Casino set to grow for Western Copper

Vancouver – The Casino project is already home to 8 million oz. gold, 4.4 billion lbs. copper, and 475 million lbs. molybdenum, but results from the latest drilling program at the Yukon site indicate those numbers will likely still grow for owner Western Copper (WRN-T).

In a 39-hole, 11,000-metre drill program Western Copper tested areas immediately adjacent to the known deposit and hit mineralized intercepts grading better than 0.3% copper equivalent in all but one hole and 16 holes returned mineralized intercepts longer than 50 metres. The company uses a cut-off grade of 0.3% copper equivalent in defining the limits of the Casino deposit.

The Casino deposit, as defined by a 2008 prefeasibility study, is shaped like a Y turned on its side – on the west side the boundary indents around an area previously thought to be barren known as the Latite plug. In its latest drilling effort, however, Western Copper intersected economic molybdenum mineralization in the Latite plug area, which will likely convert the zone from waste into ore in the next economic analysis.

In the Latite plug area hole 24 intersected 246 metres from surface grading 0.04% copper, 0.066% molybdenum, 0.04 gram gold per tonne, and 0.2 gram silver per tonne. Nearby, hole 25 returned 140.6 metres averaging 0.21% copper, 0.073% moly, 0.09 gram gold, and 1.2 grams silver, starting 63 metres downhole and including 9.5 metres of 0.518% molybdenum. And hole 26 cut 144.4 metres from surface carrying 0.14% copper, 0.089% molybdenum, 0.07 gram gold, and 0.8 gram silver.

Western Copper also punched several holes into areas beyond the deposit boundaries to the northeast and northwest, the results from which indicate that mineralization extends in both directions. To the northeast hole 5 intersected 51.1 metres grading 0.2% copper, 0.024% molybdenum, 0.15 gram gold, and 1.2 grams silver from 55 metres depth, while hole 9 hit 266.8 metres averaging 0.14% copper, 0.009% moly, 0.17 gram gold, and 1.2 grams silver from 17 metres downhole.

To the northwest, hole 19 returned 257 metres carrying 0.14% copper, 0.025% moly, 0.21 gram gold, and 1.2 grams silver from 9 metres depth. Nearby, hole 22 hit 123.5 metres averaging 0.2% copper, 0.003% molybdenum, 0.2 gram gold, and 1.2 grams silver from 37 metres downhole.

Four holes targeting mineralization beneath or at the edges of the defined pit returned mineralized intercepts. Hole 2, collared in the centre of the deposit, cut a lengthy 637.7 metres averaging 0.22% copper, 0.044% molybdenum, 0.29 gram gold, and 1.4 grams silver from surface, demonstrating the presence of economic mineralization at depth.

And a series of holes drilled to probe two of the geophysical anomalies identified during a recent survey identified lead-zinc-silver-gold mineralization south of the deposit. Hole 21, which was collared some 700 metres southeast of the deposit boundary, cut 16.8 metres grading 9.85% zinc, 0.13% lead, 0.03 gram gold, and 6.4 grams silver from 297 metres depth.

The Casino project lies roughly 300 km northwest of Whitehorse, about 100 km west of the highway that runs north-south through the Yukon. The porphyry deposit at Casino is massive; proven and probable sulphide reserves currently sit at 914 million tonnes grading 0.212% copper, 0.237 gram gold, and 0.0236% molybdenum. An oxide cap adds 78 million proven and probable tonnes averaging 0.062% copper and 0.427 gram gold.

Last year’s feasibility study assessed the economics of running an open-pit mine at Casino. In its first two years the mine would crush and heap-leach oxide mineralization to recover gold. During that time a mill and flotation facility, capable of churning through 90,000 tonnes of ore each day, would be built. Over its 30-year mine life the operation would produce an average of 124 million lbs. copper, 158,000 oz. gold, and 11 million lbs. molybdenum each year.

A low strip ratio of 1 to 1 and a high throughput would keep the mine’s cash costs down; the operation should be able to produce a pound of copper for US$1.54, an ounce of gold for US$337, and a pound of molybdenum for US$16.12.

The project’s overall economic numbers are big. Using metal prices of US$2.75 per lb. copper, US$18 per lb. molybdenum, and US$950 per oz. gold, and an exchange rate of US92¢ per Canadian dollar, Casino carries a pretax net present value of $1.6 billion, using an 8% discount, and would provide a 20.6% pretax internal rate of return.

The other big number, though, is the cost to develop the project. Capital costs to build the mine come in a $1.6 billion. A mine at Casino would also require a power plant; the prefeasibility study looked at building a coal-fired power plant, which would add $550 million to the development costs. Western Copper is investigating other options, such as a liquefied natural gas power plant, which would costs roughly half as much to build but would cost slightly more to operate.

The company is planning another drill program at Casino for next summer. Based on an updated reserve estimate, Western Copper plans to then update the prefeasibility study for Casino and embark on permitting.

Western Copper’s share price has ranged from $1.65 to $2.20 in recent weeks. The company has a 52-week trading range of 20.5¢ to $2.25 and has 77 million shares outstanding.