Coming Supply Gap as Surging Clean Energy Demand Collides with Limited New Discoveries

• Demand for copper is expected to surge in the coming decades driven by the global energy transition and electrification of transportation and infrastructure.
• However, copper supply growth is constrained due to declining ore grades, lack of new discoveries, long mine development timelines, and ESG/permitting challenges.
• This supply-demand imbalance is forecast to lead to significant market deficits and much higher copper prices in the second half of the 2020s.
• Several junior copper companies are well-positioned with advanced projects in mining-friendly jurisdictions on track to help fill this supply gap.
• Investing in copper equities provides exposure to the energy transition megatrend along with inflation protection and portfolio diversification benefits.

The global transition to clean energy and electrification is set to drive a surge in copper demand in the coming years. As governments enact more ambitious decarbonization policies to combat climate change, key technologies like electric vehicles, renewable power, and energy storage will require massive amounts of copper.

A typical electric car contains over 180 pounds of copper, 4 times that of a conventional vehicle, while each megawatt of wind and solar capacity uses 3-5 tonnes. Overall, the energy transition is forecast to boost copper consumption by nearly 600% by 2030.

However, the copper industry is ill-prepared for this demand boom from a supply perspective. Global copper mine supply has been stagnant for the past several years as the project pipeline emptied during the previous bear market. Major producers underinvested in exploration and development, leading to a dearth of new discoveries and mines. The average grade of copper ore mined has declined 25-40% in Chile and Peru, the world's top producers, necessitating more ore to be processed to maintain output levels.

Copper Supply Deficit

Building a new copper mine is an increasingly arduous undertaking in the modern era. The upfront capital costs often exceed $1 billion while permitting and construction can take upwards of 16 years from discovery to first production. Environmental opposition and geopolitical uncertainty in key copper jurisdictions like Chile, Peru, Congo and Mongolia have also delayed projects and deterred investment. These headwinds are unlikely to abate even as higher prices improve the economics.

The lack of new supply growth, combined with accelerating demand from electrification, is expected to push the copper market into a period of significant deficits and elevated prices by the late 2020s.

Marimaca Copper

In this environment, copper miners and developers with production growth are exceptionally well-positioned. Companies with projects slated to come online in the 2028-2030 period will be hitting the market at an ideal time. Marimaca Copper is one example, with its Marimaca oxide project in Chile on track for construction in early 2026. The company recently received a key environmental permitting milestone that validates its accelerated development timeline.

As Nico Cookson, VP Corporate Development for Marimaca Copper, explained:

"What the market may be missing right now is that when you think about these acquisitions and consolidations that we've made like Pampa Medina, it really changes the picture for the future of Marimaca and what the district looks like."

Marimaca's straightforward open-pit, heap leach project is expected to reach production in 2028.

ATEX Resources

For ATEX Resources, the focus is on the Valeriano project in Chile, where recent drilling has revealed high-grade breccia structures that could dramatically enhance the economics. As CEO Ben Pullinger explains,

"If you're looking at something that has the dimensions that could get us between 30-50 million tons with potential for more, you're looking at something that's six to ten billion in-situ value."

"When you look forward and you look at how copper development projects go forward in the future, it's now a consortium, it's a partner basis."

With major miner Agnico Eagle as a partner and over $50 million in the treasury, ATEX is well positioned to deliver a value-accretive resource update in the near-future.

Pan Global Resources

With a portfolio of projects in the prolific Iberian Pyrite Belt of Spain, Pan Global is aggressively expanding the Escacena deposit while testing multiple new targets. The company is working towards a maiden resource estimate in the second half of 2025 to demonstrate further scale.

The company's flagship asset, the Escacena Project, is located to the home to some of the world's largest and highest grade VMS deposits. Pan Global is currently conducting aggressive drilling to expand the near-surface resource and test multiple new targets, with excellent potential to delineate an initial 50-100Mt resource at a scale to compete with other major mines in the region and is fully funded following a recent $7 million financing. The company expects to deliver a maiden resource estimate in H2 2025, establishing a foundation to build upon and demonstrate value, with substantial upside to grow the resource base further as the project remains open in several directions.

As President and CEO Tim Moody gives the company's outlook:

"If we start to get to 50 million tons the economics start to look much better. If we get to 100 million tons, then we're at a scale to compete with the other big producers."

The Investment Thesis for Copper

• The global energy transition will require substantial amounts of incremental copper supply that is not currently being developed at the pace required.
• The lack of new copper mine supply growth in the face of accelerating demand is forecast to lead to significant market deficits and much higher prices by the late 2020s.
• Junior copper companies with advanced-stage projects in top jurisdictions appear well-positioned to help fill this supply gap and deliver value for shareholders.
• Copper equities provide an attractive way to gain exposure to the energy transition megatrend along with a hedge against inflation and geopolitical risks.
• Investing in a basket of quality copper juniors offers superior upside potential, exploration optionality, and M&A appeal compared to the major diversified producers.

In summary, the copper market appears poised for a period of structural undersupply later this decade as demand surges and new mine development lags. Junior copper companies with quality projects and proven management teams will be the key beneficiaries of this fundamental backdrop as producers seek scarce growth to replace depleting reserves.

While near-term economic uncertainty remains a headwind, building positions in attractive copper equities at current levels could prove exceptionally rewarding for patient investors willing to hold for the medium-term. As with any natural resource investment, maintaining a diversified approach is recommended to mitigate individual project or jurisdictional risks. Overall, the lack of copper supply growth and growing strategic importance of the metal suggests a compelling opportunity over a multi-year time horizon.