Western Copper & Gold (WRN) - Improved Economic Study Due in June

Western Copper and Gold Corporation is a Canadian exploration and development company focused on the advancement of its Casino project, located approximately 300 km northwest of Whitehorse in the Yukon district of Canada.

Matthew Gordon spoke with Paul West-Sells the President and CEO of Western Copper and Gold Corp. (TSX-V:WRN) to discuss the company’s recent activities.

Company Overview

Western Copper and Gold Corp. announced in 2021 that it had received a CAD$ 25.6 million strategic investment from Rio Tinto Inc. through the purchase of 11,808,490 common shares. The strategic investment by Rio Tinto Inc. will be implemented towards the advancement of the Casino project. Aside from Rio Tinto Canada Inc. the institutional shareholders of the company include the Fidelity Select Gold Portfolio fund at a 5.28% stake, the Franklin Gold and Precious Metals fund at a 2.22% stake and the Kopernik Global All-Cap fund at a 1.55% stake.

The share price of the company also recently saw a noticeable increase which Western Copper and Gold Corp. accredited to not only the support of Rio Tinto Inc. but also the current copper environment which sees the commodity in high demand with its supply chain struggling to keep up.

The company announced in January 2022 that it had appointed Ken Engquist as Chief Operating Officer (COO). Engquist has a vast amount of experience in copper deposits with him previously having led the infrastructure engineering for the underground design of the Oyu Tolgoi mine in Mongolia for Rio Tinto Inc. and all aspects regarding the development of the Timok copper project in Serbia for Nevsun.

Western Copper and Gold Corp. have also announced recently that it has commenced with the construction of the Carmacks Bypass project. The project will divert industrial vehicles around the village of Carmacks, ensuring access to the Casino project as well as providing community safety.

The company has also enlisted Hemmera, a Canadian environmental firm, to prepare an ESE statement for the Casino project. Western Copper and Gold Corp. aims to publish a feasibility study by Q2 2022, the company will incorporate the results of its 2021 diamond drilling campaign in the study.

Management

The company is led by Paul West-Sells who is President and CEO. West-Sells has over 25 years in the mining sector and started his career with BHP. He has held various senior R&D and project development roles throughout his career at companies such as Placer Dome Inc., and Barrick Gold Corporation. He joined Western Copper and Gold Corp. in 2006 and has held various technical and executive positions in the company. West-Sells holds a PhD from the University of British Columbia in Metallurgical Engineering and is part of the Yukon Minerals Advisory Board, the Board of the Yukon Mining Alliance and is also on the Centre for Northern Innovation in Mining Governing Council.

Ken Engquist is the company’s Chief Operating Officer (COO) and brings with him over 30 years of leadership and development experience. He has been a part of the de-risking of various mining projects from early-stage exploration through start-up and operations. He has previously held key management roles on large capital projects and operations within AngloGold Ashanti and Rio Tinto Inc. He held the position of COO at First Mining Gold Corp. before joining Western Copper and Gold Corp. Engquist has led various development projects including Tinka Resources’ Ayawilca zinc project, South32’s Hermosa zinc project, the infrastructure engineering for the underground design of the Oyu Tolgoi mine in Mongolia for Rio Tinto Inc. and all aspects regarding the development of the Timok copper project in Serbia for Nevsun.

Varun Prasad is the Chief Financial Officer of the company and has been with Western Copper and Gold Corp. since 2011. Prasad has extensive experience in financial reporting and regulatory matters.  He is also a Chartered Professional Accountant (CPA) and holds a degree in accounting from the British Columbia Institute of Technology.

Cameron Brown is the Vice President (VP) of Engineering for the company and has been involved in mineral processing, plant maintenance, project engineering and project management of major base and precious metal projects for 45 years.

F. Jay Corman is the Manager of Special Projects and brings with him approximately 20 years of experience in project management ranging from the semiconductor industry to construction projects including multimillion-dollar homes.

Shena Shaw is the VP of Environmental and Community affairs. Shaw has over 20 years of project management and environmental assessment experience. She is tasked with supporting the Casino project through the first-ever panel review process in the Yukon. She is well experienced in the Yukon Territory and has been involved with the consultation and socio-economic impact assessment work for the Kaminak Coffee Gold project and Victoria Gold’s Eagle Gold project.

Mary Mioska is the Senior Environmental Manager and has a record of managing the environmental aspects of mining projects, from exploration through to operation mine site monitoring. The management team further includes Elena Spivak as Paralegal and Corporate Secretary, Sandy Noyes as Director of Investor Relations and Julie Pelly as Communications and Human Resources Manager.

Share price movement

The share price of the company has in the last 12 months seen quite some movement. The company experienced a drop in its share price in middle 2021 which West-Sell believes to have been profit taking by the copper investment industry he states:

“… all copper equities boomed at the beginning of the year and then there was a bit of a sell-off. The copper price pulled back a little bit, but not equal to what we saw. I get that there was some old-fashioned profit-taking and people were thinking that the runoff was done,”

The company also believes that its announcement regarding the strategic investment of Rio Tinto Inc. through the acquisition of 11,808,490 common shares at CAD$ 2.17 per share resulting in aggregate gross proceeds of approximately CAD$ 25.6 million, may have confused the market. Rio Tinto owns approximately 8.0% of Western Copper and Gold Corp.’s outstanding shares, West-Sells, however, explains that as the company has been able to clarify the transaction it has been able to show the market its value, he explains:

“It's been a nice run, and there are a couple of things that I ascribe to that too. First of all, is the investment by Rio Tinto. This came out in May of last year, via a cryptic news release that was reviewed by a hundred lawyers. As we've gotten out and explained what that deal actually is, I think people began to realise that what we signed with Rio was a due diligence process.”

The strong copper environment is also beneficial to the company according to West-Sells. The need for critical elements, of which copper form’s part, has been outlined by various countries, including Canada which has identified CAD$ 3.8 billion for the development of infrastructure necessary to develop critical mineral operations. The country also increased the tax credit for flow-through funds around critical mineral operations in an attempt to support the development thereof.

West-Sells believes that through the combination of the market’s better understanding of the company, the fundamentals of the Casino project and the favourable copper environment the company has been able to see more than a 50% increase in its share price, he explains:

“…as the story and the fundamentals began to come into play you started to see our share price go up. This year, from December to now, we have seen better than a 50% share price increase…”

The Casino Project

The Casino project of the company is a copper, gold, silver and molybdenum project located approximately 300 km northwest of Whitehorse in the Yukon district of Canada. The project is as of April 2022 the 5 largest undeveloped copper project and the  largest gold project controlled by a junior mining company in the world.  The project holds 7.6 billion pounds (lbs) of copper in the measured and indicated category with 3.3 billion lbs of copper in the inferred category. The project further hosts 14.5 million ounces of gold in the measured and indicated category and 6.6 million ounces of gold in the Inferred category.

The Casino project is envisioned to be a heap leach operation with a separate carbon-in-column facility to recover metals from the heap leached oxide material. The processing facility will include a conventional single-line SAG mill circuit, which will include a semi-autogenous ball mill crusher followed by a conventional flotation circuit to produce concentrate for sale. 

Casino Project Economics

The company published a preliminary economic assessment (PEA) of the Casino project in June 2021. The PEA is based on a two-phase mining operation, with the first phase of the operation being 25 years and consisting of a conventional open-pit mine, concentrator complex, and heap leach operation. The second phase of the project will be achieved using the original concentrator and associated infrastructure at the same nominal processing rate per day. An additional 1 billion tons of mineralized material will be processed by the operation during the extended operation.

The highlights of the first phase of the Casino project PEA include a CAD$ 2.33 billion after-tax NPV8%, an after-tax internal rate of return (IRR) of 19.5% and a payback period of 3 years. The PEA of the second phase adds CAD$ 3 billion in after-tax cash flow and an additional 22 years of operation.

The total initial capital cost (CAPEX) of the Casino Project is estimated to be CAD$ 3.256 billion for both phase one and phase two.

Drill results and the future

The company released the final assay results of the 2021 diamond drilling program it conducted at the Casino project in late March 2022. The diamond drilling program consisted of approximately 6,075 m of drilling through 22 drill holes and included mineralization highlights of 300.23 m at 0.7%copper equivalent (CuEq), including a 1.50% CuEq intercept of 21.00 m. The diamond drilling program also encountered a 2.53% CuEq intercept of 65.80 m.

The company believes that the 2021 drilling program served to confirm the mineral resource used in the 2021 PEA as well as confirmed the mineral resource to be used for the company’s planned Feasibility Study (FS) scheduled to be released by June 2022 bringing the project to a feasibility study design stage according to West-Sells:

“…this is really about getting this back to a feasibility-level design. The reason why that is important is because, certainly for Rio Tinto who are doing their diligence looking at this, but there are a number of groups circling around us, and a PEA is a PEA: they really want to see what this looks like with the feasibility study.”

Western Copper and Gold Corp. believes that the jurisdiction of the Casino project, only adds to the attractiveness of the project, whilst many of its peers are troubled with either talk of nationalisation or are struggling to obtain mining permits and facing the permits getting revoked, it enjoys the support of not only the government but also the first nations of the area. West-Sells explains that the probability of having mining permits revoked is highly unlikely due to Canadian legislation he explains:

“…my thesis is that regardless of who becomes the next prime minister of Canada, no one's pulling any permits or applications. There's no legal mechanism for that to happen. That's just not the way politics works in Canada and so, it's an advantage that Canada has…”

Western Copper and Gold Corp. has also enlisted the services of the Canadian environmental consultancy firm Hemmera to lead the preparation of an environmental and socio-economic statement (ESE) for the Casino project. The ESE will be submitted to the Yukon Environmental and Socio-economic Assessment Board (YESAB) in the second quarter of 2023 and is a crucial part of the assessment process of the project by YESAB. 

To find out more, go to the Western Copper and Gold website