One of Australia’s top mining journalists, Kristie Batten, writes for Stockhead every week in her regular column keeping a watchful eye on the movers and shakers of the small cap resources scene.
Caravel Minerals (ASX:CVV) shares have burst out of the gates in January, hitting the highest level since April 2022.
It comes ahead of a big six months for the copper hopeful, with a potential strategic deal in the works and a definitive feasibility study on the Caravel copper project, 150km north of Perth.
The project has a substantial resource of 1.27 billion tonnes at 0.24% copper for 3.03 million tonnes of contained copper, as well as 60,600t of contained molybdenum, 895,100 ounces of contained gold and 46.3 million ounces of contained silver.
What it lacks in grade, it makes up for in scale with Caravel now billed as one of Australia’s largest undeveloped copper projects.
Based on a 2022 pre-feasibility study, the project has pre-production capital costs of A$1.6-1.7 billion and is set to produce around 62,000tpa of copper at all-in sustaining costs of US$2.37 per pound over a mine life of at least 25 years.
Using a US$4/lb copper price, the project has a pre-tax net present value of A$2 billion.
Project being de-risked
A definitive feasibility study is underway and due for completion in the current half.
In November, Caravel released an updated mine plan for the project, confirming a long-life operation with total material movement of 1.6Bt, comprising 719Mt of ore at an average diluted grade of 0.24% copper and 881Mt of waste material, resulting in a low life-of-mine strip ratio of 1.22:1.
The 30Mt per annum project is set to produce 1.527Mt of copper, 23,300t of molybdenum metal, 286,000oz of gold and 18.3Moz of silver over 25 years.
The company said the updated strategic mine plan would reduce initial capital cost requirements and potentially lower operating costs.
Canaccord Genuity analyst Paul Howard expects the Caravel project to produce around 58,000tpa of payable copper at AISC of US$1.82 per pound of copper, net of by-product credits.
“Overall, the updated plan confirms Caravel as a technically robust, capital-efficient long-life copper project, capable of sustaining 30Mtpa throughput and leveraging strong early cashflows from high-grade zones,” he said.
Just before Christmas, Caravel said engineering studies for the DFS were advanced and Mining Plus had been appointed to deliver the DFS mine plan and updated reserve.
Environmental studies are nearing completion, keeping the company on track to resubmit its final environmental review document in mid-2026.
Partner talks underway
In November, Caravel announced it had signed a non-binding memorandum of understanding with a subsidiary of Indian resources giant Adani Enterprises.
The MoU will explore a potential investment in Caravel or the project, an offtake agreement, development collaboration and procurement and equipment supply and project funding.
A due diligence site visit is planned for the end of this month and the parties have agreed to signing a binding term sheet by the end of the March quarter.
Canaccord’s Howard noted that Adani was building a US$1.2 billion copper smelter in Gujarat, India.
Caravel has been working with leading banks to structure financing, including export credit agency-supported solutions, alongside traditional debt and equity.
In late 2023, Caravel received a letter of interest from the Export and Investment Fund of Denmark for potential funding tied to Danish equipment supplier FLSmidth.
Howard is modelling a 25% project selldown with the balance of capital funded through debt and equity but noted a deal with Adani could materially change that.
“Should the MoU progress to a binding agreement and culminate in a direct investment by Adani, or other group(s) into Caravel, it would significantly de-risk both the funding pathway and project execution by introducing a strategic, well-capitalised partner with the technical and financial capacity to underpin development, in our view,” he said.
Copper on a tear
The copper price surged by more than 45% in 2025, setting a new record average price for the year of US$4.52 per pound.
It’s started 2026 strongly, briefly surpassing US$6/lb for the first time.
Shares in Caravel are up by 19% since the start of the year.
Caravel is using a US$4.20/lb price in the DFS but the uplift is good news for project economics.
Just before Christmas, Argonaut updated its 2026 copper price forecast by 7% to US$4.99/lb and its 2027 forecast by 11% to US$5.50/lb.
“The demand thematic for copper remains strong, with the current surpluses likely to be eroded during 2026,” head of research Hayden Bairstow said.
“Once the market shifts to deficit, we expect the timelines for new supply growth will be more closely scrutinised.
“The increased focus on supply risks is likely to occur in conjunction with the improving demand backdrop, translating to a more positive outlook for copper.”
Bairstow said decarbonisation and renewable energy infrastructure build-out, combined with rising global electric vehicle sales, continued to support a more bullish long-term outlook for copper.
“The increased focus on the global battery storage build-out is creating upside risk to consensus demand forecasts,” he said.
“The spectre of a more aggressive interest rate-cutting cycle is also likely to improve sentiment for the copper price.”
