Brent Cook: Tips For Diversifying Beyond Gold

Last month's landslide at Utah's Bingham Canyon, one of the world's largest copper mines, triggered significant discussion on possible copper shortages. Brent Cook, veteran geologist and publisher of Exploration Insights, puts the landslide into perspective in this interview with The Metals Report. And for investors who want to dig out profit potential beyond the yellow metal, Cook gives us a byproduct primer and suggests base metals are a great way to diversify. Last month's landslide at Utah's Bingham Canyon, one of the world's largest copper mines, triggered significant discussion on possible copper shortages. Brent Cook, veteran geologist and publisher of Exploration Insights, puts the landslide into perspective in this interview with The Metals Report. And for investors who want to dig out profit potential beyond the yellow metal, Cook gives us a byproduct primer and suggests base metals are a great way to diversify.

The Metals Report: In April, a landslide shut down operations at one of the largest copper mines in the world, Rio Tinto Plc's (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) Bingham Canyon mine. Thankfully, no one was injured. Are landslides always a threat at large, open-pit mines? Will this change the standards for how mines are built and their size?

Brent Cook: Landslides and rock falls are always an issue in open pits, and companies put a lot of effort into understanding the rock mechanics in order to build these mines and pits properly. They generally are not a major problem if sufficient upfront studies are done. The Bingham pit was opened in the early 1900s and has been expanding since then. While the slide is a major event, I do not think it will change how anyone builds mines per se.

TMR: Rio Tinto was looking at another expansion there. Will this make it tougher for that mine, or another of similar size, to expand?

BC: What happened at Bingham should not affect other mines of that size. I imagine the company is going through a lot of engineering analysis and trade-off studies to figure out what exactly it has to do at Bingham this year and over the next decade.

As you can see from the photo [below], this was a major landslide. I've worked at Bingham, so I know it real well. The mine produces about 400,000 ounces of gold and 430,000 tons of copper annually but I would guess there's enough ore stockpiled to last several weeks.

The slide represents close to 165 million tons (165 Mt) of rock that will need to be moved out eventually—the equivalent of moving a whole mine. Kennecott hasn't released specific plans so I don't know how much, if any, of the slide material would go to the ore pile versus waste. As I recall, the company had plans to go underground.

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TMR: You think it will go underground instead of expanding the open pit?

BC: No, the underground mine was to be sequenced in and the open pit continued or expanded. But now that has to be one of the options being considered.

TMR: I understand that mine produced 25% of U.S. total supply. How will that affect the copper market dynamics?

BC: Not all that much, really. There is a lot of copper sitting in Chinese and London Metal Exchange warehouses. In terms of the global copper market, this mine represents only about 1%, but close to 25% of the U.S. market.

TMR: Copper is considered an economic indicator. Is the fact that prices have dropped from $3.70/pound ($3.70lb) in January to $3.10/lb in April an indicator that the world's economies are not recovering? Or is there just too much copper in the market right now, sitting in warehouses as you mentioned?

BC: That is a tough call. Copper has always been considered an indicator of future economic stability and growth. But in the past decade, speculators have taken heavily to buying and selling copper. I don't think anyone really knows how much copper is being hoarded in China as an investment, or for pure speculation. I have seen photos published by Standard Chartered Bank showing Brent Cook brings more than 30 years of experience to his role as a geologist, consultant and investment adviser. His knowledge spans all areas of the mining business, from the conceptual stage through detailed technical and financial modeling related to mine development and production. Cook's weekly Exploration Insights newsletter focuses on early discovery, high-reward opportunities, primarily among junior mining and exploration companies.

DISCLOSURE:
1) JT Long conducted this interview for The Metals Report and provides services to The Metals Report as an employee. She or her family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Metals Report: MAG Silver Corp., Atico Mining Corp. and Almaden Minerals Ltd. Fission Uranium Corp. is a sponsor of The Energy Report. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Brent Cook: I or my family own shares of the following companies mentioned in this interview: Fission Uranium Corp., MAG Silver Corp., Almaden Minerals Ltd., Alderon Iron Ore Corp., Denison Mines Corp. and Synodon Inc. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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Written By: The Gold Report