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Kodiak Copper (TSX-V:KDK) has expanded its existing MPD property in Canada’s British Columbia with a further 4,980 hectares. The copper explorer added this from the neighbouring Axe property which it bought from Orogen Royalties (CVE:OGN).

The Axe property has four drill-proven copper-gold porphyry centres as well as potential for more targets along the same lines as the existing Kodiak Gate zone. Previous work on the Axe property was on the western side, mainly using surface drilling at less than 300 metres.

Claudia Tornquist, the CEO of Kodiak Copper, said: “”Kodiak believes there is considerable exploration upside at depth, and in underexplored areas on the property, particularly the 1516 Zone. We look forward to unlocking this excellent potential with a view to potentially making another transformative discovery.”

Kodiak paid 950,000 of its shares to close the deal and will also provide a 2% net smelter returns royalty on the Axe property. It can buy back 0.5% of this for C$2m. A cash payment equal to 75,000 Orogen shares will be made (up to a maximum of C$50,000) on the completion of of a 5000m drilling program. In addition a further cash payment equivalent to the value of 150,000 Orogen shares (up to a maximum of C$150,000) will also be made when a measured or indicated mineral resource of at least 500m tonnes at a grade of minimum 0.4% copper equivalent is announced.

Kodiak Copper will also pay a cash equivalent of the value of 250,000 Orogen shares (maximum C$200,000) when a feasibility study is completed.

“The unprecedented positive market conditions for copper make Kodiak’s control of an easily accessed copper gold region within the prolific Quesnel Belt a compelling opportunity for our shareholders,” said Kodiak Copper Chairman Chris Taylor. “Previous drilling on the property could have missed “Gate Zone-style” high-grade copper-gold targets that may also exist at Axe.  Kodiak will now apply the same systematic exploration approach that led to the discovery of the Gate Zone at MPD.”

Deal gives Kodiak Copper further access to lucrative Quesnel Trough

The acquisition gives Kodiak Copper scope for further exploration in the Quesnel Trough, considered by mining experts to be a world class copper belt, already home to Teck’s Highland Valley mine, not to mention Copper Mountain or New Gold’s New Afton mine. Analysts are particularly excited by the 1516 Zone on the property, mentioned by Tornquist above, which looks like a Gate Zone style target, missed by previous drilling, which was mainly on the shallow side.

“Bottom line, 1516 is a compelling near-term drill target that potentially stands to materialise into another transformative discovery,” commented Stefan Ioannou, an analyst with Cormark Securities.

Cormark has set a target price of C$3 for Kodiak Copper. The company remains very well-positioned as a potential copper prospect as global demand for copper is expected to rise. Copper prices hit a high of $9600/metric tonne in February, and while they have fallen back slightly in March, it is anticipated that the demand for new power infrastructure created by a global shift to clean energy is going to be a strong wind in copper’s sales going forward. This will place a premium on productive copper mines that are already located close to developed infrastructure.


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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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