Mining Copper: VMS Ventures shares insights into Copper Pricing and Global Mining Markets
Posted: 05/22/2012 12:00:00 AM EDT | 0
Mining Copper, Copper Pricing and the Impact of China's Demand for Copper
Mining IQ recently interview Rick Mark, CEO and Chair of VMS Ventures.
In this interview Rick speaks frankly about the state of play with mining copper, copper pricing and its impact on global mining markets as well as the challenges of investment for junior exploration companies.
What is your role at VMS and can you give us a short overview of the company and its activities?
I’d be happy to. At VMS Ventures I am the CEO and chairman of the board. Really what we are trying to do is make new discoveries and we are targeting copper deposits in Manitoba. It’s been an interesting and valuable journey and along the way we have managed to attract some really talented geologists and our team is really well respected in the community.
We are working with a fantastic major player, Hudbay Minerals, who has operated mines for 80 years in this area. HudBay will pay for the development of the mine. We are 30% owners, carried to production which is expected to begin in late 2013.
How long have you worked in the mining industry and how did you embark on a career in mining?
I have been in these junior markets for about 25 years now. And this iteration of my career started about 9 years ago when an old colleague of mine dragged me into their office to talk about finding copper deposits in Manitoba. I approached them with my ideas about what I thought it would take to be successful in this space in the mining industry. I brought ideas and strategies about how to raise money, present a message to the corporate community and get the Company properly positioned to go make discoveries.
So, it’s been almost ten years of learning our way, but we were in the right place and in 2007 made our first discovery. Largely due to our success, we were fortunate to add two outstanding people to our Geo team, our COO Neil Richardson and our chief geologist, John Pattison, who are tremendous assets.
What excites you about this industry?
There is an opportunity for our team and our shareholders to make money through discovery and that’s how we define success in this area.
It’s a science – but the amount of science isn’t generally understood by the layman investor and it’s really remarkable what advancements there are in helping our guys take a look under the surface of the earth for these deposits.
There is some incredibly interesting stuff happening these days and the energy and opportunity of discovery is very exciting. When you see a stock price jolt up, everyone’s happy and our people can take care of their families and that makes us very proud. Our group is made up of professionals who are achieving their dream of what they want to do, which is very rewarding for me. I am a driven guy and I think I understand what it takes to be successful and it really does come down to the people who surround you.
How are things changing for junior exploration companies at the moment operating in the marketplace?
Really since the events in Greece last year, the risk money has been slowly going away from the junior mining companies.
Here in Vancouver, a great deal of money is raised for projects all around the world and this is where most start-ups in this business get financed. However, it is now incredibly difficult to get financing and you can track it back to last April and the market trajectory since then.
Fortunately, VMS Ventures has money in the bank and we expect a treasury boost in cash flow from the Reed Mine in Manitoba starting in 2015, or so, assuming these Copper prices hold up, so we are fortunate. But, it’s hard for the retail investor to make money mining copper in this market without discovery. You are seeing a lot of money backing away. Hopefully we are doing a good job mitigating the risk by focusing on advanced targets for discovery.
Mining Copper update - what does the price of copper say about the rest of the industry at large?
It’s all about the copper price for us.
I look at it every day.
These conversations are fundamental for us and for our shareholders. The easy copper has been found. The world is left with mining copper that is lower grade copper and the correlating higher cost to get it out of the ground has a real impact on the copper price.
On the demand side, China is consuming 40% of the world’s copper and they are now using half of that for power generation – so it is becoming a more constant demand – not a peak and trough -and that demand is going to help drive up copper prices overall.
For operators mining copper – the copper price is key and we are confident that the copper price is going to remain strong. It’s a real economic bellwether. It’s stayed amazingly strong given the weakness of its junior market I described earlier. It’s getting harder to find and more expensive to get out of the ground.
How does that impact VMS Ventures in particular?
Dramatically, given the projects we are involved in – esp. the Reed Lake project. The price of copper fundamentally impacts whether this mine is going to be profitable. At the moment the cash flow is predicted to be strong, just for our 30% of that project with Hudbay Minerals – we expect to receive somewhere in the neighbourhood of $ 100 million in cash flow over the life of the mine over the next 2 to 7 years. This real asset helps us to be taken seriously in the marketplace and differentiates from most of the junior mining or exploration companies.
What have been your lessons learned along the way mining copper?
It’s a difficult and risky game.
It’s all about risk mitigation. Your investors need to know that as a junior mining company you understand risk. We have decided, for example, to work only in politically safe jurisdictions. Your financiers also need to know how you intend to spend their money. So, keep in regular contact and be transparent. Make it a priority to communicate plans and achievements to your shareholders. All of those elements are key to a junior public company’s success.
Mining IQ thanks Rick Mark. For more information about VMS Ventures please visit: http://www.vmsventures.com/
About Rick Mark:
Rick has over 22 years’ experience in the public market place. His leadership positions in various organizations over the last 35 years provides the company with experience in developing short and long term corporate goals, securing financings, building cost-effective property development plans, creating effective communication platforms and managing regulatory functions. Now in his seventh year with VMS Ventures Inc., Rick is also the CEO and Chair of Harvest Gold Corporation (HVG-TSX.V), a December 2005 "spin off" of Rare Earth Metals Corp. Rick is also CEO & Chair of North American Nickel Inc. and is the President and CEO of Pancontinental Uranium Corp. (PUC-TSX.V)
About VMS Ventures:
VMS Ventures Inc. is a mine development company focused primarily on discovering and developing high grade copper deposits in Manitoba. They acquire, explore and develop copper-zinc-gold-silver massive sulphide deposits in the Flin Flon-Snow Lake belt of Manitoba, located approximately 850 kilometres northwest of Winnipeg. VMS Ventures Inc. is a well-financed, publicly traded mineral exploration company listed on the TSX Venture Exchange (TSX.V) under the symbol VMS owning approximately 45% of North American Nickel Inc.
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