Freeport's New Exploration Play: Bor Serbia
I was on the road last week, with some readers visiting an ore deposit in Serbia.
As the saying goes, it’s investable. Thus, the other day, my intrepid travel mates and I began our trek in Belgrade, Serbia, near the “Istanbul Gate” — part of the old Roman road system and for many centuries thereafter the road to Constantinople, now Istanbul, Turkey.
We spent two days visiting mining and energy projects in Serbia. Here’s what you need to know…
We visited the copper mining district of Bor, over east, toward Romania. Bor is where Freeport-McMoRan Copper & Gold (FCX) is spending about $2 million per month on a major drilling program to extend the limits of a known copper-bearing trend. Our hosts were representatives of a smaller company that’s a junior-venture partner with Freeport. I cover this small company in my other newsletter, Energy & Scarcity Investor.
They Don’t Call It “Bornite” for Nothing!
Things at Bor are promising. In general, Bor has yielded rich resources since Roman times. In fact, Bor is what’s called the “type locale” for the copper-bearing mineral “bornite” — a copper-iron-sulfide mineral (Cu5FeS4) also known as “peacock ore,” due to its bluish luster.
Super-high-grade bluish bornite ore, straight from the drill core. BWK Photo.
Freeport has eight rigs drilling around Bor, all working 24/7. Evidently, Freeport management believes that something is there, right? Our group saw six of the eight rigs, with the other two on the far side of a distant hill, along a road that seemed too rough to risk our vehicle’s tires and suspension system.
I had long talks with a couple of geologists who work on the project, as well as the owner of one of the drilling companies under contract with Freeport. Plus, I spoke with several drill rig workers who had a limited command of English, but excellent skills for describing things with their hands and amusing facial gestures. (You kind of had to be there.)
What’s Down There?
There’s much about the Bor area drilling and results that are proprietary to Freeport, and I respect that. Then again, there are other things that are public knowledge, if you know where to look and how to understand what you see.
First, I should note a few basic things. Bor is covered with mining infrastructure dating back to the 1890s or so. There are roads, rail, water, electric power, natural gas, a town with a skilled workforce and much more. Political support for revitalizing the mining industry in the region is strong.
Thus, in many respects, there’s a great foundation for development at Bor, which makes life a lot easier than, say, trying to put together a project in the wilds of some jungle on the far side of the Earth.
Currently, the challenge for Freeport is to figure out the size and scope of the Bor deposit. We know that the ore is there — see photo above, for example. It’s all based on a volcanic episode that occurred about 86 million years ago, when the mineralization was emplaced and then got buried under other rocks.
Workers move coring pipe at drill rig near Bor, Serbia. BWK Photo.
Whatever is there, it’s down underground, and certainly not evident to the naked eye. It just takes plenty of labor (meaning Hard! Work!) and capital to drill holes and get a feel for the dimensions.
Using ballpark numbers, each drill hole goes down about 1,500 meters — yes, that’s deep. Each drill hole costs, let’s say, about $450,000. So your “exploration” cost is in the range of $300 per meter — about $100 per foot, give or take. In other words, this work is not for the weak of heart or people with skinny checkbooks.
The reward for all this effort is that Freeport has pulled out cores with stunning ore assemblages, such as the image of the bornite above. Then again, much of this deposit appears to be what’s called “porphyry,” with very strong grades — in the 1-2% range. It’s an andesite-type of rock, now impregnated with microscopic copper mineralization — although I could see evident pyrite and chalcopyrite in some samples. In essence, the porphyry is the large-scale pay dirt — enough to last many decades in terms of mine life.
Andesite copper porphyry sample, right from the core drill. BWK Photo.
I’ll refrain from throwing more ore-grade numbers at you, but one Freeport executive was recently quoted in public comparing Bor to the super-giant Grasberg Project in Indonesia. That alone makes Bor a potential world-class item. That alone makes Freeport a long-term player, even in the world of Big Copper.
Meanwhile, the World Keeps Spinning…
Even though I’ve been in Serbia visiting mines, I know that back home the markets are taking a whack out of energy and resource shares. Freeport shares have felt the crunch, along with much else in the metal and energy space, like gold, silver, copper and more.
We’re still living with the Ben Bernanke blowback from his comments last week about changing (if not ending) Federal Reserve stimulus efforts. And that’s really quite strange. This U.S. economy — let alone global economy — is what three years of “stimulus” looks like? Wow. Any other ideas, Ben?
Meanwhile, Bor is a long-term development. Freeport is still exploring, in the sense that it’s drilling holes and sniffing around deep down. There’s no decision to move ahead yet. And even when that kind of decision gets made, the Bor area project will require more years to define, develop and build out, no matter how blue that bornite ore is that comes from the drill rigs.
So with Freeport and Bor, we’re looking at the long term. But at least there’s a long term at which to look. Frankly, I’d rather be Freeport looking at Bor than Ben Bernanke trying to figure out how the U.S. economy is ever going to pay off that national debt.
Thanks for reading.
Byron W. King
Original article posted on Daily Resource Hunter