First MPD resource gives Kodiak Copper a new story to tell

[Redator]

Kodiak Copper (TSXV: KDK) released its first resource figures for the MPD copper-gold project in southern British Columbia.

The new estimate, released late Wednesday, covers four of seven zones – Gate, Ketchan Man and Dillard. These deposits underpin 56.4 million tonnes indicated at 0.31% copper, 0.14 gram gold and 1.18 grams silver per tonne for a copper-equivalent grade of 0.42%. That accounts for 385 million lb. of contained copper, 250,000 oz. gold and 2.14 million oz. silver, or 522 million lb. of copper-equivalent.

Kodiak estimates MPD’s inferred resources at 240.7 million tonnes grading 0.24% copper, 0.12 gram gold and 0.91 gram silver, or 0.33% copper-equivalent. This would represent 1.3 million lb. copper, 960,000 oz. gold and 7.05 million oz. silver for 1.75 million lb. of copper-equivalent metals, the company said.

“I’ve had the vision right from the start that MPD’s rich mineral endowment holds the potential for a major mine in BC and our initial resource estimate clearly demonstrates this,” Kodiak chairman Chris Taylor said in a news release. “We expect to grow this resource substantially with the inclusion of the remaining zones later this year.”

Kodiak shares gained about 4.6% to C$0.68 apiece Thursday in Toronto, boosting the stock’s 12-month gain to 55%.

Peer valuation

Management presented the numbers as proof-point one that MPD deserves to be compared with established BC porphyries. It also offers clear ways to take the asset to a feasibility case. These include cut-off flexibility, zone expansion and step-out drilling.

Analysts predict a copper supply shortage by 2027. This is due to limited project pipelines and growing demand from electrification and renewables. Projects of MPD’s size will enter a tight market, positioning Kodiak to capture premium valuations once it converts resources to reserves and advances to economic studies.

With a C$58 million ($52.5 million) market capitalization as of Thursday, Kodiak sits well below peers with similar resources. Before Newmont (TSX: NGT; NYSE: NEM) acquired the preliminary economic assessment-stage Tatogga gold-copper project in 2021 for about C$400 million, GT Gold had a market cap of roughly C$304 million. Goldshore Resources (TSXV: GSHR), which is developing the resource-stage Moss Lake gold project in Ontario and has a market cap of C$174 million, is another peer.

MPD’s emerging scale could potentially help Kodiak close that valuation gap.

Resource flexibility

According to Kodiak, even a modest cut-off reduction to 0.12% copper-equivalent would lift indicated tonnage to 82.4 million tonnes and in-situ copper-equivalent to 600 million lb., with inferred tonnage up to 435.6 million tonnes for 2.4 billion lb. copper-equivalent. That sensitivity underlines how incremental drilling can unlock metal with little extra effort, the company said.

Confirmation and infill drilling is underway at the West, Adit and South zones as part of the current exploration program. Results are expected later this year for inclusion in the full resource estimate before year-end, the company said.

“I consider this initial resource estimate a starting point for future growth, as most of our zones remain open to extension and our work to date has identified more than 20 additional copper and gold occurrences and targets,” Taylor said.