An important change is coming to the London Metal Exchange (LME) in September 29th, the biggest and by far the most important copper trading arena in the world.

The LME is extending future contracts on the red metal to 123 months out, i.e. 10 years into the future. Presently, copper futures contracts at the LME are available up to 63 months into the future. The LME is also extending contracts on Aluminium to 10 years, and Zinc, Lead and Nickel to 5 years.

Why is this so important?

Well, it's going to substantially change the way copper mining juniors can value their future production. Right now, nearly all copper juniors are based on long term copper prices of between U$1.50 and $2 per Lb (with $1.50/lb being the norm).

After September, if these junior companies can go to the LME and secure much higher prices for their longer-term production, it makes the projects worth that much more.

Bottom Line: In a world where mining costs have been rising, projects now in the pipeline can price their projected future production more accurately to justify and attract the funds they need. Or in other words, junior copper projects are about to get a dose of added value.

Time to redo those NPV and IRR calculations?

Source: http://incakolanews.blogspot.com/200...