Coda Minerals draws market interest as excitement grows around BHP consolidation

➤ Coda Minerals Ltd.'s Elizabeth Creek copper project has received significant market interest since BHP Group Ltd.'s bid for OZ Minerals Ltd., given the project's proximity to Oak Dam.

➤ The Emmie Bluff iron oxide-copper-gold, or IOCG, discovery at Elizabeth Creek would likely require a bigger development partner.

➤ Coda has been "overly punished" due to confusion between Emmie Bluff IOCG and the more advanced Emmie Bluff copper-cobalt sedimentary deposit.

Coda Minerals CEO Chris Stevens. Source: Coda Minerals

Market interest in Coda's Elizabeth Creek copper deposit in South Australia sent the miner's share price soaring in mid-2021, when its first deep diamond drill hole revealed evidence of a major IOCG system, and again in August 2022, when BHP made its first takeover bid for OZ.

BHP's takeover was seen as a move to accumulate critical mass to tie existing and future major discoveries into a province-controlling approach to South Australia's Gawler Craton geological province, in anticipation of a long-term supply deficit.

Among South Australia's top primary copper deposits, Elizabeth Creek is the closest project not owned by BHP or OZ to the former's Oak Dam copper discovery. BHP's fiscal 2023 half-year report mapped the Emmie Bluff deposit on the Elizabeth Creek property as being substantially closer than OZ's Carrapateena to Oak Dam, all in the vicinity of BHP's Olympic Dam.

Large diversified miners, copper-focused and even gold-focused majors have shown an increasing appetite for the red metal in the past year. The IOCG discovery at Elizabeth Creek would likely need a bigger partner to develop it if the market is right about its potential, Coda CEO Chris Stevens said in an interview.

S&P Global Commodity Insights spoke with Stevens about how Coda is managing expectations as it works to develop the deposits within the Elizabeth Creek property. The interview has been edited for clarity and length.

S&P Global Commodity Insights: On Feb. 15, you announced further surveys of Elizabeth Creek. Are you far away from having a solid idea of how big this thing is?

Chris Stevens: Remember, we've got two quite distinct forms of mineralization on the tenure. There's the sedimentary copper-cobalt that we simply call "Emmie Bluff," which is what OZ Minerals ranks as Australia's sixth-largest undeveloped copper project. The deeper deposit we call "Emmie IOCG," which is a more challenging beast — a very large, genuine and ongoing tier one opportunity. It's what I would call a technical discovery.

We're getting a better understanding [of] the geophysics identified and correlated data from the known drilling, which we'll use to generate more targets. In a perfect world, I'd spin them out to two separate companies, but considering one is 400 meters under the other, that's not a possibility.

Though Emmie Bluff was discovered in the 1970s, we took a handful of drill holes and looked at this from a different paradigm in terms of the processing. Instead of trying to suppress the cobalt and just getting the copper, we realized that with changes in the cobalt market, the cobalt is extremely valuable. So the project's Achilles' heel became its most attractive trait, which is the high-grade, readily processable cobalt. Then we turned it into a 43 million-tonne at 1.84% copper-equivalent resource.

They're part of the same system, but the development of Emmie Bluff is eminently achievable for a company of our size. The IOCG's value will be created through the copper-cobalt deposit above it, which may reduce our capital costs and give us the opportunity to continue exploring in the longer term. If we confirm a tier one IOCG, I can say with reasonable certainty that something of that size would definitely be better suited in a bigger company.

Emmie IOCG is a phenomenal discovery, and it's an awful lot of smoke, but we haven't yet found the fire. We found some incredible mineralization, but it's a long way from being anything you would describe as a mineable or go-forward project. It's an accumulation of copper, which is, without doubt, in my mind, the fifth-best discovery on the Gawler Craton after Olympic Dam, Prominent Hill, Carrapateena and Oak Dam.

Is there some sense of irony, then, that when BHP moved on OZ, your share price soared due to market expectations of your IOCG, when it's not actually the main game for you compared with the copper-cobalt deposit?

Correct. Absolutely bang on, and it drives me completely around the bend. The reality is the overwhelming majority of people who are just passingly familiar with our projects are only familiar with the IOCG, and that is the wrong thing to be familiar with.

Emmie Bluff is a fantastic project, and I'm looking forward to getting that out at a much more detailed level in the next couple of months.

Have you had a lot more market interest in Emmie Bluff since BHP's approach to OZ Minerals?

I don't think that's an unreasonable thing to say, because BHP's approach really demonstrates that BHP and other majors are going to be increasingly acquisitive, as they haven't been exploring themselves, and they will be looking for credible, go-forward projects. So they are open for business when it comes to M&A.

Combining that with a project that has gone from, frankly, a few relatively thin drill holes historically, and a twinkle in a geologist's eye, to the sixth-largest undeveloped copper project in Australia — and that's just identified work — then interest intensifies.

There's nothing less attractive than [an executive] whinging about the share price, but I think we've been overly punished because of the confusion between the IOCG and the sedimentary copper-cobalt deposit, but when we demonstrate the product of the work that we've been doing over the last year in a scoping study on the copper-cobalt deposit, due in about two months, that should hopefully resolve itself.

Most copper-focused groups, be they traders, end users, investors or anything else, understand Emmie Bluff to a much greater extent and see the IOCG for what it is: an amazing opportunity. But they are increasingly familiar with the sedimentary deposit as a genuine copper project with go-forward potential.

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