Faraday Copper (TSX: FDY; US-OTC: CPPKF) expects confirmation drilling at BHP's (NYSE, LSE, ASX: BHP) former San Manuel mine in Arizona to underpin a combined resource of more than 18 billion lb. of copper, a scale the company says would rank among the largest undeveloped copper resources in the United States.

"We think it will be north of 18 billion lb. of copper," CEO Paul Harbidge told The Northern Miner on a call this week. "That's going to be one of the largest undeveloped copper resources in the entire U.S."

The San Manuel acquisition is scheduled to close this month. It hands Faraday control of a past-producing copper mine, roughly 109 sq. km of prospective private land, a water-supply agreement and established infrastructure beside its former flagship Copper Creek project next door. The assets sit about two hours by road southeast of Phoenix.

Arizona, where the assets sit, supplies the bulk of American copper mine output, while the United States still imports a significant share of the refined metal it consumes. Among the comparably scaled undeveloped U.S. copper assets is the Rio Tinto-operated Resolution project, also in Arizona, in which BHP is a partner.

The deal would transform Faraday from a single-project explorer into a district developer planning two open pits and two underground mines around shared infrastructure. Faraday plans at least 23,000 metres of drilling at San Manuel beginning in the fourth quarter, with a combined resource expected around mid-2027.

Confirming a historical estimate

The acquisition leaves Faraday with work to do. San Manuel's remaining copper estimate is historical, BHP discarded the old drill core, and the combined mine plan has not yet been studied. Faraday must confirm the resource with new drilling before it can fold San Manuel into a current technical study.

Under National Instrument 43-101, the Canadian disclosure standard governing how TSX-listed miners report resources, a historical estimate cannot be treated as current until a qualified person verifies it with fresh work.

The company holds San Manuel's historical drilling, assay and geological records, including information from about 440,000 metres of drilling. Because BHP discarded the core, Faraday has to drill new holes before it can classify the old estimate under current disclosure standards.

San Manuel began underground production in 1955, later adding open-pit and in-situ leaching. The operation processed about 800 million tonnes grading 0.66% copper and produced more than 4.5 million tonnes of the metal before low prices ended mining in 1999. BHP had rehabilitated the site by 2003, having taken control of the complex through its 1996 acquisition of Magma Copper.

Copper Creek already holds 421.9 million measured and indicated tonnes grading 0.45% copper for 4.2 billion lb. of contained metal, according to a preliminary economic assessment issued in May 2023. Inferred resources add 83.6 million tonnes at 0.34% copper for 628 million contained pounds. Faraday completed 88 holes totalling 22,510 metres in its latest Copper Creek program before pausing in June to accommodate the acquisition and Arizona's summer storms. More assay results remain pending.

Staged build

Faraday intends to place shared facilities on the former San Manuel mine lands rather than duplicate infrastructure at Copper Creek. The acquisition is served by roads, rail, gas and power.

Harbidge outlined a staged path to production: start with oxide material at San Manuel, then develop Copper Creek's open pits and use cash flow to help fund a mill for sulphide ore. Underground production would follow from Copper Creek and the San Manuel-Kalamazoo system.

"It's not like we've got to write a $5-billion cheque for initial capital," Harbidge said. He sees potential for more than four decades of production at about 150,000 tonnes of copper a year, a concept that still requires confirmation drilling, a current resource and detailed engineering. A mine life of that length rests on demand outlooks from bodies such as the International Energy Agency, which project copper consumption rising over coming decades as power grids, electric vehicles and data centres expand.

Funding and shareholders

Faraday held $94.2 million in cash and $32 million in term deposits at June 30. Harbidge said the funds should carry the company into early 2028, covering the acquisition, San Manuel drilling, the combined resource and the first-stage study.

BHP would own 30% of Faraday on a fully diluted basis after closing and gain the right to nominate a director. The Lundin family trusts hold about 18%. Both investors participated in Faraday's $100-million financing in March.

Faraday's Toronto-listed shares have more than quadrupled over the past 12 months to close at $5.73 apiece on Aug. 13 as copper prices have surged. Shares have tested a range between $1.15 and $6.69 over the past 12 months. The company has a market capitalization of $1.6 billion (US$1.15 billion).

Haywood Securities has maintained its buy rating and $7 target, identifying the combined resource and mine study as Faraday's main catalysts. The shares gained 34% during the second quarter, making Faraday one of the strongest developers in Haywood's coverage as the broader group fell an average of 9%.

Faraday has no immediate appetite for another acquisition, Harbidge said. Its challenge now is to prove the scale it has assembled.

"We've caught the tiger by the tail in consolidating San Manuel with Copper Creek," he said.