Is This Copper Co. Extremely Undervalued?

Technical Analyst Clive Maund shares his thoughts on Interra Copper Corp. (Imcx:CSE; Imimf:Otcqb; 3MX:FRA) to explain why he believes it is an Immediate Buy.

Interra Copper Corp. (IMCX:CSE; IMIMF:OTCQB; 3MX:FRA) hasn’t done much since we looked at it in August, and has actually slipped a little lower, but there is big news out of the company this morning that it is thought could positively impact the share price, which is that the company has entered into a purchase agreement for the Stars Copper Project.

The difference that this will make to the company is best summed up by President and CEO of Interra Brian Thurston, who commented, “Acquiring the Stars Property is transformative for Interra. The company changes from a junior exploring to making a discovery to a junior with a discovery that is looking to define a resource. The Stars Property has two complementary exploration upsides, with an established zone of higher-grade mineralization, that Interra can grow and define and a much broader under-explored area with high potential for new discovery.”

So this development is viewed as a big “move to the right” on a chart showing the steps from exploring to being a producer. For this reason alone, the company is viewed as a candidate for revaluation, especially given its currently very low valuation and, more generally, the rapidly improving outlook for the copper price. The transaction contemplated by the Purchase Agreement is expected to close on or before December 15, 2024, and is subject to customary closing conditions and approvals, including Aurwest shareholder approval as it relates to the sale of the Property.

So, if we look at the following slide from the company’s investor deck showing its priorities for 2024, we see that with respect to Item 3, they weren’t just talking about it; they did it.

If we look at the slide showing the priorities for 2025 and compare them with the priorities for this year, we see an important difference, which is that at Thane, there are now 10 large high-priority copper-gold mineralized targets.

Before reviewing the latest stock charts for the company, it is worth reminding ourselves about the company’s two main properties prior to the proposed acquisition of Stars, which are Thane and Rip, whose locations in British Columbia are shown on the following slide

This next slide sets out the attributes of the Thane copper-gold project.

This one sets out the attributes of the Rip property.

Two copper–moly targets have been identified at Rip as a result of an aerial survey undertaken this year, whose most important findings are shown on the following slide.

Since the August article appeared, a new copper zone has been discovered at Thane, which is called the Bananas showing. It, along with the previously known Gail showing, are ranked as the highest priorities, with strong copper-gold mineralized alteration systems in favorable host rocks.

Lastly, we take a look at the capital structure of the company as set out in the latest investor deck, with the most important point to note is that of the 42.6 million shares in issue, an estimated 44% are in the float.

Turning to the charts, we see on the long-term 7-year chart that Interra Copper stock is at the tail end of a seemingly relentless brutal bear market that has, at the current price, erased 99% of its value at its 2020 peak and, according to all normal metrics it is extremely undervalued here.

Yet despite the horrendous decline in the stock price, its Accumulation line has continued to advance, and we can see on the 2-year chart that its rate of climb has been accelerating over the past year.

By itself, this is bullish and indicates clandestine accumulation even as the stock price has fallen, and the longer it goes on, the greater is the chance that a reversal to the upside will occur, and now, with the announcement of the planned acquisition of the Stars Project, we may, at last, have the necessary catalyst to make this happen.

Even though the price is still technically in a downtrend with the price below bearishly aligned moving averages there are other bullish factors to observe on this chart that point to a reversal soon and these include the increasing bunching of price and moving averages such as typically precedes a reversal, the predominance of upside volume in recent months and downside momentum having dropped out as shown by the MACD indicator.

Lastly, the 6-month chart shows recent action in much more detail. In the original article on Interra posted in August, it was not expected to drop any further but it did, although it was not by much, and now it is suspected to be at the second low of a small Double Bottom whose first low was in the middle of last month and whose second low just occurred. It should pick up from here, and it is thought that today’s news will do it.