VIDEO: Crown Mining CEO Stephen Dunn on the Potential of Copper

MidasLetter Live

Crown Mining Corp. (CVE:CWM) (FRA:C73) recently announced that the company will be assessing the potential viability of its fully-owned MoonlightSuperior Copper Project in Northeast California. CEO Stephen Dunn talks about the project, the future of the copper industry, and common misconceptions about copper mining.

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James West:     Stephen, thanks for coming back.

Stephen Dunn:     Thank you for having me.

James West:     Let’s talk a bit about Crown Mining. I’ve noticed the price of copper has been more or less moving into a stronger zone, over $3.00 lately, and you’ve always said that you needed $3.00 copper before any of these big mines started to move toward production. Is that what’s happening right now with Crown Mining?

Stephen Dunn:     I think what’s happening right now is, the market is starting to become interested in copper again. I think we do need $3.50 copper before any new mines are built, but what we’re seeing now is a number of the producers are taking a look at who can they invest in, what mines can they start building again…$3.00 copper is really the threshold. This is when people start to look at, we can make money at that level.

James West:     Sure. Your project is in East California –

Stephen Dunn:     California, yeah.

James West:     It’s a collection of past-producing assets, if I’m not mistaken.

Stephen Dunn:     Two old mines, and they’re actually in what is called an intrusion. There is actually four deposits there right now. The two old mines were shut down in 1930, right when the Depression started; the price of copper collapsed, and they were not profitable.

James West:     And what is the 43-101 resource at present?

Stephen Dunn:     Approximately 2 billion pounds.

James West:     Two billion pounds! And you’ve got some precious metals in there, if I recall?

Stephen Dunn:     Yes, we do. We’ve got 750,000 ounces of gold and 25 million ounces of silver.

James West:     During the last copper heyday, when it was up above $4.00 back in the late 2000s, there was a flurry of takeover activity, and there was a sort of benchmark price per pound in the ground for copper that companies were being bought at. What was that price per pound in the ground?

Stephen Dunn:     When prices – there were approximately 40 takeovers in the last cycle, and the last ten takeovers averaged $0.10 per pound of copper. The average price of copper at that time was $3.75.

James West:     Wow. Okay. So you’re currently trading at what valuation of pound per ground of copper?

Stephen Dunn:     Less than $0.01 per pound.

James West:     Less than $0.01 per pound?

Stephen Dunn:     Yep.

James West:     Okay. So this sort of demonstrates the potential for a bit of upside when copper goes up in about $3.00.

Stephen Dunn:     That’s right.

James West:     Now, how many deposits in the world are there of the same scale as yours, in a mining-friendly jurisdiction? And just let’s clarify on that for a second: people think California, they don’t think it’s a mining-friendly jurisdiction, but how many mines have been licensed there in the past ten years?

Stephen Dunn:     Seven.

James West:     Exactly. So it is a mining-friendly jurisdiction.

Stephen Dunn:     Yes, it is.

James West:     And especially in an area that has historically been a mine, I imagine there’s no problem there. So then, what is the world sort of pool of mines of this scale in politically feasible jurisdictions, that could possibly be brought into production in the next ten years?

Stephen Dunn:     I have been able to identify approximately 20 different mines out there – or different deposits. However, half of them have already been spoken for, in the sense that there was a joint venture in place, or someone like a Hud Bay or a BHP has come along and bought 10 or 20 or 30 percent of the company. So there’s approximately ten companies like us that do have deposits, that are still looking for a joint venture partner.

James West:     So have you been entertaining any sort of visits or site tours by majors?

Stephen Dunn:     Not yet. Our objective right now is to move the project to the point where we have a PEA, a preliminary economic assessment. So right now, we’re doing that. We hope to have it ready by the first quarter of next year, and at that point, we will then start making calls.

James West:     Sure. Now, in your opinion, what is driving the price of copper to current levels after it’s been sort of dormant at the $2.50 and even lower mark for the last five years? What is it that’s driving the interest now and the price higher, and is that a trend that’s going to continue, or is this an anomalous sort of just blip in the cycle?

Stephen Dunn:     I actually think copper has a very rosy future. I think what is going on right now is a secular change in copper demand. What we’re seeing out there is a lot of talk about things like electrical vehicles and the advent of renewable energy and the impact on copper, but really, what people need to think about is, copper is the way we harness energy. It’s the way we deliver electricity, and electricity is what makes our modern world possible; it’s what helps to increase everyone’s standard of living. And what we’re seeing right now is, we saw in the past 25 years this huge move in China to basically modernize their economy, and the only way they could do that was by building out an electrical grid. And that has a huge impact on copper.

James West:     That was what drove the copper boom from 2005 to 2010.

Stephen Dunn:     That’s right. And China now imports 10 million tonnes of copper; they’re basically accounting for almost 45 percent of copper demand.

What you can see looking out over the next 20, 25 years, are a number of impacts. Number One is India. India is still only using approximately a million tonnes a year; they have more people than China. They could end up going to the same level of demand that China is at.

We also have another 2 billion people that will come into the world by 2050. That’s going to bring on another new set of demand. And we do have this electrical vehicle, and renewable energy impact. There’s huge impacts from that, and I think that’s the thing which has really helped copper over the past year. But if you think about just car demand: right now there’s 100 million cars per year produced. The internal combustion engine uses approximately 20 kg per car, so that’s 2 million tonnes of copper.

The electrical vehicle of the future uses 80 kilograms per car. That’s 8 million tonnes per year. It’s not going to happen next year, but it’s going to happen over the next 20 years. So you’ve got all these new sources of demand coming into the market, and what’s happened over the past five years is, the producers have stopped investing in new mines. So where is all this new copper going to come from?

James West:     Right.

Stephen Dunn:     And the only way it’s going to come into place is if prices go up.

James West:     So we’re coming to a point in the future where the demand for copper rising is going to converge and cross the line of copper production and initial supply, and I guess that’s the point at which you could really see a price breakout.

Stephen Dunn:     And I think that’s what’s happening right now. And I guess a number of people have said, J.P. Morgan have said $3.50, William MacKenzie have used numbers like that. Until we see prices like that, the producers are not going to start building new mines, because they cost too much money. You need to make sure you can get a rate of return.

James West:     And what’s the market cap, roughly, of Crown Mining today?

Stephen Dunn:     Four and a half million.

James West:     4.5 million. Okay. Stephen, we’re going to leave it there. We’ll come back to you in a quarter’s time and see how you’re making out. Thanks for coming in today.

Stephen Dunn:     Thank you.


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