COPPER Boom Incoming: 'Very Strong' Future Amid Global Demand Surge

Key Concepts

• Porphyry Copper Mineralization: A type of large-scale, low-to-medium grade copper deposit often associated with igneous intrusions.
• Pre-Feasibility Study (PFS): A comprehensive study that evaluates the economic viability of a mineral project, following a Preliminary Economic Assessment (PEA).
• Indicated vs. Inferred Resources: "Indicated" resources have sufficient geological confidence for mine planning; "Inferred" resources have lower confidence and require further drilling.
• Strip Ratio: The ratio of waste rock to ore that must be removed to access the mineralized material.
• NPV (Net Present Value): A financial metric used to estimate the profitability of a project by discounting future cash flows to the present.
• Cut-off Grade: The minimum grade of ore required for a mineral to be economically extractable.

1. Copper Market Outlook (2026–2027)

• Market Sentiment: Ian Graham and the broader industry are bullish on copper, citing strong demand drivers and supply constraints.
• Price Forecasts: While Graham maintains a conservative outlook, he acknowledges UBS’s projection of $15,000/ton ($7.50/lb) by Q1 2027. He notes that high prices are necessary to incentivize new production and allow for the mining of lower-grade deposits.
• Supply Gap: UBS projects a supply deficit of 520,000 metric tons for 2026. Graham emphasizes that the industry must accelerate project development to meet this widening gap.
• Recession Impact: Graham argues that while a recession would impact demand, copper is a fundamental commodity and would likely be one of the least affected sectors over the long term.

2. Santo Tomas Project Overview

• Location: Northwestern Mexico.
• Resource Profile: The project hosts a 541 million-ton indicated resource at 0.37% copper equivalent, plus a significant inferred resource of 530 million tons at 0.35% copper equivalent.
• Production Potential: The PEA outlines a 23-year mine life, producing approximately 100,000 tons of contained copper annually, with additional silver, gold, and molybdenum credits.
• Economic Highlights: The project features a low strip ratio for the first decade of mining, contributing to an NPV8 of approximately $1.5 billion USD against an initial capex of $1.1 billion USD.

3. Operational Strategy and Methodology

• Phase 2 Drilling: The company is initiating a 20,000–25,000-meter drilling program aimed at converting inferred resources to the indicated category.
• Optimization: The team is utilizing Whittle Consulting for trade-off studies to improve throughput and energy efficiency, specifically targeting "readily millable" rock to reduce processing costs.
• Project Development: The project is designed as two conjoined pits on a hill, allowing for operational flexibility in equipment movement and mine planning.

4. Security and Community Relations

• Regional Security: Graham distinguishes the Santo Tomas district from other parts of Mexico, noting that the project is located on a well-monitored trade route (the "La Intrael Pacificico") and has experienced almost no cartel activity for over a decade.
• Community Support: A unique aspect of the project is the "bottom-up" support from local communities (Cho and Eluete). Residents actively lobbied federal representatives to include Santo Tomas in "Plan Mexico," a list of priority national infrastructure projects.
• Management Approach: The company follows a strategy of "sticking to their knitting"—focusing strictly on mining operations and maintaining positive, non-intrusive relationships with the local economy.

5. Corporate Structure and Financials

• Leadership: The team includes experienced mining professionals from Anglo American and Rio Tinto. The board recently added Fisel Rodriguez (of Torex Gold) to bolster operational expertise in challenging environments.
• Financial Position: As of March 2026, the company holds over $19 million CAD in cash following a $23 million financing in January.
• Funding Plan: Current drilling and technical work are fully funded. The company expects to return to the market before the end of Q3 2026 to fund the upcoming PFS and further desktop studies.

6. Notable Quotes

• "The best way to constrain copper prices is to bring the production on... my purpose is to make sure there’s plenty of supply so that fundamental commodities remain affordable to economic growth." — Ian Graham
• "We’ve never seen [this level of community support] before in a project... it’s a bottom-up support and actually just exceeded our expectations." — Ian Graham, regarding local advocacy for the project.

Synthesis/Conclusion

Arokco Resource is positioning the Santo Tomas project as a highly buildable, economically robust copper asset. By focusing on resource conversion and energy-efficient processing, the company aims to capitalize on the projected long-term copper supply deficit. The project’s primary competitive advantage lies in its strong, grassroots community support and a management team experienced in navigating the technical and social complexities of mining in Mexico. Investors should monitor the upcoming PFS results and the company's next capital raise in late 2026.