Julius Caesar's Gold...
If Julius Caesar had what I’m about to describe, the Roman Empire might never have fallen. Indeed, we might all be speaking Latin.
What do I mean? There’s a new gold-copper discovery in the heart of old Europe. It’s literally down the road from a district where people have been mining since the days of the Roman Empire.
And shares of the company that found it are selling on the low end just now. I believe we can make some money here, so let’s dig in.
Long ago, in his Commentaries on the Gallic War, Julius Caesar famously divided Gaul (we call it France — long story) into three parts. “Gallia est omnis divisa in partes tres.” Gaul was a big place, of course, but Julius Caesar was good at simplifying things.
How did Julius Caesar conquer Gaul? With soldiers, of course. But how did he get the soldiers? He hired and paid them. The point is that building an empire is expensive. So where did the Romans get the money to run an empire that lasted many centuries?
Let’s review some basic history. Ancient Rome was really two empires. The Western Empire covered what’s now Italy, France, Spain, England and parts of the North African littoral (ancient Carthage — now Libya, Tunisia, Algeria, etc.). The Eastern Roman Empire included the Balkans down through Greece plus what’s now Turkey and other parts of the Middle East (Syria, Israel, Jordan, northern Iraq, Egypt, etc.).
That West-East division works well, certainly if you focus on how the Roman Empire paid for itself. Back in Roman times, much of the “Western” Empire was funded by silver out of Rome’s mines in Spain. In fact, one famous old Spanish mining district is called Rio Tinto — the name of which today belongs to one of the world’s largest mining concerns. (Rio is a British group, with roots in the 19th century. It started in Spain, but doesn’t quite date back to the days of Rome.)
What about Rome’s “Eastern” Empire? That jurisdiction was funded by silver from mines in ancient Dacia and Thrace — what’s now Serbia and Bulgaria, relatively small countries in the heart of the Balkans. These days, Serbia is what remains after the breakup of former Yugoslavia.
Serbia is also home to a gigantic new — and investable — gold and copper discovery. This new gold-copper play is about to move some serious needles, I suspect. And it won’t be the first time for this particular Serbian mining district.
Serbia’s Modern Mineral Wealth
Here’s another quick history lesson to help understand what I’m about to describe. Back in the 1890s, a Serbian businessman named Georg Weifert opened a copper mine at an old Roman site called Bor. Bor is in eastern Serbia, not far south of the Danube.
Weifert’s mining project at Bor soon became the largest copper mine in Europe. Bor yielded rich ore and created great wealth for both Weifert and Serbia. Indeed, it was then-wealthy Serbia’s refusal to pay “reparations” to Austria after Archduke Ferdinand was assassinated in 1914 that led in part to the outbreak of World War I. (Another story, entirely.)
The Bor mine operated after World War I. Income from Bor helped lessen the impact of the Great Depression on Serbia, which was then a key part of the former Yugoslavia. During World War II, Bor was seized by the Germans.
After the Second World War, then-Yugoslavia adopted a communist government and the Bor mine was nationalized. Still, Bor operated all through the second half of the 20th century and — post-communism — still produces ore today, from surface and deep workings. In fact, the Bor mine recently completed a major expansion of its smelter, which is a critical asset for all future operations in the region.
The New Guys Move In
A few years ago, a small Canadian “junior” company obtained a mining concession a few miles down the road from Bor. I’ve followed this company for over two years in my newsletter, Energy & Scarcity Investor (however, that’s not the company I want to bring to your attention today!)
What’s the hook for Bor and this Canadian group? The geology of the new concession is “on trend” with the Bor mineralization. Still, it’s tough prospecting. The surface in the area is covered with rocks and soil from recent geological times. There are no bedrock outcrops of Bor-style mineralization. Thus, it’s hard to say if the Bor mineral trends continue or not.
What did the Canadians do? They performed geophysical and geochemical surveys. They located some intriguing hot spots. Then the Canadian firm partnered up with a familiar name.
What Has Freeport Found?
Who might that partner be, you ask? It’s our old friend Freeport-McMoRan Copper & Gold (FCX), a company I’ve wrote about in these pages before. The new gold-copper discovery is so hot in my view that I’ve re-recommended Freeport to my readers. You’ll understand why in just a moment.
In the deal with the Canadians, Freeport is funding exploration drilling near Bor, to “earn in” to a large share of whatever they find. What’s the status of the project? In the first phase of drilling, results were ho-hum. Freeport’s geologists found hints of mineralization down the road from Bor, but nothing to write home about.
Then, early in 2012, Freeport geologists pulled out a drill core that made jaws drop. The core was filled with long sections of high-grade copper mineralization, the likes of which no one had seen since the early days of Weifert’s mine back in the 1890s. Really, you have to go to the mineral museum in Belgrade to find old specimens like what Freeport just drilled. It’s called pay dirt.
Freeport management quickly swung into action, deploying four new drilling rigs to the region. The activity on the ground has been hot and heavy ever since. Freeport has poked holes up and down the mining concession for the past year, but not released too much news.
Last summer, the Canadian company released news on a number of drill cores. Basically, the Freeport cores cut into a massive copper-bearing body, with assays ranging from 5% and 6% to over 9% copper, and over large distances.
This is excellent news, especially in a world where people mine ore grades down to a fraction of 1%. The news from last summer indicated a significant new discovery near Bor. The ore grades are superb, while the dimensions of the ore body are impressive — although nobody has worked up any “official” numbers yet.
This news from Bor last summer was enough to move the share price of the Canadian company from 38 cents to over $3. Still, the news didn’t do much to Freeport’s share price, because the big guy has a $30 billion market cap, and it takes a lot to move a needle like that.
Can This Move Freeport’s Needle?
The next question is could other results at Bor move Freeport’s needle? Freeport went quiet about Bor after last summer. Then in Toronto, in March, Freeport presented information at the convention of the Prospectors and Developers Association of Canada (PDAC). There, Freeport offered intriguing tidbits about the quality of the ore at Bor.
The next development came in early April when the Canadian company released more news about the latest drilling at Bor. The news was stunning, and disclosed a section of high-grade core — over 900 feet long, about 200 feet higher than the top of the piers of the Golden Gate Bridge in San Francisco — with a “copper equivalent” grade (CuE, copper, plus gold credits) over 7%. And within this section was a 150-foot stretch with CuE over 18%. Holy smokes!
This is fabulous news. In a geological and mineralogical sense, it’s fair to say that Freeport has drilled into a mineable, high-grade gold body filled with phenomenal levels of copper that only sweeten the deal. Apparently, there’s a gigantic ore body within that mining concession near Bor, and the gold and copper numbers are utterly spectacular. World-class? It’s more like “out-of-this-world” class.
Plus, this new gold-copper discovery is just a few miles down the road from the old workings at Bor. There are existing roads, rail, power, water, natural gas, workforce and an entire ecosystem of supporting businesses and industry. Mineable? You bet.
So could this be among the best recent “copper” discoveries in the world? Freeport management isn’t saying anything, and I don’t want to be accused of overstating the case. But I can sort of feel the vibe as that Freeport needle moves.
Where will that Freeport needle go? It’s hard to say just now, but Freeport’s share price is quite attractive in the $31 range, which is near a two-year low. The dividend yield as you get paid to wait is a decent 3.9%.
Finally, as I noted at the outset, the best place to build a new mine is next to an old mine. In this case, we have not just Freeport, but the ancient Romans to thank.
What’s that in Latin? “Gratias tibi ago!”
Thanks for reading.
Byron W. King
Original article posted on Daily Resource Hunter