Western Copper & Gold Corp

Western Copper & Gold Corporation (TSX:WRN, NYSE American:WRN) is a Canadian-based mining company focused on developing the Casino Copper-Gold Project in Canada's Yukon Territory. The Casino project represents one of the largest undeveloped copper-gold resources in North America, with the potential to become a significant producer of copper, gold, molybdenum and silver over a multi-decade mine life.

Located approximately 300 km northwest of Whitehorse, the Casino project benefits from its position in the mining-friendly jurisdiction of Yukon. The company has steadily advanced Casino through exploration, economic studies, and permitting activities since acquiring the property in 2006. Most recently, Western Copper & Gold completed a feasibility study in 2022 that demonstrated robust economics for a large-scale open pit mining operation.

With a current market capitalization of around C$307 million, Western Copper & Gold offers investors exposure to a major copper-gold development project that has attracted strategic investments from industry leaders Rio Tinto and Mitsubishi Materials. The company is well-funded with C$77.2 million in cash and no debt as of June 30, 2024, positioning it to continue advancing Casino towards a production decision.

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The Casino project represents a world-class copper and gold resource with significant exploration upside. The 2022 feasibility study outlined a measured and indicated resource of 7.6 billion pounds of copper and 14.8 million ounces of gold, plus additional inferred resources. This positions Casino as one of the largest undeveloped copper-gold deposits globally. The scale and grade of the resource provide the foundation for a large, long-life mining operation spanning multiple decades.

The feasibility study demonstrated attractive economics, with an after-tax net present value (8% discount) of C$2.3 billion and an internal rate of return of 18.1% at conservative long-term metal price assumptions. Over a 27-year mine life, Casino is projected to produce an average of 163 million pounds of copper and 211,000 ounces of gold annually. The project benefits from a low strip ratio of 0.43:1, contributing to competitive operating costs.

Importantly, Casino offers significant leverage to rising copper and gold prices. At current spot prices, the project's economics would be substantially enhanced. With the copper market expected to face growing supply deficits in the coming years as electrification trends accelerate, Casino is well-positioned to help meet future demand for this critical metal.

Beyond the current resource, the Casino property offers excellent exploration potential to further expand the resource base. Historical drilling has identified promising copper and gold targets to the west of the main deposit that warrant follow-up. This provides avenues for potentially extending the mine life or increasing production rates in the future.

The Yukon is an emerging mining district that has attracted increasing investment in recent years. The territorial government has demonstrated strong support for responsible resource development, as evidenced by its C$130 million commitment to fund access road construction for the Casino project. This infrastructure investment significantly de-risks the project and improves its economics.

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Western Copper & Gold has assembled an experienced management team with the technical and financial expertise to advance Casino through development and into production. The company is led by CEO Sandeep Singh, who joined in February 2024 after successfully leading Osisko Gold Royalties as President and CEO. Mr. Singh brings over 15 years of experience in mining investment banking and M&A, providing valuable strategic and capital markets acumen.

President Dr. Paul West-Sells has been with the company since 2006 and offers over 30 years of experience in the mining industry, including senior roles with major producers like BHP and Barrick Gold. His technical background in metallurgical engineering is well-suited to overseeing Casino's development. CFO Michael Psihogios joined in July 2024, bringing 20 years of financial experience in the natural resource sector, including turnaround expertise.

The management team is rounded out by VP of Environmental & Community Affairs Shena Shaw, who has over 20 years of experience managing environmental assessments and Indigenous engagement for northern resource projects. VP of Projects Jeff Eng provides project development and construction expertise from his time with Teck Resources and AMEC. This combination of technical, financial, environmental, and project execution skills positions Western Copper & Gold to successfully advance Casino.

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Western Copper & Gold's primary focus is on systematically de-risking and advancing the Casino project towards a production decision and ultimately into operation. Key near-term priorities include progressing through the environmental assessment process, continuing engagement with local communities and First Nations, and further optimizing the project configuration.

The company is currently advancing Casino through the Yukon Environmental and Socio-economic Assessment Board (YESAB) process, which is expected to take approximately 2-3 years to complete. In parallel, Western Copper & Gold is working to secure other key permits and authorizations required for construction and operations. The goal is to achieve shovel-ready status for Casino by 2026-2027.

Ongoing stakeholder engagement is a critical component of the strategy. The company has signed cooperation agreements with key First Nations and is committed to maximizing local benefits from the project. Western Copper & Gold is also evaluating opportunities to reduce the environmental footprint of Casino, such as potentially connecting to the Yukon power grid to access renewable energy.

From a technical standpoint, the company continues to assess optimization opportunities to enhance project economics. This includes evaluating the potential for an initial higher-grade operation focused on the core zone of the deposit. Exploration drilling on satellite targets also offers the potential to expand resources and extend mine life.

Importantly, Western Copper & Gold's strategy involves maintaining a strong balance sheet to fund ongoing development activities. The company may pursue additional non-dilutive funding sources, such as royalties or streams, to complement its existing cash position. As Casino advances towards shovel-ready status, securing a strategic partner or pursuing M&A opportunities could also be evaluated to maximize shareholder value.

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Western Copper & Gold is well-capitalized to continue advancing the Casino project, with C$77.2 million in cash and short-term investments as of June 30, 2024. The company has no debt, providing financial flexibility. This strong treasury position has been bolstered by strategic investments from Rio Tinto and Mitsubishi Materials, who invested C$33.9 million and C$26.6 million respectively in 2023-2024.

The 2022 feasibility study for Casino outlined an initial capital cost estimate of C$3.62 billion for a 120,000 tonne per day operation. While substantial, this capital intensity is competitive relative to other large-scale copper developments globally. The study projected average annual after-tax cash flow of C$951 million in the first four years of operations and C$517 million over the life of mine.

At the base case assumptions of US$3.60/lb copper and US$1,700/oz gold, Casino is expected to generate C$10 billion in after-tax cash flow over its 27-year mine life. This translates to an after-tax net present value (8% discount) of C$2.3 billion and an internal rate of return of 18.1%. Importantly, the project demonstrates robust economics across a range of metal price scenarios.

Western Copper & Gold trades at an enterprise value of approximately C$230 million, implying a significant discount to Casino's net present value. On an enterprise value to copper equivalent resource basis, the company trades at just US$0.010/lb, well below the average of US$0.031/lb for comparable development-stage copper projects. This suggests potential for valuation re-rating as Casino is de-risked and advanced towards production.

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Western Copper & Gold offers investors exposure to one of the largest undeveloped copper-gold projects in North America at a time when new copper supply is increasingly critical. The Casino project's scale, attractive economics, and location in the mining-friendly Yukon make it a compelling development opportunity. With C$77.2 million in cash, no debt, and backing from industry leaders Rio Tinto and Mitsubishi, the company is well-positioned to continue advancing Casino towards production.

The experienced management team has demonstrated a methodical approach to de-risking the project through technical studies, environmental assessment, and stakeholder engagement. While risks inherent to large-scale mine development remain, Western Copper & Gold has taken steps to mitigate these challenges. The company's current valuation appears to ascribe little value to the significant long-term potential of Casino, suggesting room for share price appreciation as development milestones are achieved.

For investors seeking leveraged exposure to copper and gold with the potential for transformative growth, Western Copper & Gold presents an intriguing opportunity. As global electrification trends drive increasing copper demand in the coming decades, projects of Casino's scale and quality are likely to become increasingly strategic and valuable assets. While development-stage mining investments carry risks, Western Copper & Gold's strong financial position and systematic approach to advancing Casino warrant consideration from investors with appropriate risk tolerance and a long-term perspective.

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