What happened 

Shares of mineral resource company Ivanhoe Electric (IE -6.42%) (IE -5.58%) rose 15% this week through Friday morning, according to data provided by S&P Global Market Intelligence. The move comes in a week when Ivanhoe issued an updated mineral resource update for the Santa Cruz Copper Project in Arizona. 

According to the release, "Total contained copper in indicated resources across all deposits and domains increases by 11%, with a near-doubling of the copper cut-off grade to a minimum of 0.70%." 

The copper cut-off grade refers to the grade (the concentration of copper in each tonne of material) needed to make the project economically viable. The more expensive it is to extract material, the higher the required grade. The higher the price of copper, the lower the required grade will be. In a nutshell, a high copper price plus low extraction cost means a lower grade is fine; a low copper price and a high extraction cost means a higher grade is necessary. 

The update refers to three separate deposits and reflects a 0.7% grade at the Santa Cruz deposit, with 0.8% at the Texaco deposit and 0.9% at the East Ridge deposit.

So what

As such, the 15% rise in the share price reflects investors' pricing in an 11% increase in indicated resources in the project. That said, if the price of copper moves higher, it will lower the grade required to make extraction profitable. Therefore, it's important to consider the potential for an even more significant increase in indicated resources. 

It's good news for Ivanhoe, particularly as it comes in a resource in a relatively politically stable country. 

Investors are warming to copper miners like Ivanhoe and Freeport-McMoRan due to the industrial metal's importance in the electrification of everything megatrend. Freeport is also doing well due to the surge in the price of molybdenum.

Now what

Ivanhoe's management has promised an initial economic assessment before the end of the third quarter of 2023. That's something to look forward to while keeping an eye out for the trend in the price of copper.