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Marc Davis, CMM

It is being hailed as an "extraordinary" copper-gold discovery by the gold mining industry’s hottest new star, Chris Taylor. 

And his words carry plenty of gravitas these days. 

The CEO of Great Bear Resources (TSX.V: GBR) and his team are already credited with a world-class Canadian gold discovery. And it’s one that has propelled the company’s share price from pennies two years ago to a high of nearly $20 due to a proliferation of very high-grade drill results spanning a huge area. 

A low-key, easy-going geologist, Taylor is not someone who tends to hype a good story. Instead, he prefers to let the drill results speak for themselves. But in this instance, he isn’t shy about pointing to the obvious here: Kodiak Copper Corp. (TSX.V: KDKOTCQB: OCPFFlooks like it has struck the geological jackpot by drilling into the margins of a large, high-grade copper resource at its sprawling MPD Property in southern British Columbia. 

In fact, it’s fast becoming a bedazzling discovery that could easily outshine any of the prolific billion-dollar porphyry mines that are located nearby in the same renowned Canadian copper-gold belt.   

Bedazzling Drill Results Suggest a Home Run Discovery

So what exactly is Taylor so excited about? 

In a Kodiak webinar last week, he enthused over a discovery hole that returned exceptionally wide, consistently mineralized intercepts of rich copper and gold. They included 282 metres of 0.70% copper and 0.49 g/t gold (1.16% of copper equivalent, i.e. CuEq). Within this drill hole, 45.7 metres of 1.41% copper and 1.46 g/t gold (2.75% CuEq) was also assayed.

"These drill results are quite phenomenal," says Taylor. "The grades we are seeing here are three to four times better than the neighbouring deposits in this mining district."

He points to the presence of densely mineralized rock that is hundreds of metres wide, which averages approximately 2.7% copper CuEq. (By the way, CuEq refers to the combined value of the co-mingled copper and gold in each tonne of rock.) Significantly, these drill results compare very favourably with both the Red Chris and Mount Polley mines, according to Taylor. This is because both of these world-class porphyry mines – which are also in BC – average no more than 0.36% copper. 

It is worth noting here that Taylor was instrumental in the exploration of a massive discovery that later became the Red Chris mine when he worked as a geologist for Imperial Metals well over a decade ago. 

Now might be a good time to also mention that Taylor is not some envious onlooker with regard to this new "company maker" discovery hole. He is actually the founder and Chairman of Kodiak Copper, alongside his role as CEO of Great Bear, which has bragging rights for making Canada’s most sensational gold find in over a generation. 

Working alongside Taylor is Kodiak’s CEO Claudia Tornquist. A longstanding mining industry executive, her past credits include a senior management role with the multinational mining heavyweight Rio Tinto Group. This is where she was involved in developing several world-class copper porphyry mines. They include the world’s largest copper mine, the Escondida operation in Chile, as well as the Oyu Tolgoi mine in Mongolia.

Now Taylor and Tornquist apparently have a tiger by the tail with MPD – and with only five deep holes drilled so far this year, but with a commitment to continue to drill for the rest of the year.   

Tornquist comments, "We could not have wished for better drill results from our project. Especially remarkable are the new high gold values, which we would have viewed as a successful stand-alone gold discovery in the absence of any copper. So these results are a real game changer. And this is only the start. There are lots more drill results to come."

A richly-mineralized copper-gold core sample from Kodiak’s discovery hole.

A High-Grade Copper-Gold Giant in the Making?

This season’s drilling has been designed to test a large-scale geophysical anomaly (measuring 1,000 by 300 metres) that was initially probed last year, leading to the discovery of the prolific, richly-mineralized Gate Zone. (Previous drilling at MPD by other project operators over the past 50 years never tested for mineralization at greater depths than 200 metres.)

Significantly, this year’s initial drilling – which struck paydirt well below a depth of 200 metres – has given a huge boost to the tantalizing theory that a monster copper-gold porphyry deposit may be lurking beneath the surface. And its grades suggest it is shaping up to be one of the highest-grade porphyry discoveries in recent memory. 

In spite of the imperative to replenish dwindling global copper inventories, it is worth noting that new porphyry discoveries are few and far between these days. And high-grade deposits are especially rare. In fact, only four world-class copper deposits – consisting of over one billion tonnes grading 1% copper or better – have been found since the turn of the new millennium.

Hence, the rewards for any exploration junior that beats the odds can be stupendous. Each of these "super mines" is typically worth billions of dollars and is large enough to run profitably for decades on end. This makes the rich, expansive grades being found at MPD all the more remarkable.   

What further sweetens the significance of MPD’s world-class drill results is the fact that the MPD mineral claims are located at the heart of one of North America’s most prolific copper belts and in close proximity to several big-league copper and gold mines, namely Highland Valley, Copper Mountain and New Afton. 

Hence, there exists excellent infrastructure in this mining camp, including a network of highways and roads that offer easy access to the MPD project area. All of this offers the likelihood of cost-cutting synergies for any new mine in the area. 

Investment Summary

I wrote about this company in Stockhouse.ca in late June, discussing how Kodiak was well-positioned for a successful drill program this summer. At the time the share price was around $0.45. It has now nearly quadrupled in value.  

In fact, the stock has rallied hard lately on very heavy volume, meaning that much of the "smart money" is piling into Kodiak. That said, it is very early days yet in the MPD exploration/development cycle. So the mainstream investment community certainly has not missed out on all the upside action.

This is all predicated on Kodiak continuing to impress with its drill results. What are the odds of this happening? Well, Taylor believes that it’s just a matter of time before Kodiak drills into the deposit’s core – where the richest grades are usually encountered. Thus, he expects future drilling results to get even better. 

On a technical note, the company has a very tight share structure consisting of 36.6 million shares outstanding (47 million fully diluted). When matched with a steady flow of upbeat news, such a scenario typically acts as a powerful catalyst to higher share price valuations. I doubt that there will be a lack of sufficiently inspiring news to prevent this from happening in the coming months.  

Meanwhile, MPD’s intrinsic value seems to be growing by the day. Consider this: in spite of the COVID-19 global pandemic, copper demand continues to significantly outstrip supply due to heightened usage, particularly for the electrification of vehicles and other "green" initiatives.  

Yet the green energy revolution is being hampered by the diminishing average grade of the world’s copper-gold mines. It has fallen by around 60% from around 1% copper to less than 0.4% copper over the past couple of decades. 

This means that Kodiak’s MPD discovery now stands out as an extraordinary prospect as the mining industry scrambles to replenish the planet’s dwindling copper supplies with new world-class discoveries. This daunting challenge is being presaged by China’s new US $700 billion economic revitalization stimulus program, involving massive infrastructure and urbanization projects. 

Accordingly, Taylor and Tornquist have timed their company’s new focus on hunting for massive copper deposits very well indeed. By thinking ahead of the curve, they have now created an excellent early-mover opportunity for investors to enjoy highly leveraged exposure to copper’s resurgent spot prices, which is now over $3 a pound! (Less than six months ago, copper was trading around 50% lower, close to $2.00. This was at the same time that Kodiak initiated its 2020 exploration season.)

Kodiak investors who are already on-board have been very well rewarded so far. But other investors need not fret that they may have missed the boat. There promises to be plenty of opportunity in the coming months for investors to participate in Kodiak’s exemplary upside potential long before the company sails off into the sunset. 

After all, it takes a long time to fully develop a new monster discovery, which typically requires the drilling of at least a couple of hundred holes. In comparison, Kodiak has only completed a handful of exploratory holes so far.    

A similar scenario was laid out in my Stockhouse.ca column of August 2018 about Great Bear. This was after its share price had appreciated five-fold, rallying from $0.40 to $2.00 on the strength of exceptional exploratory drill results (though I first recommended this stock to investors at $0.35). 

Since then, I have continued to write about Great Bear’s ever-improving investment profile, as illustrated by a steady flow of news releases attesting to increasingly lustrous results from dozens more drill holes. Meanwhile, Great Bear’s share price hassteadily climbed to a high of nearly $20 and now trades in the $17 range. 

It therefore bears repeating that Kodiak’s share price trajectory appears primed for a sustained uptrend – one that still makes it a bargain price for savvy investors who are as patient as they are risk-friendly.

ABOUT THE AUTHOR: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, The Times (UK), Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post, AOL, City A.M. (London), Bloomberg, WallStreetOnline.de (Germany) and the Independent (UK). He has also appeared in business interviews on the BBC, CBC, and SKY TV. He is also an enthusiastic shareholder of Kodiak Copper. 


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