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Hot Stocks: International PBX

To quote CIBC’s Institutional Equity Research on Metals & Minerals released in September 2010, “China simply is not blessed with domestic high-quality copper resources.” For this reason, the firm named copper as its favourite metal. After analyzing a group of “some of the best junior Americas-focused copper names” currently listed on the TSX, the report ranked International PBX (TSX-V: PBX) Ventures number 17 out of the 25 juniors.

PBX has a lot going for it. Its share price benefitted from two recent company developments: the participation of China’s largest copper processing company – Jintian Investment — in  PBX’s equity financing in November 2010 and the announcement of a company spin-off that would  focus on the PBX’s iron oxide-copper-gold (IOCG) projects. The next few months should be interesting to watch as it expands the copper-molybdenum resource at its flagship Copaquire Project in Chile.

“Jintian  was looking for a company that will be able to produce copper in the long-term for their needs — they consume 400,000 tonnes of copper every year  — and we were one of the first companies that they invested in directly. It was that endorsement from them that gave us greater credibility in the minds of our shareholders,” says PBX President & CEO, George Sookochoff.

Meanwhile, Sookochoff noted that the company spin-off should allow PBX to focus on unlocking the value at Copaquire, while allowing another team to focus on the value of the IOCG projects. “The markets for these metals is so strong right now, we believe they all need to be advanced quickly to gain the most upside from each,” he tells Resource Intelligence.

“Based on the scoping study, the total resource at Copaquire is 1.1 billion lbs of copper and 313 million lbs of molybdenum but the scoping study reduces that amount because it bases it on $2.25 copper and $10.50 molybdenum,” he adds. “Over the 24-year mine life, based only on existing resources, the scoping study suggests production of 785 million lbs of copper and 166 million lbs of moly. Considering that copper and moly prices are both nearly double the prices used in the scoping study, then we could obviously mine out a greater portion of the resources.”

One of the many interesting features of the project is the potential for negative cash costs. Sookochoff explains: “We’ve got so much molybdenum that this could be a stand-alone moly mine. As credits to a copper mine, our cash costs could be less than zero because of potential revenues from molybdenum sales.”

As PBX prepares to start a 40,000-metre drill program, another key thing to watch over the next two to three years is the decision it takes with regards to the company’s future. The Jintian deal has presented PBX with a scenario that was not in the cards earlier, acknowledged Sookochoff. “Their long term goal is to ensure copper supply, so we’re determining if that is a possibility from our end. Our initial strategy was to develop and then sell the project outright, but development of a mine and production facility may be an option, too.”

Calculate PBX’s value and check out other developments HERE.