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December 2013
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International Enexco Gives a Base Metal (and Uranium) Balance to a Junior Resource Portfolio


By Financial Press

( – In the world of junior resource/mining stocks, investors tend to gravitate toward gold/silver plays as those get the most press and let’s face it, gold sells. Rational and successful mining investors have long known that base metal inclusion for diversity and balance has a place in the mix, just as with any asset class.

Enter Vancouver-based International Enexco Ltd., (TSX Venture: IEC) a quality junior copper and uranium concern. Well funded (approximately $1.7 million in cash) with no debt, great metrics, coupled with world-class partners and right in the midst of the prolific and uranium-rich Athabasca Basin and you have an investment with compelling potential. Not to mention the Company’s 100 percent owned Contact Copper Project in Nevada.


On October 1st, the Company issued a PFS updating the resource and production projections of the Contact Copper property. The report used a copper price of US$3.20 a pound and the results are impressive.

In the mining friendly area of Elko County, Nevada, the property is 100% owned by IEC. It includes 2600 acres of patented land as well as 6800 acres of unpatented claims. Resource and reserve estimates from the PFS:

Mineral Resource Estimate at 0.07% Cu Cut-off


Cu %


Pounds Cu









Total Measured + Indicated








(Note: Inferred should be viewed as speculative)

Mineral Reserve Estimate at 0.07% Cu Cut-off


Cu %


Pounds Cu









Total Proven + Probable




Mineralization has been established by drilling 7500 feet in length and 3000 feet in width. The PFS delivered exceptional potential including a 95% increase in proven and probable as well as forecasting average annual copper production of almost 50 million pounds a year over 9.5 years. With an extremely competitive per-pound cash cost of US$1.73 (including costs and royalties) IEC gains excellent price stability. Payback period is 3.4 years after tax. The Company has decided that the results obtained from the PFS warrant the commissioning of a full feasibility study.

For context, IEC’s low cash cost reduces price risk amidst an industry that boasts some very high cost producers. Should the price of copper reduce to $2.80 for example, it could defer expansion plans or shutter unprofitable production. And since the world needs copper—replacing about 1.1 billion pounds annually—low cost producers such as IEC have the edge.

Before tax NPV at 8% discount and IRR are forecast at $136 million and 30.4% while after tax numbers are NPV-8% of $107 million and IRR of 25.9%.

Uranium Properties

Mann Lake

IEC’s two uranium exploration sites are equally as compelling. Bachmann Lake (early stage) and Mann Lake (advanced stage) are both located in the Athabasca region of Saskatchewan and have significant JV partners. The area is undoubtedly the one of the most prolific and highest-grade uranium regions in the world.

At Mann Lake, with operator Cameco (52.5%), Enexco (30%) and AREVA (17.5%), IEC is in the company of two of the largest uranium concerns in the world. The recently announced 2014 drill program set to commence in January, will drill 13k metres through 18 holes. Of the $2.9 million program, IEC will fund just under $900,000. The purpose is to:

‘…evaluate three types of targets; a preliminary evaluation of the area footwall to the western axis of the C trend, the completion of the systematic evaluation of the remaining targets along the main C trend and the preliminary evaluation of the conductive features near the western margin of the Wollaston sedimentary corridor’.

To date the two highest grade intervals are 7.12% U308 over 25m and 5.53U308 over 0.4 m at depths of 500m.

Bachmann Lake

IEC earned a 20 interest in Bachmann Lake with Denison Mines by funding the 2013 program with $500,000. That program, which commenced in August 2013, drilled four holes in the 11,400 hectare property and produced results that warrant further drilling, including a step out in both directions along the strike, particularly with regard to the BH-13-05 which was the fourth hole to intersect the CR-2 conductor. The program tested two other conductors; ML-2 and ML-1, 2.5 to 5 km apart on the property.

The price of uranium (U308) at roughly US$36 a pound is far from its peak at just under US$140 a pound in 2007. Fukushima didn’t help– all but taking Japan, the world’s third largest producer of nuclear power offline and dumping the spot price by 50%. That said, Japan continues to honour its uranium contracts and has established a stockpile of about 100 million pounds. That overhang is a risk for investors and that stockpile would supply Japan for 4-5 years. Given that Japan is using importing extremely expensive fossil fuels to augment, there is a belief amongst some analysts that Japan will eventually return to nuclear power. An indication of Japan rising will translate into more utilities initiating long-term contracts and the current price rising. Until then, and it could be a while, U308 prices will likely idle at these base-building levels.

That said, Cameco is the proxy for the global uranium market. For IEC to have a strong partner such as Cameco in the Athabasca Basin speaks to its potential as a quality junior uranium play.

Cameco is responsible for 14% of global uranium supply and has had decent numbers of late. The stock appears to be establishing a base trading between US$17-$20 for the last couple of years.

The Bottom Line

I have to agree with IEC COO Bill Willoughby who stated,

“For investors, IEC is about balance. The Company is anchored with a tangible copper asset and has partnered with the best uranium companies in the world in one of the best global areas. As we extend drilling into the Copper Ridge and New York prospects at Contact,  our copper resources have potential for growth. Also the fact that we intend to produce to copper cathode eliminates the need for smelting and off-site costs which bodes well for developing shareholder value.’

IEC trades at approximately $0.42 a share. 52-week range has been $0.23-$0.70. Market cap just under $17 million with 40 million shares outstanding (Insiders holding 19.2%).

For any serious investor building a diversified junior resource portfolio, IEC appears a decent inclusion.

Bob Beaty for The Bottom Line Report.

International Enexco Ltd.

2060 — 777 Hornby Street
Vancouver, B.C.
Canada V6Z 1T7
Office: + 1 604 669 8368
Fax: + 1 604 662 3231

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