The majority of current conversations between family, friends and colleagues are destined to arrive at either pandemic, political, or commodities related jargon. While many discussions are surely based on vastly altered opinions drawn from divisive sources of information, one must cut through the vines to uncover factual information supported by real-time economics to come to terms with actuality. The reality of today remains focused on saving the planet from carbon emissions and marching towards renewables as quickly as possible and hidden beneath the surface of almost every single renewable energy project lies an abundance of reddish, extremely ductile, recyclable metal that is an unusually good conductor of electricity and heat, Copper.

Supply and Demand of Current Copper Markets:

Copper has been deemed an essential material since pre-historic times, being one of the first metals to ever be used by humans. While the applications have evolved over many years, the world once again finds itself focused on the robust material to support several industries such as construction, power generation and transmission, electronics manufacturing, industrial machinery, and transportation vehicles. While you may not see it, copper plays a vital role in our daily lives, used primarily for wiring and plumbing, heating and cooling systems, and telecommunications that we use both at home and at the office.

Additionally, Copper is essential in automotive through motors, wiring and connectors, and brakes and bearings, with the average car containing roughly 20 kg of copper. This number increases drastically for the production of electric vehicles, as traditional fossil fuel systems are replaced with electric applications. For this reason alone, Copper demand should continue to experience stellar growth as global adoption of renewables is pursued aggressively.

Reports have stated that Copper is headed towards a multi-year deficit based on both the disruption to supply at the hands of the pandemic, as well as the increased global demand driven by the surge in renewable energies and electric vehicle interests. Naturally, a decrease in supply combined with an increase in demand creates the perfect storm for investors with foresight into Copper investments. Call it smart money if you wish, but Copper has already experienced unprecedented growth since mid-March, and speculations can be made that this is only the beginning.

So, what is the expectation for Copper pricing? Some analysts, in extremely bullish scenarios, have mentioned the potential for copper to reach US $5.00 per pound, with a base scenario of US $4.50 per pound, however if the spectrum of supply vs demand spirals out of control, there remains a realistic possibility that the rise of Copper prices continue well into the future.

While a realistic target for the potential price of copper remains speculative as we venture into 2021, one company with a major African asset, Deep South Resources Inc. (TSXV: DSM) is well positioned to be a major solution to current supply shortages and profit greatly as the price of Copper continues to enjoy its historic run.

Deep South Resources and its flagship Haib Copper Deposit:

Deep South Resources Inc. (TSXV: DSM) presents as a mineral and exploration company that remains actively involved in the acquisition, exploration, and development of major African mineral properties. The company boasts a growth strategy aimed at the use and assessment of environmentally friendly technologies in the development of Copper projects, embracing the green revolution. Commonly unheard of from the majority of mining companies, Deep South provides humbling outlook towards the sustainability of traditional mining and the adoption of renewables, demonstrating the potential for coexistence.

Currently, Deep South boasts 100% ownership in its Haib Copper Deposit found in the south of Namibia, one of the largest of its kind in Africa. It can be argued that Haib is the oldest porphyry deposit in the world, having been discovered by German prospectors around the late 1800’s or early 1900’s. Featuring extensive exploration over the years through various drill programs, metalogical test work and a feasibility study conducted in the mid-nineties, Haib Copper Deposit offered an advantageous database for Deep-South to inherit and was immediately considered a main asset.

The property contains a NI 43-101 compliant indicated resource estimate of 457 MT @ 0.31% Cu for 3.12 billion lbs. of Copper and an inferred resource estimate of 342 MT @ 0.29% Cu for 2.19 billion lbs. Copper. The company recently announced the results of the updated Preliminary Economic Assessment (“PEA”) from METS Engineering Group (“METS”) on its Haib Copper Project in Namibia, revealing dramatic improvements using a base case model price of US $3.00 per lb. which shows an after-tax NPV of US $957 million and an after tax IRP of 29.7%.

Pierre Leveille, President and CEO of Deep-South continues to state “Moreover, at a copper price of US $3.50 per lb. our Haib Copper project shows an after-tax NPV of US $1.3 billion and an after-tax IRP of 42.1%. Of note, our current market capitalization is only 0.8% of this NPV. We are highly encouraged by the solid copper market outlook and with the funds in-hand we are confident that our coming exploration and development program will bring strong added value in 2021 and onward.”

To understand the magnitude of opportunity that the Haib Copper Deposit presents, base understanding of NPV must be outlined. Net Presence Value (“NPV”) can be defined as the difference between the present value of cash inflows and the recent value of cash outflows over a period of time. This calculation is typically used in capital budgeting and investment planning to investigate projected profitability of investments or projects. A positive NPV reveals that the projected earnings in present dollars exceeds the anticipated costs, also in present dollars.

When combining current Copper prices with Table 2: Scenario 2 Project Metrics from Deep-South Resources recent Haib Copper PEA, the potential economic upside of higher recoveries creates an after-tax NPV of US $1.78 billion, almost double the after-tax NPV of US $957 million at the time of evaluation. It must be noted that mineral resource estimates do not account for mineability, selectivity, mining loss and dilution and are considered too speculative geologically to allow for certainty towards the preliminary economic assessment realization.

That being said, Deep-South Resources just recently announced that it has commenced drilling at Haib, with the first drill having been delivered and a second being mobilized for delivery within days. The main focus of the campaign is seemingly directed towards increasing the higher-grade zone of the deposit unearthed in 2019 while attempting to advance the project towards an acceptable feasibility stage. Having recently raised roughly US $4.6 million through a private placement, Deep-South appears persistent on delivering fully funded drill results that will not only solidify the robust status of the Haib deposit but continue to add multitudinous value to its investors along the way.

With drilling set to begin any day, investors can look forward to imminent results to be produced from the 10,000-meter program being performed on the higher-grade zone of the deposit. The first 5,000 meters will be drilled to infill gaps in previous drilling with ambitions of expanding the higher-grade zone and improving the overall grade of the project. Past drill intersects reveal some impressive results:

• HB026: 12m @ 1.81% Cu and 30 ppm Mo from 38m
• HB041: 56m @ 0.76% Cu and 74 ppm Mo from 18m
• GFMHB09: 40m @ 0.64% Cu and 75 ppm Mo from 150m
• GFMHB10: 140m @ 0.62% Cu and 57 ppm Mo from 20m
• GFMHB08: 230m @ 0.59% Cu and 64 ppm Mo from 86m
• GFMHB07: 112m @ 0.52% Cu and 37 ppm Mo from 14m
• HB092: 44m @ 0.53% Cu and 30 ppm Mo from 60m

Deep-South Resources also revealed plans to drill holes to depth in excess of 350 meters to test the vertical extent of the deposit. The outcome of the first phase of drilling will ultimately serve as a basis for the execution of the additional 5000 meters, which potentially include testing other anomalies located elsewhere within the Haib Copper Deposit.

Undervaluation:

Combing the market for comparisons, Deep-South resources should easily replicate the successes of both Marimaca Copper Corp. and Cordoba Minerals Corp. when comparing recorded PEA valuations:

Marimaca Copper Corp. (TSX: MARI) is currently valued at an estimated $252 million market cap. Announced on August 4, 2020, the company distributed results from its Preliminary Economic Assessment (“PEA”) for the company’s flagship Marimaca Copper Project in northern Chile. The highlights of the report reveal an after-tax NPV of US $524 million and an after-tax IRR of 33.5% at a price of US $3.15 per pound copper. Assuming an increase to US $3.45 per pound copper, Marimaca increases its after-tax NVP to US $640 million and an after-tax IRR of 38%.

Cordoba Minerals Corp. (TSXV: CDB) is currently valued at an estimated $62 million market cap. It did, however, climb to a 52-week high in September 2020 to achieve an estimated $136 million market cap. A rather outdated PEA from July 2019 reveals that, at the time, the companies San Matias Copper-Gold-Silver Project carried an after-tax NVP of US $210.7 million and an after-tax IRR of 20.3% at a price of US $3.25 per pound copper.

Deep-South Resources Inc. (DSM.V) is currently valued at an estimated $24 million market cap. That being said, its recently completed PEA, combined with the surging price of copper in accordance with the global shortage of supply vs the increase to demand leaves one to ponder how grossly undervalued this company remains while sitting on its Haib Copper Deposit and the immense potential upside it contains. The company currently sits at a fractional valuation in comparison to its competitors, and investors will not take long to discover this low risk, high reward opportunity within the Copper mining sector that boasts a realistic opportunity to produce an estimated 3-10 times growth factor from current levels.

Forward:

As the drills continue to turn and the results of pending assays become available, the company should have ample opportunity to provide its investors with valuable, continuous news flow that will only continue to solidify Deep-South Resources and its Haib Copper Deposit as one of the major solutions to the imminent Copper shortage of the not-so-distant future. As long as Copper remains heavily used and continually targeted across several major industries with no signs of slowing, investors should take note and be mindful of this prospective copper company and its advantageous offering towards exponential portfolio growth and a sustainable renewables future.

Deep-South Resources (TSXV: DSM) last traded at $0.205.