Regular EQUEDIA readers know that we have been following a company called Excelsior Mining Corp. (TSX: MIN) for several years.
Excelsior brands itself as “The Copper Solution Company.” It owns the Gunnison Copper Project near Tucson, Arizona. The project is a bit unusual for a copper mine because it is an in-situ recovery copper project that does not involve any “mining” activity.
We saw great hope and optimism when the stock neared its upper break-out level at $1.15. That was back in the second week of December 2020.
The weekly stock chart was looking very good. Trend momentum looked to be turning up and Aroon, an infrequently used indicator, was in a good position to, perhaps, signal the start of a new trend.
Despite positive technical indications and a strongly improving copper price, MIN.TO retreated back to $0.50. So, what happened?
Lots of “tiny bubbles” in the form of Carbon Dioxide formed and restricted solution flow rates. This caused concern amongst investors who were looking forward to a relatively “smooth start-up.”
We wrote about this “not so tiny” problem a few months ago:
Now, we revisit the daily stock chart.
Our interest was piqued by the very strong volume in the shares recently, most notably a block trade of 2,315,500 shares at $0.53. Copper moving up in bold fashion may have caused investors to perhaps “re-think” the risk involved in the management being able to resolve the operational problems.
Here is a daily chart for MIN.TO highlighting the formation of another positive technical pattern for Aroon: the development of closely parallel lines for Aroon Up and Aroon Down. A cross-over of the lines is required for a signal to occur.
(Search term: “Aroon technical indicator” refer to StockCharts.Com article)
Other technical indicators such as MACD; Accumulation/Distribution/RSI remain firmly negative or neutral.
So why are we still interested in MIN.TO? Here is the answer:
Several decades ago, I was fortunate enough to be at the forefront of the introduction of a new technology that had been developed by the US Bureau of Mines: heap leaching.
As I recall, there were several spectacular successes and a number of failures. Some of the failures involved trying to adapt the heap leaching technology to ores that were unsuitable for it.
In time, the mining industry “figured it out.”
By way of an example, ores with a high clay content could be treated using agglomeration. Improvements were also made on the way that diluted cyanide solutions were applied to the top surface of the leach pads – primarily to slow the evaporation rate and to aid in even distribution of the solutions through the leach pads. Other ideas that were put into practice included using stackers to deliver the ore to the leach pads so that there would not be any excessive compaction that might interfere with solution flow rates.
One gets the impression that this is what is happening with Excelsior Mining at their in-situ copper leaching project.
They have identified their problem of reduced solution flow rates and are trying different approaches to “figuring it out”.
Summary & Wrap-Up
Opportunity comes in many different forms.
Sometimes, to recognize it, one needs to have some form of experience that is parallel. For example, the gold industry solved many operational difficulties in heap leaching that must have seemed monumental at the time.
The SX-EW in-situ copper leaching industry in Arizona has seen several projects achieve commercial production. Some have long operating histories, so there is no need to doubt the process: it works.
Unseen operational problems at MIN.TO’s Gunnison project have resulted in a 50% reduction in the share price as investors have “adjusted” the risk premium.
Our strategy is to continue to monitor the stock chart for technical clues that the operational problems are getting closer to becoming resolved.
We also continue to look for positive news via any future corporate updates.
We have not lost sight of the value of the prize: 4.5 billion pounds of copper lay below the surface. The management of Excelsior seems determined not to be outdone by “tiny bubbles.”
Recently (May 2021), Excelsior reminded its shareholders that at a copper price of $3.30, the project had an NPV of more than $1 billion.
Currently, MIN.TO has a market capitalization of approximately $160 million. The upside is evident if MIN.TO can start to see improving copper grades coming out of its collection wells.
-John Top, the technical trader