Beament eyes Develop re-rate and sale on back of imminent cashflow ramp-up

The copper price has been hanging together nicely despite the economic uncertainty that comes when a heavyweight like the US starts imposing tariff walls against friends and foes alike.

The red metal is known to be a bellwether of economic activity and so far at least, its $US4/lb-plus price handle says that while uncertainty has increased, the scale of the tariffs will be something much less than originally proposed by the White House on X.

Besides, copper it seems, will be OK, in the longer term anyway. The supply pressures coming from falling grades, mine exhaustions, approval delays and a lack of new developments – all at a time when the global electrification effort is in full swing – is an enduring thematic, unlike the politics of the day.

It is against that backdrop that ASX copper stocks have been doing nicely in recent weeks despite all the trade war noise. Bill Beament’s Develop (DVP) is a prime example with its 26% share price gain to $2.43 in the last 10 weeks.

Copper’s recent price strength despite the Trump administration’s tariff threats, and the general recovery in copper equities from an oversold state in late November, are factors in Develop’s 10-week surge.

But the outperformance has more to do with Beament of former Northern Star fame and his 19%-owned Develop (23% diluted) closing in on being able to taste first cashflows from the restart of the Woodlawn copper-zinc mine, 40km south of Goulburn.

WOODLAWN:

Beament hasn’t been out and about as usual in public forums in preparation for Woodlawn’s return under Develop’s ownership.

That’s because it has been a case of head down and bum up at the project, doing all the things Beament’s experience has told him needed to be done to ensure a successful return of the operation.

First cashflow from concentrate production is on track for the June quarter but Beament has also flagged commissioning could be brought forward.

Either way, Develop has said the first three years of post-ramp up production will be good for about $425m of pre-tax cashflow at current metal prices, allowing for all debt to repaid and more.

That suggests a re-rating of the $658m Develop is in order, remembering Develop also owns a bustling underground mining services business, the Sulphur Springs copper-zinc project in WA and the Pioneer Dome lithium project, also in WA.

Sulphur Springs, the only project held by Venturex (now Develop) when Beament arrived on the scene in 2021, is the sleeper in the portfolio. It has been around so long that the market seems to have forgotten that Develop has reworked it as a direct-to-the-underground proposition capable of producing another $147m in pre-tax annual cashflow using lower commodity price assumptions.

Beament is also working on a funding fix for the development cost at Sulphur Springs by inviting offers for up to a 20% stake in Woodlawn (it has a pre-tax NPV of $758m on a 100% basis), with proceeds from any deal to be recycled into the Sulphur Springs development.

On a copper equivalent basis, Woodlawn (100%) will in its initial phase be good for 20,000t of copper and Sulphur Springs some 30,000t. On a combined basis that compares with the 42,000t produced in 2024 at the CSA mine in Cobar by the now ASX-listed MAC Copper (MAC).

MAC acquired the mine from Glencore in June 2023 for $1.4 billion in cash and shares. Then there is the $750m paid by Evolution (EVN) in 2023 for 80% of the Northparkes copper-gold mine with its 25,000t of copper and 38,000oz of gold annual output.

The deals on Cobar and Northparkes highlight just how highly prized existing copper production has become.

Develop is not there yet but the first cab off the rank – Woodlawn – is about to roll, with Sulphur Springs to follow in quick order, particularly if Beament secures a better than NPV deal for 20% of Woodlawn.

Argonaut reviewed Develop’s December quarterly, released on January 29, and kept a $4.50 price target on the stock. Bell Potter made a “firing on all cylinders” call after digesting the quarterly, increasing its price target from $3.50 to $4.

COPPER JUNIORS:

The enduring copper thematic mentioned earlier of emerging supply deficits is proving supportive of the junior explorers, the proviso there being that they make a promising discovery to help feed the pipeline of future developments the world needs.

That came through loud and clear with the leveraged response to the porphyry copper discovery in coastal southern Peru announced to the ASX on January 23 by AusQuest (AQD). What was a 0.8c stock became a 2.4c stock on the day.

AusQuest has gone on from there to march to 5.7c in Thursday’s market on a 21% gain after more drill results (304m grading 0.3% copper from near surface, including 28m at 0.56% copper) confirmed the virgin Cangallo project as a large-scale porphyry copper discovery.

Back in South Australia, Coda (COD) is out to attract a re-rating from what it reckons is a potentially high-impact drilling program at its sediment-hosted Emmie Bluff copper-cobalt-silver deposit.

The program is targeting potentially laterally extensive extensions to the east and south-east of the known mineral resource of 40.2Mt at 1.87% copper which is already in the development incubator.

Success is likely to trigger a leveraged response as Coda has a modest $20m market cap despite the existing scale of its resource base at Emmie Bluff, part of the broader Elizabeth Creek project area (1Mt of contained copper equivalent). There is also a deeper IOCG target which will be followed up in time.

Swinging over to sunny Namibia, another high impact copper drilling program is underway by the $7.5m junior Noronex (NRX) on the fast-emerging Kalahari copper belt which is also home to Sandfire’s (SFR) Motheo success story.

The drilling effort is funded under a strategic alliance with the $15.2 billion South32 (S32). There is a lot more to come as Noronex gets around to testing a multitude of targets to its own account, or as part of its alliance with South32. It is also has a Namibian uranium leg to its story.