By Leia Michele Toovey-Exclusive to Copper Investing News
On Tuesday, copper futures extended Monday’s losses as data indicating weaker than anticipated US consumer confidence weighed on sentiment. On Monday night, copper futures closed down for the first time in five sessions as a firmer greenback halted the red metal’s rally.
Around mid-morning in New York, May copper hit a low for the day of $3.2485 a pound. Most active copper for May delivery closed at $3.3285 per lb on the New York Mercantile Exchange’s COMEX division; the metal fell in overnight trading. Analysts pegged a firmer US dollar over the Euro as the main reason behind copper’s slump. The euro fell after the German LFO sentiment index fell to 95.2 this month from 95.8 in January instead of rising to 96.4 as forecast. The common European currency is at $1.3551, compared to $1.3593 late Monday.
The Conference Board, a private research group, said its index of consumer confidence declined to 46.0 this month from a revised 56.5 in January. The February reading was far below the 54.8 expected by economists. Although data regarding housing is showing improvement, the failure of labour numbers to improve is resulting in a dark cloud over the markets. Meanwhile, traders are anxious to hear Fed chairman Ben Bernanke’s testimony before congressional panels Wednesday and Thursday for any clues on when interest rates may go up.
Copper’s downside is being limited by profit taking and consolidation. According to the International Copper Study Group, the world copper market surplus will hit 144,000 tonnes between January and November. London Metal Exchange copper warehouse stocks rose by 250 tonnes to hit 555,025 tonnes on Monday. COMEX copper stocks declined by 137 short tonnes to hit 104,327 short tonnes last Friday.
Anglo American’s head of copper predicts that over the long term global copper stockpiles will fall as mining companies struggle to increase output. “There aren’t enough high-quality projects in the world,” Anglo’s John Mackenzie told reporters. “It won’t be easy to maintain a balance.” Mackenzie expects demand for the metal will rise 6 per cent this year, while prices will remain volatile. Anglo is selling assets as part of the company’s overall corporate strategy to focus on copper and iron ore mines in South America. Anglo plans to spend more than $1 billion to develop mines in Chile this year after last year’s $926 million investment, which will help the company reach its goals of doubling copper output by 2017.
Company News
A 2009 resource estimate by Toronto based Lundin Mining indicates that the company’s measured and indicated copper reserves have increased by 44 per cent. Three new deposits have been added to the mineral reserves of the Tenke Fungurume joint venture in the Democratic Republic of the Congo, resulting in an increase in Lundin’s share of proven and probable reserves of 1.1 million tonnes of contained copper for a total of 4.2 million tonnes. Phil Wright, CEO of Lundin said, “Our goal this past year was to increase copper resources at Neves-Corvo and the increases we have seen continue to justify this on-going investment, and our belief that Neves-Corvo remains under-explored.” Proven and probable reserves at Neves-Corvo were reported to be 753,000 tonnes of copper, 190,000 tonnes of zinc, 68,000 tonnes of lead and 29 million ounces of silver. Lundin owns 24.75% of Tenke, which is operated by Freeport-McMoRan Copper & Gold.
Augusta Resource Corporation will issue 11,820,000 common shares, at a price of CDN$2.75 per share, for gross proceeds of CDN$32,505,000. Funds raised will be used for general working capital, and to advance to development of the Rosemount Copper property in Arizona. Augusta has retained TD Securities Inc. and Wellington West Capital Markets Inc. as joint lead managers for the issuance. The offering is scheduled to close on or about March 12, 2010, subject to approval by the securities commission.
