The Encounter Resources Ltd (ASX: ENR) share price is surging today. At the time of writing, shares in the mineral exploration company are trading for 17.5 cents each – up 29.63%.
The massive price rise comes after the company announced BHP Group Ltd (ASX: BHP) agreed to enter into a joint-venture agreement to develop a copper project in the Northern Territory.
Let's take a closer look at today's news.
Why the Encounter share price is rising
In a statement to the ASX, Encounter Resources said BHP has exercised an option under a previous agreement to jointly develop the Elliot Copper Project in the NT. BHP will own three-quarters of the endeavour while Encounter will own the remaining portion. This is providing BHP spends $22 million over 10 years on the site. The mining giant will also manage the site.
Investors are clearly loving the prospects for this joint-venture copper project with BHP, judging by today's Encounter share price action.
Management commentary
Encounter managing director Will Robinson said:
Copper sourced from sedimentary-hosted deposits is one of the fastest growing sources of high-grade copper in the world.
The potential for this region to host large sedimentary-hosted copper deposits is rapidly emerging and we are delighted to be teaming up with BHP to apply leading edge technologies in the search for Tier 1 copper deposits at Elliott. The outcomes of the jointly designed validation program at Elliott have been illuminating and bolstered the potential for the discovery of large sedimentary-hosted copper deposits under shallow cover in the NT.
Copper commodity price
Copper is currently trading for US$4.54 per pound on the commodities market according to the website Trading Economics. While it's down 2.7% this week, the metal's value has increased 6.1% this month and 29.0% since the beginning of the year. It should be noted copper was at an all-time high price of US$4.90 per pound two weeks ago and a near-record US$4.79 last week.
The increasing copper price could also be positively affecting Encounter shares today.
As Motley Fool has previously reported, copper demand has been surging recently due to a rebounding global economy and increasing demand for green technologies. Copper is an essential metal in the production of renewable energy technologies.
As also reported, supply of the reddish-brown metal is also down due to a lack of investment in copper production by large mining corporations, as well as tax hikes in Chile. One-quarter of all copper is mined in the South American nation. A mix of increasing demand and decreasing supply will generally increase the price of a good or service.
Encounter share price snapshot
Over the past 12-months, the Encounter share price has increased by 45.83% – the majority of which occurred today. However, since hitting a 9-year high of 33.5 cents per share in October last year, the company's value has fallen by almost 48%. Encounter Resources has a market capitalisation of $51.7 million.
