World Copper (WCU) - Technical Analysis & Due Diligence

World Copper Ltd. is a Vancouver-based junior copper mining company with projects in both Chile and Arizona. The company’s Chilean projects are the Escalones and Cristal projects, with the Zonia project of the company being located in central Arizona. The company believes that it understands both the near and long term needs of the copper market and is positioning itself to be able to supply those needs.

Merlin Marr-Johnson sat down with Nolan Peterson the President and CEO, and John Drobe the Chief Geologist of World Copper Ltd. (TSX-V:WCU) to have a technical discussion regarding the company’s Escalones and Zonia projects. 

Company Overview

The company announced in March 2022 that it had received approval from the Chilean regional environmental committee to conduct a 5,000 m drilling program at its flagship Escalones project in Central Chile. The exploration drilling will consist of 11 drill holes and is aimed at exploring the project’s Mancha Amarilla lithocap which extends further south than the current mineral resource estimate (MRE). The southern section of the Escalones project is also deeply mineralised as indicated by its most southern drill holes.

The company published a preliminary economic assessment (PEA) of the Escalones project in late March 2022. The PEA includes highlights as a post-tax NPV8% of approximately USD$ 1.54 billion at a USD$ 3.60 copper price and a life of mine (LOM) of 20 years. The project production in the first 5 years of operation will be on average 124.7 Mlbs of copper per annum with the average production rate over the life of mine at 114.9 Mlbs. The Escalones project has an EBITDA of USD$ 290.8 million and an initial capital cost (CAPEX) of USD$ 438.4 million.

The company plans on conducting various exploration programs in the coming year, including drilling at the Zonia project in the summer of 2022.

Chilean Projects

Chile is responsible for 23% of the world’s copper reserves as well as for 28% of global copper production. The country’s mining sector contributes to approximately 15% of the country’s gross domestic profit (GDP), with 60% of all exported goods from the country being accredited to the mining sector as well.

The Chilean mining sector, however, is currently a concern for many in the international investment markets, with the country currently underway with a possible constitutional reform. The constitutional convention of Chile is set to review a second draft of the environmental committee’s mining report in early May 2022, which includes the suggestion to nationalise the country’s mining sector. Critics of the proposed constitutional reform, and the environmental factors used as motivation regarding nationalisation, point out the lack in logical reasoning. The critics point out that the global markets require more lithium and copper to enable the shift to renewable forms of electricity away from fossil fuels, with Goldman Sachs referring to Copper as “the new oil”.  Bloomberg also estimates that global copper production needs to double in order to meet the projected 30% penetration rate of electric vehicles by 2042.

World Copper Ltd. believes that the Chilean mining environment is still a stable and mining-friendly jurisdiction and the perfect operating environment for it to position itself for the impending copper “boom”.

The company has two Chilean projects, namely the Escalones and Cristal projects.

Escalones project

The Escalones project of the company is a 70 km² property that lies 35 km east of El Teniente, one of the world’s largest underground copper mines. The project has access to various infrastructure, including roads, electricity, seaports, and a gas pipeline that crosses the property.

The project holds 426 million tons of ore at a grade of 0.367% copper. The resource estimate was completed in June 2021 by Hard Rock Consulting LLC and is based on 25,000 m of drilling through 53 holes. The 3.45 billion tons of copper are believed to be amenable to heap leaching, with an anticipated recovery rate of 71%. The realisation that the project’s mineralisation is amenable to heap-leach copper production due to it being acid-soluble occurred in 2020.

Escalones project PEA

In March 2022, World Copper Ltd. published a Preliminary Economic Assessment (PEA) of the Escalones project. The PEA showed highlights including a USD$ 1,499.6 million (USD$ 1.5 billion) post-tax NPV8% at a life of mine (LOM) copper price of USD$ 3.60 per pound of copper. The post-tax internal rate of return (IRR) of the project is 46.2% with the project’s payback period being 2.18 years. The pre-tax NPV8% of the project is USD$ 2.279.1 million and the pre-tax IRR is 63.9%.

The PEA further shows a Capital cost (CAPEX) of USD$ 438.4 million, with the project's first 5 years of production averaging 124.7 million pounds. The average all-in sustain cost (AISC) of the project is USD$ 1.28 per pound of copper. The Escalones project is envisioned to be an open-pit mining operation, which will be suited to a phased design and expansion approach.

The Escalones project’s production process will consist of a conventional sulfuric acid heap leaching process which will be followed by solvent extraction and electrowinning to produce cathode copper. The company aims to process 50,000 tons of mineralised material per day, which will produce approximately 52,000 tons of Grade-A copper cathode annually.

Escalones project exploration potential

The Escalones project deposit remains open to the South, East and West and holds great expansion potential. The Mancha Amarilla lithocap and the East-flanking Skarn targets have both undergone surface sampling programs, with results showing copper grades of up to 1.6% copper. World Copper Ltd. announced in Early March that it had received approval for a 5,000 m diamond drilling program aimed at the targets which commenced shortly after the announcement.

The northern targets of the project consist of three hydrothermal alteration zones, located 5 km to 10 km away from the project’s main discovery. Each of the alteration zones are approximately 2,000 m to 3,000 m in diameter. The Northern targets are the Rio Negro, Argüelles Este and Argüelles targets. The Rio Negro target is the primary target for future exploration, with the company aiming to conduct exploration drilling at the target by the end of 2022.

Cristal project

The second Chilean project of the company is the Cristal project, located in the northern region of Chile adjacent to the Peruvian border. The project has seen previous exploration initiatives in the 1990s with the first significant exploration work on the project being conducted by BHP Billiton under an option agreement in 2012.

The previous exploration initiatives have been largely geophysical with limited exploration drilling. The initial results of the conducted airborne magnetics, gravity and EM studies showed the potential for a large porphyry copper deposit.

World Copper Ltd. plans to conduct exploration drilling at the Cristal project in 2022, with the exploration drilling program planned to consist of two to three holes, each between 500 m and 600 m deep. The drilling program is aimed at testing the mineralisation of the suspected “doughnut-shaped” mineralisation anomaly that the project hosts.

Zonia Project

World Copper Ltd. also owns 100% of the Zonia Copper Oxide Project in Central Arizona, United States. The project was acquired through the company’s merger with Cardero Resource Corp. in April 2021.  The project has seen over 50,000 m of drilling in approximately 600 drill holes, with 800 m of underground sampling having also been conducted.

The project holds a land position of approximately 4,280 acres with it having easy access to infrastructures such as electricity and an abundance of groundwater to support the envisioned operations of the project. The company believes that it will be able to fast-track the project to production within 3-4 years which will lead to significant cash flows.

World Copper Ltd. is currently underway with the identification of drill targets for a planned exploration drilling program at the project. The internal technical reviews, conducted by the company have shown three significant growth drivers for the project, namely the expansion of the project’s mineralisation, the significant exploration potential and the update of the project’s PEA.

The resource expansion targets of the project are aimed at enlarging the project’s mineralisation, with the company planning on achieving this through step-out drilling initiatives. The primary exploration target of the project is the Zonia Norte target at the northeast of the project’s main mineralisation. The Zonia Norte target possesses the potential to be similarly sized to the project’s main mineralisation deposit, but still within the overall land package of the project. The company’s expansion and exploration initiatives will enable the updating of the project’s PEA, the final of the three identified growth drivers for the project. The updating of the project’s PEA will enable World Copper Ltd. to publish a feasibility study (FS) for the Zonia project by the end of 2023.

OTCQX Best Market listing

World Copper Ltd. announced in the middle of April 2022, that it had been approved to trade on the OTCQX Best Market. The company will still trade under the ticker symbol WCUFF. The OTCQX Best Market is the highest quality tier of over-the-counter stock trading for companies that are not listed on traditional exchanges such as the NYSE. The companies that are listed on the OTCQX Best Market are subject to SEC regulation and must follow stringent rules and criteria in order to qualify and remain listed.

World Copper Ltd. believes that by upgrading to the OTCQX Best Market it demonstrates that the company is committed to expanding and activating its shareholder base in the United States.

Future plans

World Copper Ltd. plans on advancing all three of its copper assets in the coming year. The company is currently underway with a drilling program at the Escalones project, with the assay results of the drilling program anticipated to be available by the beginning of Q3 2022. The surface sampling results of the Rio Negro target will also be available in the following months according to the company. The surface sampling results will enable the company to apply for the necessary drilling permits enabling an exploration drilling program in the future.

The company also plans to initiate a drilling program at the Zonia project in the summer of 2022. The aim of the Zonia drilling program is to expand the project’s mineralisation enabling the updating of the project’s 2018 PEA.  The location of the Cristal project of the company, specifically its elevation, enables World Copper Ltd. to initiate an exploration drilling program at the project in the coming Chilean winter.

World Copper Ltd. plans to continue with its corporate development activities, such as the upgrading of its shares to the OTCQX Best Market. The company is aiming to upgrade from the TSX Venture Exchange to the Toronto Stock Exchange as well in the near future.

World Copper Ltd. believes that it has the necessary high-quality assets and the corporate knowledge to continue its growth initiatives in the future and drive itself to newer heights as time passes.

To find out more, go to the World Copper website