Pyramid copper project in Alaska belonging to Copperbank Resources Corp: The Depository Of Established Copper Deposits

If you’re reading this, it’s likely you own a smartphone, computer, TV, refrigerator, automobile, and all the myriad of marvelous inventions that those of us in the modern world enjoy, and take for granted.

However, there are still hundreds of millions of people who have yet to benefit from these modern amenities in developing nations, namely China, India and rural Africa. As the world’s population has surpassed 7 billion and makes its way to 9 billion by 2050, hundreds of millions of people will shift from rural farmland to urbanized cities, and they’re going to want to live like we do.

So, where does the savvy investor channel his resources to take advantage of the coming shift?

One contrarian investor, a self-proclaimed ‘realistic environmentalist, believes that of all the commodities that fuel our modern life, copper will not only out-perform most of the commodity complex, but will also be one of the investment classes adopted by generalist and ethical investors alike over the next decade.

Gianni Kovacevic, Executive Chairman of CopperBank Resources and author of “My Electrician Drives a Porsche?”, has spent fifteen years investing in natural resources and he is a sought-after speaker at meetings around the globe on topics such as green energy, demographics, and natural resources. We sat down with him recently to get his thoughts on why investors should start paying attention to copper now.

Andrew Nelson (AN), CEO.ca: Copper is very out of favour at the moment, why will copper buck this trend and be an important asset class over the coming decade?

Gianni Kovacevic (GK): Copper is the umbilical cord of society, as it is the common denominator of energy. As we slowly lessen our dependence on fossil fuels such as oil and coal, we can say this; oil is energy, energy without fossil fuels is electricity, and electricity requires copper.

As we look back over 100 years, demand for copper has grown, on average, by 3.5% per annum. We have rarely seen negative demand growth for copper. This is because overall energy consumption has done only one thing since electricity was invented - increased! In the last decade we have seen demand for copper spike to 4%-5% per year. In my opinion, future growth for copper will be 3% and at times as high as 5% due to technological advancements and mandated green energy.

The world has been mostly deficient in energy capacity since Nicola Tesla. That trend will not be broken until most of the developing world lives like you and I, and that is going to be the largest driver of future energy usage.

I closely follow Bill Gate’s blog, GatesNotes.  Gates frequently discusses extreme poverty, which he believes will be nearly fully eradicated by 2030. This will require two major things among other important factors: running water and electricity. In developed economies we have had these comforts for over a century, but there are still hundreds of millions of our fellow global citizens living without these basic conveniences.

Studies have been done in developing nations asking citizens if they would be willing to pay for electricity if made available, and 100% of respondents say yes.  India and rural Africa will join a surging China as the next developing economies where one billion people will be making the shift into urban society.

AN: Why is copper so important for the green energy movement?

GK: To put it into perspective for current household electricity, to create a megawatt of conventional electricity from coal or natural gas, it takes a tonne of copper per megawatt. With solar or wind energy (green energy sources), it takes 4 to 6 tonnes of copper per megawatt. Generating off-shore wind energy requires 10 tonnes of copper per megawatt due to the long distances the energy must travel to reach the end user.

It takes a magnitude more copper for green energy sources. A typical wind turbine is 1.8 - 3.5 megawatts, the ones you see in wind turbine farms.  An average coal fired plant will be 200 megawatts. You need around 57 3.5 megawatt wind turbines to replicate the coal fired power plant. But wind turbines do not run all the time as wind stops, so the average base load will be between 25%-40%. If a wind farm has 57 wind turbines they also must be interconnected, further increasing copper usage.

In addition, the grids in which the green energy is transferred from rural to urban areas are much more sophisticated and highly specialized and cannot function unless copper intensive systems are implemented.  Copper will absolutely drive the green energy movement as other realistic environmentalists recognize.

AN: Why will China be the leader in green energy due to the “Airpocolypse” and what does this mean for copper?

GK: The majority of China’s electricity is generated from coal. The government is making a huge push to shift toward green energy because of severe air pollution. China is now a leader in wind and solar power and will soon also lead in electric vehicles.

The State Grid Corporation of China has just completed a series of charging stations on the 1,200 km super free-way linking Shanghai to Beijing. As of January 2015 there were 70,000 electric vehicles in China, but State Grid forecasts a staggering 5 million more electric cars in the next 4 to 5 years.

Green energy is largely dependent on copper. For example, manufacture of an electric vehicle requires 3 times more copper than an internal combustion vehicle.

However, when looking at the electric car trend, the true demand for copper does not end with building the vehicle.  The infrastructure required to support the electric car is also copper hungry.  There are a few home applications to charge your electric car, the standard 240V outlet, a ‘quick-charger’, or even a turbocharger. If a progressive electric car enthusiast were to select a turbocharger the cable would contain copper as thick as your thumb due to the 125 amps of electric current.

AN: With your recently IPO’ed CopperBank Resources (CSE:CBK), what do you look for in a project for potential acquisition?

GK:

1. Projects must be situated in jurisdictions where we would be comfortable sending our families to work. We are not interested in going to exotic locations. We are going to stick close to home where there is an abundance of prospects.
2. Projects have to be sufficiently de-risked and have established resources and reserves. Research is another way to put it, we want to buy significant research at a steep discount to money already spent in the ground in drilling and engineering and metallurgical studies.
3. There cannot be large outstanding work or spend commitments.
4. 100% ownership is preferred, but we are open to buying a percentage of a high quality project when there is a good partner involved.
5. The project must be copper focused, but we are willing to pick up projects with gold, silver, or molybdenum by-products.
6. We look for Tier 1 potential type of deposits, meaning good grade (0.5%-1.0% Cu) and multi-billion pound potential.

AN: How are you going to raise funds to acquire a project with a share price at $0.05 and not heavily dilute shareholders?

GK: As we have created partnerships, people have to want to be part of the partnership. Our first three projects were purchased with shares. So it was always a question of what percentage of CopperBank do you own in shares for putting your project in CopperBank?

I would look at a potential future acquisition to be done in shares based on what percentage of CopperBank potential partners would own. But do not forget we are offering Contact, Pyramid, and San Diego Bay to potential partners who are going to be buying in as much to us as we are buying into them, which creates the true partnership. So that is how we will address future project acquisitions with our share price at its current level.

But you would not see a deal take place that would be grossly dilutive to CopperBank shareholders because we are not obligated to buy additional projects we do not see fit. We want to buy something that makes sense for our shareholders and for ourselves as we are owner operators. We own a huge piece of CopperBank so we are very sensitive to non-accretive dilution. Remember we won’t have to raise funds as the project we would buy would have zero spend commitments and be 100% owned.

Thanks to Mr. Kovacevic for taking the time. Learn more about CopperBank Resources at their web site (www.copperbankcorp.com). Also see Part 1 for a more financial oriented discussion on CBK , March 13th:  CopperBank chairman shares enthusiasm for flagship Contact project. Mr. Kovacevic's comments have been made in a Forward Looking Context. Seek professional advice (this is not investment advice) before making an investment decision, and make sure you fully understand the risks (investing in small mining stocks could result in a total loss). Copperbank has outlined the risks the company faces in their Annual Information Form filed on SEDAR, which all readers should consult. Always do your own due diligence. Certain information in this article may constitute forward-looking statements under applicable securities laws and necessarily involve risks associated with regulatory approvals and timelines. Although CopperBank believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. For more information on each of CopperBank and the risks and challenges of its businesses, investors should review the information circular dated September 12, 2014 and its other continuous disclosure filings that are available under CopperBank’s profile at www.sedar.com.