 million metric tons (Mmt) today to about 50 Mmt by 2035.

“The chronic gap between worldwide copper supply and demand projected to begin in the middle of this decade will have serious consequences across the global economy,” authors of “The Future of Copper,” wrote. “In the 21st century, copper scarcity may emerge as a key destabilizing threat to international security. Projected annual shortfalls will place unprecedented strain on supply chains.

Even before the purchase, CAVU was “well positioned to potentially make a significant copper discovery,” wrote Red Cloud Securities analyst Taylor Combaluzier.

The challenges this poses are reminiscent of the 20th-century scramble for oil but may be accentuated by an even higher geographic concentration of copper resources and the downstream industry to refine it into products.

Electric vehicles (EVs) would not exist without copper; they use three times the amount of copper as cars with internal combustion engines. According to the report, the amount of copper that will be required by 2050 will be more than all the copper consumed by the world between 1900 and 2021.

Elephant Country

The purchase of CAVU nets Alpha its Star and Hopper projects.

Star is a multi-target copper-gold porphyry project in the Golden Triangle with 106.98 meters graded at 0.77% Cu in one hole. Over 13,000 meters of modern drilling have been completed there, and it is fully permitted for 200 drill sites until 2026.

Because it’s located close to other massive copper projects like Schaft Creek and Galore Creek, Jones called the area “elephant country” because of its rich deposits.

The Future of Copper,” wrote. “In the 21st century, copper scarcity may emerge as a key destabilizing threat to international security. Projected annual shortfalls will place unprecedented strain on supply chains.

“These are multibillion-pound copper deposits,” he said. “We’re obviously very excited . . . We’re going to have our hands full with all four of these projects.”

Hopper is a 74-kilometer multi-target porphyry copper-molybdenum project in the Yukon with “significant copper-gold-silver peripheral skarn mineralization,” Alpha said. The best intercept there has been 22.28 meters at 1.405% Cu.

Alpha’s British Columbia properties include Indata and the Okeover North Lake Zone, which has a historic resource of 86.8 million tonnes grading 0.31% copper (Cu) and is located about 25 kilometers from a Pacific tidal port.

Indata is also close to Northwest Copper’s Kwanika and Stardust discoveries. Historical drilling includes 148 meters grading 0.20% Cu, including 24.1 meters grading 0.37% Cu, the company said.

Assays from Indata and Okeover are expected by the end of the year or at the beginning of 2023.

As copper continues to get all the attention, “we’re in a really good position,” Jones said.

Ownership and Share Structure

Top shareholders include Mango Research & Management Inc., which holds 2.69% or 1.3 million shares; the CEO Jones, who holds 1.66% or 800,000 shares, and Sean Charland, who owns 0.78% or 380,000 shares, according to Reuters.

The company has 48.2 million shares outstanding, 45.7 million of them free-floating, with a market cap of CA$11.7 million. It trades in a 52-week range of CA$1.09 and CA$0.20.


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Disclosures: 

1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

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