Ivan Bebek: Sombrero Could Be One of Copper’s Next Big Discoveries

0:18All right, everybody. We are wrapping up our first day here at the Beaver Creek Precious Metals Summit. Normally, Michael McCray would be sitting here across the table with Ivan Bebek of Copernico Metals. They do trade on the TSX with COPR and on the OTCQB with CPPMF. Mike has allowed me to sit here with Ivan. I haven't seen you in quite some time, man. Like, good to see you. Things are ramping up there in Peru. I mean, how has the summer been? Busy.

0:47Ivan Bebek: I've been in this business for 26 years, and it's great to see you. But this has been the busiest summer of my entire career. Wow. And it's not just Peru. It's the sector coming alive. and we saw we saw the majors do extremely well Agneka went up 7x in the last few years like that's where it starts but in the junior world it's different this time it's different because there's real real supply crunches and metals that take a long time you can find to bring online and that's where the copper story really kicks up but you have a lot of geopolitics and financial crisis on the horizon with gold performing in the record money going into gold ETFs in August of this year,$18 billion, I believe it was.

1:29Ivan Bebek: So market's coming alive. And for somebody that looks for mines and is close to finding a big one, it's perfect timing. Peru's coming alive. Peru had a big shift politically. We went back to the right. It kind of does follow the US, I've noticed in the last 10 years since I've been doing business there. We've never seen real issues with either side. We love both parties, but the right is definitely much more pro-mining. But what also happens, not just in Peru, in Ghana, Mongolia, Ecuador, places I've done or I'm doing business, you start to see a lot of accelerated timelines get moved up, red tape removed as commodity prices start to take off because mining improves about 40 % of the GDP.

2:10Ivan Bebek: They're mining and surrounding networks that support mining. So the more they can encourage that, the better the country will do and that's a big push. For us, I mean, this is year 10, trying to bring this project online for a big discovery. Took a lot of bullets in that weight because that's a long time for any investor. But the project has gotten bigger, it's gotten richer, and the targets have gotten better in that time frame. So the reward is certainly increasing considerably. All right, let's talk about the exploration at hand here. You did sign a drill contract with AK Drilling. that was about two weeks ago, September 10th, to carry out the phase two of its sombrero at Sombrero in the project in Peru.

2:51The agreement commits the company to 5 ,000 meters of diamond drilling. You said in the news release, Ivan, that you expect to start drilling in the coming months pending permission from Peru's mining ministry. Where does that stand today?

3:04Ivan Bebek: That's a great question. So signing a drill contract is a massive ode of confidence on that timeline that's been hard for us to meet. Right now, we're anticipating completion of that permit in October from those authorities you just mentioned. We're in the final stamping process for the start of activities, and then you can drill. So that means it's coming soon. The 5 ,000 meters is a minimum, but we'll likely get into a 20 ,000 to 30 ,000 meter drill program because we have this phase to test seven of the big targets we're going to test. We have a 20 ,000 minimum just as a first pass on them.

3:40Ivan Bebek: Two of those targets are really advanced. One is expanding a resource where we're going to start drilling at the end of November is our estimated timeline. And then the other one is an absolute jewelry box with some of the best copper grades in the world. Tens of meters of 1 % copper, over 100 meters of half to 1 % copper in some areas with a massive geophysical target to go with them. So we plan to start drilling in the most probable areas first. And they also have the potential for massive scale and very rich grades. And then there's five more targets that are a little bit buried by the volcanic ash.

4:12Ivan Bebek: So you can't really see them outcropping. They're a bit more science. And we'll get to those two. And in a perfect world, we drill about 70 holes, 20 ,000 meters by the end of next year. Our permit is substantial. We need one more permit for one of the targets. But for five or six of the seven targets, we're permitted for that. And that permit allows us to drill from 181 spots. We call them pads and we can drill 300 holes and we can use multiple drill rigs, which is the last permit we would need for that area to drill for a mine to be discovered and delineated. So it's a big permit we got this year, a few months behind schedule, but right on time with an exploding copper price market.

4:54Yeah. Out of all those, which one, like the numero uno in your mind has the highest priority for you?

5:00Ivan Bebek: every major mining company in the world is uh is really paying a lot of attention to neoc that's the ones with a lot of one percent number one and number two is furasso um furasso is the most obvious but neoc is just falling off the page huge and obvious it just got a scale that would meet tier one potential around the world so um those two uh neocs one furasso is number two when you drill and you go down and you go out extend these things you don't know what's going to happen the jewelry box can be here it can be there but they advertise from the science of being a certain way and so we will drill durasso first and neoc second neoc will be about the end of q1 is our our speculated timeline okay to start getting into that but both will be drilled sequentially in the first phases here okay uh once those permits are in hand can you start work right away?

5:52Are there any issues regarding access to any of these areas?

5:57Ivan Bebek: So Furasso, yes, we can drill within two and a half, three weeks. That's how long it takes to get to drill there. You mentioned we have the contract in place already, so we're ready to go. NEOC, we have one more community agreement to complete. We're in the final stages of that, and then we have a permit that should land by the end of first quarter. So no to NEOC, yes to Furasso, but we're 10 and a half years in to NEOC with that community and working on it. And we did a tremendous amount of work with the communities and bringing agricultural programs into these areas. And we've hired the people they've allowed us to sample.

6:32Ivan Bebek: So we've got a long-term relationship that we feel is mature enough to be confident that we'll get there pretty quick on the NEOC side as well. Okay. You've stated that Copernicus financed to advance the initial stages of the program. So how far does that go? What is initial stages? Not far enough. So we can drill at it. We don't have any option payments. We don't have any, we can drill at our own pace, right? We will raise more capital when we start drilling or somewhere around that timeframe. But I expect a substantial re-rate on the company once the permits are completed and announced and that second community agreement where NEOC is announced.

7:13Ivan Bebek: And those are both anticipated before the end of October. My roadshow, my marketing show, if you look at my chart, you can see some of those effects in the past 12 months. This is a perpetual marketing roadshow I'm starting that will go to the end of next year because I go as a drill. And it's aggressive. It's probably one of the most aggressive ones I've started in my career. Why? Because when asked what my biggest fear is with this project after 11 years, it's selling it early in a single digit kind of return. When we look at the geology, we look at the global copper market, we look at this being potentially a top 10.

7:49Ivan Bebek: There's a lot of potential, a lot of risk in what I'm talking about, but we see the potential value that it could get into the double digits. And that's our goal as a management team, as a company. If we have early success, some of this project advertises extremely obvious for a discovery. And there's two major mining companies,$90 billion companies that own stakes in our company so far. Newmont and then Anglo Tech is the other one. So we have the audience in our shareholder base. They're patiently waiting and curious to see how it goes. The ones that are not in it, on the outside, everyone's watching it because finding widespread high-grade copper on surface in a massive system, like a lot of scale with it, it's not happening anymore around the globe.

8:33Ivan Bebek: And this ranks as one of those unique opportunities that could meet thresholds for the largest miners in the world. So it's going to be exciting to say the least. This is a SCARN system, and there's also big porphyry targets. There's both. SCARNs are variable. Sometimes you don't find it right away. If you look in our appendix and look at the Las Bombas analog and the drill holes there, some of their holes were sporadic smoke, but they did find now they have the eighth largest copper mine in the world, three or four in production at about 400 or 500 kilotons a year. And that's an analog for a third of the targets that we've identified, and we're going to drill that first third in the beginning.

9:10So the game plan here, it seems, correct me if I'm wrong, but you expect a re-rate with the community agreements and permits for NIOC. You would use that potentially for, it sounds like you'd have to raise some cash. You'd use that as an opportunity to raise some cash. Yeah. You've never had terrible, I mean, you've never had problems accessing capital. But that's kind of the thought here, like, wait for this re-rate, market to finally figure out its appreciation for Sombrero and then go back and raise some capital to put to work?

9:43Ivan Bebek: Yeah, so I've raised close to a billion dollars for companies like this. And so I have no issue raising capital, not with a good project, a really good project. We were going to raise the money in June because we thought we were done our permits in June. And the money offered was 25 million at the time. We just barely marketed the financing. And we took 5 million in because the 20 million said, well, we'll come back when you have permits, right? That interest has grown substantially with the copper market, with this project getting the big permit. And so I have no concern on capital. I'm just price sensitive.

10:17Ivan Bebek: If the price is lower and I don't see it, I would take 10. If the price is higher and we have the right investors we want in there, I would take 20 million dollars. So I'm price sensitive. The re-rate is critical in Peru. If you follow Peru, permits are everything in social access agreements that's why there'd be a lot of credence to it but if you're an investor looking for a new world-class copper discovery something that could really hit that top 10 global threshold this is one of the few on the planet and not only does it have grade and scale but you could drive your Honda Civic to the property it's a paved road there's power lines over the property there's water we pump water for drilling we don't have to truck it and there's a workforce there as well so it's one of those dreams off the side of the highway projects with infrastructure that goes with all the scale and great potential.

11:07Yeah, yeah. Newly elected president Fujimori says she's going to unblock Peru's mining sector. Huge news.

11:14Ivan Bebek: Yeah, we're in the middle of a big permit that's starting to unravel in a good way for us. We're getting it. And we've seen a direct correlation from that statement that she's made in the final parts of this permit. There's definitely a big and a big vibe shift with that which is welcome obviously by us and everyone else in Peru so we're excited and I think the additional permits I've made comments towards I've worked in Mongolia and Africa in Mexico but primarily Mongolia and Africa as a comparison when you see commodity prices left governments that rely on mining as a key commodity tend to really cut the red tape because the profitability goes up in the country benefits considerably best part about our story is that we've had 10 years of building incredible relations with the communities prior to all this excitement right and that will affect a premium in the valley of this actually being something that could potentially turn into a mine down the road so we've done the hard part and if you're hearing this for the first time you've just saved a decade if you're hearing this for the 15th or 20th or 100th time i've given a podcast the weight has become more worthwhile based on what we found in the last year and based on the copper prices and the outlook for copper.

12:26Right. I do want to kind of leave you a last theme to have a conversation about. It's not necessarily about the copper market itself, but copper projects. I feel like we're almost like a holding period. The philo's come off the board. That's continuing to move forward. But the next stage of big tier one copper projects, like who's going to go next, it continues to be a thing. We're waiting any day who's going to acquire what or what's going to get built or finance along the lines and you know obviously sombrero is a lot earlier stage a lot of you know highly advanced projects but it just seems like we are waiting for the next one and what's it going to take to

13:08Ivan Bebek: like if we get one does it snowball into two three four so that's a good topic and i'll try not to be too elaborate on it, but some basic points. Grade is king. And the projects you're referring to, most of those are not high grade. Lower grade copper projects are big earth moving events that cost 10 to 12 billion dollars in capex. The market's improved, but not good enough to bring those online and force a hot M &A type of frenzy, right? M &A is driven when people can't grow organically and make new discoveries like the one we're trying to make with Sombrero, right? so people move laterally and they start merging and you've seen some of the major mining companies merging tech anglo is a perfect example our share of anglo tech um that starts kicking in first right but if you ask what is the value in a good copper discovery it's going to be a rich one what is the average grade of a lot of these ones that haven't transacted they're sub 0.4 sub 0.3 copper there's no shortage of quantity but they need much higher prices for a longer period of time to really support those coming online.

14:14Ivan Bebek: And when those come online, they're going to produce copper slowly because they're not very rich, right? And those are going to be socially very difficult to permit in this environment. Big earth moving events, huge pits, super pits and stuff like that, right? So what triggers the copper frenzy, the M &A? There's some great things being built that are going to be profitable mines. Well, if you don't sell during the discovery phase, like I sold Caden to Agnico Eagle, if you make it all the way into development in and you start to stare at that big capex the m &a is going to wait right because there's no rush and there's a lot of heavy lifting a lot of big capital raises there at some point people will try to consolidate it's not yet but i think it's coming i just don't think there's the quality out there yet yeah buying so it's missing quality everybody's really excited about six dollar 50 cent copper because everything works.

15:070.3, 0.4 absolutely works at$6.50. But are we maybe

15:16discounting$6.50 copper to the point where this thing can come back to$5? No.

15:23Ivan Bebek: You don't think so? It just got to$6.50, right? Yeah. And if you're going to write a$10 billion check, it's going to have to be at$8 or$10 copper, not$6.50 copper. You're marginally profitable at$650. It's a very, very interesting market. These are massive, massive undertakings financially. I think I was just going to say, there's some danger to$650. Yeah, you're still volatile. Copper could drift. If you look at inventories, if you look at what's happening in the open markets, if you listen to Robert Friedland and watch some of his posts and a lot of information he's been putting out about copper, it's going to go much higher per ton.

16:01Ivan Bebek: It's going to go much higher. But at this stage, the new magic number where we see in gold used to be certain thresholds. If we cross that number, the market goes into frenzy. It should be there in equities with good projects. I don't see it yet. There's a lag, but there's a big wave coming. I just came through New York. I'm in Beaver Creek here. I head to Germany and Switzerland next week. and the inner interest I'm seeing now towards copper equities is like the early stages of crypto and of AI recently. Rooms are filling, eyes are open, wide open. So back to your comment about that, I think you need more stability over time at these higher prices to bring those other 0.3, 0.4 copper mines online.

16:45Okay. All right. Ivan, thanks so much. Always appreciate our conversations. I'll send you back to Mike for the next one, but it's good to see you and catch up with the team. Copernico Metals does trade on the TSX with COPR and on the OTCQB with CPPMF. Have a great rest of your week, Ivan. Thank you so much. The information presented should not be considered investment advice. Mining Stock Daily and its affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.