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We continue to follow with interest developments at Kodiak Copper (TSXV:KDK), where the milder summer months in British Columbia have seen further drilling activity at Kodiak’s MPD property.

The copper explorer put out an update last week in which it confirmed it will be carrying out 30,000 metres of drilling this summer.

Drilling started in March and is described as progressing well. New drilling at Kodiak’s focal point on the MPD property, the Gate Zone, has intersected prospective, sulphide-bearing altered porphyritic host rock a minimum of 125m south and 75m north of the 2020 drill program.

Six drill holes completed so far: new drill expected

Kodiak Copper is evaluating a 1km long soil anomaly (copper in soil) in a regional magnetic low across 3km. The miner has completed six holes so far (as of 10 May) and is currently operating one drill with a second expected to start later in the season. Core samples are already being shipped out to assay and we are anticipating results either this quarter or next quarter.

Kodiak Copper has also secured an amendment to its existing exploration permit on the MPD which will allow new drill sites and further exploration activity across the property all the way out to 2026.

CEO Claudia Tornquist confirmed again last week that the Gate Zone project was fully funded and that the pace of the drill program will speed up as the year progresses. She said that there would be further testing at the Dillard site elsewhere on the property.

Cormark Securities research note

Cormark Securities issued a research note on 12 May which also mentioned that the new Axe property acquisition by Kodiak adjacent to MPD includes the 1516 zone, an area that has been missed by previous, largely shallow drilling. This offers up the opportunity for further virgin exploration.

Cormark said its conceptual base case model for Kodiak Copper was a 300MMt open pittable mineable resource at MPD, grading at Cu 0.5% CuEq, which it is calling “an arguably conservative target.” We are seeing projects with lower grades than this already attracting attention in BC this month, of which more in a future Armchair Trader article (sign up to our newsletter or website alerts for updates).

Kodiak is being closely watched by specialist mining investors

We know Kodiak Copper is being watched closely by many in the copper mining business (this has been confirmed to us by discussions with several independent sources in the last 3-4 months), as its principals have good pedigree in the business, and there is increasing focus on potential yield from new copper mines in British Columbia. The macro picture is already looking very positive for copper.

The Armchair Trader is keeping Kodiak Copper on our long term watch list as we see it as an excellent junior mining proposition, well-positioned for an anticipated copper mining boom. While the share price looks relatively range bound over the last few months, with assay results coming through over the summer there is scope here for some big price moves if the results are good.

The 0.5% CuEq estimate from Cormark would be enough to evince considerable interest in the property if that is achieved. More conservative grades than that are creating approaches from bigger players. Cormark has a $3 price target which it says is based on a 0.8x multiple to Kodiak Copper’s fully financed after tax NAV of 12% of USD 637 MM or C$3.93 per fully diluted share.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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