Northwest Copper drilling hints at Kwanika’s size potential

Northwest Copper (TSXV: NWST) has released the final assay results from last year’s Central zone drilling at the Kwanika copper-gold deposit in British Columbia, indicating a larger mineralized footprint that could lead to resource growth.

Assay results from hole 22-248 expand the footprint of copper-gold mineralization north of the resource pit as outlined by the recent preliminary economic assessment (PEA). The hole encountered two long intercepts over its 1,118-metre length – a 449.25-metre interval grading 0.23% copper equivalent (from 222.05 metres depth) and a 367.6-metre interval grading 0.21% copper equivalent (from 750.4 metres depth), in an area of low drilling density.

The hole’s results show the continuity of copper-gold mineralization below the pit-constrained resource estimate and to the side from the underground estimate for Kwanika Central, likely leading to growth. The bottom of the hole remains in copper and gold mineralization, suggesting that the system potentially continues.

K-22-248 is the final hole from Kwanika Central for 2022. However, assays are pending from an additional seven drill holes from the Kwanika South zone. None of these holes were included in the recent PEA.

The 2022 drill program at Kwanika was designed to test for high-grade zones within the known mineralization and to expand the mineralized footprint.

Haywood Capital Markets believes the rare presence of bornite and chalcocite at depth may point to the presence of grade laterally. Mining analyst Geordie Mark suggests the results are worthy of potential follow-up examination.

However, given the company’s proposed strategy of setting up a hub-and-spoke plant and mine design, Mark believes that the near-term preference should be allocated towards drilling out the nearby (40km north) Lorraine deposit. The company needs to find a higher-grade starter feed to speed up the payback period and fast-track the time to achieve free cash flow.

Demarcating a volume of higher-grade mineralization at Lorraine, where mineralization locally outcrops, could jumpstart the production profile.

“So, we believe the biggest catalysts ahead for the company relate to drilling on Lorraine and delivering additional metallurgical results throughout 2023,” Mark wrote in a note to clients.

“The important facets to focus on for Lorraine are grade potential and continuity of mineralization, metallurgical recovery characteristics and resource volume.”

The company’s equity has been under pressure over the past 12 months, dropping 63% in value to 24.5¢ a share at close on Wednesday. It had traded between 19¢ and 73¢ over the period and has a market cap of $45 million.