Western Copper and Gold raises $40M for Casino project in Yukon

Western Copper and Gold (TSX: WRN; NYSE: WRN) is increasing a stock offering by 60% for its Casino copper-gold-molybdenum project in the Yukon.

The bought deal increased to $40 million from $25 million, the company said in a release on Wednesday. Last month CEO Sandeep Singh invested $3 million for more than 2.2 million shares and Rio Tinto (LSE: RIO; ASX: RIO) increased its holdings to maintain a 9.7% stake. Rio spent $6 million in November to increase its stake from 8%.

Toronto-based Eight Capital agreed to buy 21.1 million common shares of Western at a price of $1.90 per share on behalf of a syndicate of underwriters. The offer is expected to close at the end of the month.

Vancouver-based Western is preparing environmental studies on Casino for submission this year. The site 380 km northwest of the Yukon capital, Whitehorse, also has the backing of a 5% investment by Mitsubishi Materials. It has the potential to produce 11 billion lb. copper and 21 million oz. gold, the company says. 

Casino holds 1.2 billion proven and probable tonnes grading 0.2% copper, 0.2% gold and 0.02% molybdenum for 5.1 billion lb. copper, 8.5 million oz. gold and 572 million oz. molybdenum, according to a feasibility study released in 2022. The deposit is about 17% molybdenum, 46% copper and 34% gold.

Ross Beaty

Western took over the project in 2006 in a merger with Ross Beaty’s Lumina Resources. Drilling and studies accelerated four years ago with a new resource estimate followed by a preliminary economic assessment, Rio Tinto’s interest and the feasibility study.

After-tax, Casino has a $2.3 billion net present value at an 8% discount rate, an 18.1% internal rate of return, a three-year payback period and $10 billion in cash flow over the mine life, according to the feasibility study. Sustaining capital would be $751 million for total capital costs of $4.4 billion.

The project lies within the Traditional Territory of the Selkirk First Nation. A small portion in the north of the project area also lies within the Traditional Territory of the Tr’ondëk Hwëch’in. First Nations groups had previously expressed concerns about building an access road through hunting grounds and proposed tailings arrangements.  

The Yukon government has committed $130 million and started to build 100 km of access road from Carmacks, a village bearing the name of a co-discoverer in 1896 of the Klondike gold rush in the Yukon. Western is to build the remaining 100 km to the project with 30% government financing.

Western would ship concentrate out through the Alaska port of Skagway, where Yukon has a long-term agreement with the state. The mine could be powered by liquid natural gas but the company is encouraged by talks started last year between the Yukon and British Columbia governments to link their grids. However, that project would require some 760 km of new line and take years to build. 

Shares in Western Copper and Gold fell 1% on Wednesday in Toronto to close at $1.92 apiece, valuing the company at $319.9 million. They’re traded in a range of $1.27 to $2.60 over the past 52 weeks.