copper project basics

Understanding copper mineralisation

Good afternoon MINING AIM, and welcome to some education. Today we’re having a crack at copper — we have already made the copper supply gap clear, looked at how to assess a junior resource asset in general, and highlighted some top copper picks (though as always, none of these constitute investing advice).

However, I thought it might be a good idea to cover the various types of copper mineralisation, how they occur, and what actually happens during development and processing.

Let’s dive in.

Copper grading

It’s important to be aware that this article is only an overview — and individual deposits can and do occasionally break the mould. But as a primer:

The average copper mine worldwide has a grade of 0.53%, with Mining Intelligence data putting the average mine under development in 2024 at a 0.39% grade. This is likely to be far, far lower than many of you were anticipating.

However, grading is only one part of the equation; zone size and drill intercepts are just as important (if not more so). For context, Newmont is currently mining several assets at less than 0.4% CuEq — but a low grade can be completely economic if the thing is big enough.

Ore body geometry is also critical; if the ore is laid horizontally making it amenable to open-pit mining, then it will be much cheaper than orebodies that are either vertical or angled diagonally. Beyond this, the more vertical a deposit is, the higher the waste to ore ratio will be, which not only means increased opex but also worse environmental credentials.

Here’s the thing: the grade is only important when contextualised with both the depth and the size of the orebody. Current technology has created soft limits to what is economically viable with open pit copper (as always, there are exceptions); such that a near surface orebody needs to be less than 300 metres deep and with an intercept at least 100 metres thick to be considered valuable. 

If you meet these two criteria, then you can have a much lower copper grade to still be viable — and if you have 1% copper or more as well, then you can pretty much name your price. 

But what if you’re considering underground mining? This is massively more expensive for obvious reasons — and therefore, the juice has to be worth the squeeze — you’re looking for a grade of at least 2% dependent on size and depth — though some mines in DROC and Zambia have grades as high as 6%+, in addition to by credits in the form of nickel, gold etc. If you consider VMS or IOCG systems, low copper grades supported by other commodities can be completely viable though as always mineralogy matters most.

The world’s largest copper mine, Escondida, is a really good illustrative example — production began during the 1990s with a head grade of circa 2.5%-3% copper — but the reserve grade now stands at less than 0.5%. As per usual, the highest grade copper was mined first and the mine makes up for the lower grade with higher volumes, though this remains less profitable than in the past.

Of course, Escondida remains the world’s highest producing copper mine, and it may even become more profitable then ever in the future as the copper supply gap rears its head.

Common copper mineralisations

Porphyry — the mineralisation most of you will have heard of — these are large, low-grade deposits that are formed by hydrothermal fluids that emanate from a cooling magma chamber deep beneath the Earth's surface. They’re typically associated with mountainous areas such as the Rockies in North America or the Andes in South America.

The big thing to understand with porphyry deposits is that copper grade is perhaps the least important factor, as long as it’s reasonable. The size is paramount, as the orebody needs to be large enough to justify a massive mine investment — and the economics are also hugely affected by the presence (or not) of bycredits like gold, silver and molybdenum (which reduces the processing opex and also generates more revenue).  

But these are binary deposits — they are either going to be significant enough to attract major investment, or not. There is no middle ground. For context, circa 60% of the world’s copper comes from porphyry deposits — because their size offers greater economies of scale. Deposits tend to be hundreds of metres in diameter and less than 300 metres deep.

Sediment-Hosted Stratiform — formed by the precipitation of copper-bearing minerals within sedimentary rock layers. These are predominantly located in the Central African Copperbelt (Zambia — my favourite exploration location — and the Democratic Republic of Congo), Central Europe, and some parts of North America. 

These deposits are viewed by most as extremely valuable because they usually have higher copper grades, less complex extraction requirements, and are much easier to mine than porphyry deposits. 

However, they tend to be smaller compared to porphyry — and one drill does not a deposit make.

Volcanogenic Massive Sulphide (VMS) — formed from hydrothermal fluids that are expelled through volcanic activity on the ocean floor, leading to the creation of layers of sulphide minerals. 

These deposits are typically found along mid-ocean ridges, such as those in Ontario, and also parts of Australia. VMS deposits are highly valuable for a different reason — while the ore typically contains high-grade copper, it also usually contains a decent amount of metals like zinc, lead, gold, and silver. This polymetallic nature makes them particularly attractive to miners looking to hedge their diversification risk.

On the other hand, they also tend to be quite small, and the multi-metal component means more complex processing, and therefore higher costs.

Skarn — formed by the metasomatic process, where hot fluids from an igneous intrusion change the surrounding carbonate rocks. These deposits are typically found in regions with significant carbonate rocks and igneous activity, including parts of North America, South America, and China. 

Skarn deposits can be quite valuable, but it’s arguably trickier to know when a skarn deposit is economically viable. If there’s also bycredits like gold, tungsten or silver, and the copper grade is decent, they can be attractive — but their small size and geological complexity means it can be harder to find a partner to develop them.

From exploration to reclamation

The first thing to remember with any copper mining is the ESG considerations — and the jurisdiction. A deposit found in Western Australia is going to command a significant premium over an identical deposit in DROC; but on the flip side, trying to get a mine going in Canada is the equivalent of corporate purgatory, while sorting out a small scale start-up mine in Zambia is comparatively simple.

It’s also important to note that many small-scale operators (especially low-grade open pit mines) will do some initial crushing and sorting at project site, and then sell their copper to larger processors — consider the Jubilee Metals model.

But here’s how mine development typically plays out:

1. Exploration

Geologists conduct surveys and collect samples to identify potential copper deposits — geological mapping, geochemical analysis, and geophysical surveys are used to try to locate ore bodies (with varying success). Advanced technologies like satellite imagery and 3D modelling now help to identify promising sites — though I’d argue that the traditional methods are still most important.

Once they’re pretty sure there’s ‘something’ at the project, it’s drilling time. With core samples in hand, it’s off to the lab for analysis — and then assay RNSs, including grading and information on deposit size.

2. Planning

It’s well worth mentioning that many (if not most) explorers never get to the planning stage. But if the assays are decent, the orebody sizeable and the mineralogy apparently viable — then you get feasibility studies (scoping, pre, definitive and bankable) — and then there’s also the permitting process.

Governmental approvals, environmental impact assessments, community consultations with the locals, regulator consents etc etc ad infinitum.

3. Extraction 

As noted above, you can extract copper ore via either open-pit mining or underground mining. Near-surface open pits involve removing the overburden (the soil and rock covering your ore) — holes are then drilled in the rock and filled with explosives to break it up. The ore is then loaded onto trucks and transported to the processing plant — waste rock and soil are stored in waste dumps.

Underground mines use tunnels and shafts to reach the ore — room and pillar, block caving, or cut and fill techniques are used to get the ore out. Underground mines are more expensive not only because it’s harder to get to the ore, but also for obvious health and safety reasons.

4. Ore Processing

Once the ore is extracted and at the plant, it is usually crushed into smaller pieces and then grinded down into a fine powder to liberate the copper minerals from the surrounding rock. This powdered ore is than concentrated to increase the copper percentage in the final product.

The concentrated powder goes through floatation — added to a reagent (chemical) causing the copper to stick to air bubbles and float to the surface — and then often, there’s gravity separation where the plant uses the difference in density between copper and waste rock to further separate them.

5. Smelting and Refining

The concentrated ore powder is then subjected to high temperatures in a smelter to separate the metal from impurities. It starts with roasting, where the powder is heated alongside oxygen — this removes volatile impurities that bond with the oxygen, like sulphur. This material is then melted in a furnace, with the copper further separated from waste slag material.

This hot, molten copper (now known as matte) is then purified further by blowing air through it to remove additional impurities — and then cast into anodes and placed into an electrolytic cell. An electric current is then passed through the cell, causing copper ions to migrate from the anode to a cathode, ideally resulting in 99.99% pure copper.

6. Tailings and Waste Management

The waste material left after ore processing (tailings) is often stored in tailings ponds or dams. These are designed to contain and manage the tailings safely, minimising environmental impact — but tailings storage only lasts so long, and these can present long-term environmental problems. Further, overburden and waste rock tends to remain in waste dumps, and these can become unstable over time.

It's worth noting that tailings may contain valuable copper that can become economically attractive as mining extraction techniques are developed and refined. Consider Power Metal’s GSA acquisition, Fulcrum Metal’s Extrakt tech in Ontario, or Jubilee’s IRH deal in Zambia.

7. Reclamation 

After mining operations are complete and the site completely exhausted, the site is reclaimed to restore the land to its natural state or prepare it for other uses. This process involves recontouring, soil replacement, and revegetation with native species. The operator tends to also be obliged to monitor the site long-term for environmental stability, including tailings, waste dumps and ponds.

A mine near end of life can be worth less than the copper remaining in situ if the closure costs exceed remaining mine life. Operators can and do spend significant sums expanding assets to put off closure — and will often pay a premium for any additional nearby supply from neighbouring projects. Consider the likes of Telfer and Havieron, or Voisey’s Bay and Amaroq’s exploratory portfolio.

Happy copper hunting!