World Copper pursues low-cost oxide strategy

World Copper (TSXV: WCU; US-OTC: WCUFF) is making headway on developing compelling low-cost, oxide-resource-based copper projects in Chile and the United States, CEO Nolan Peterson told The Northern Miner in a recent interview.

A relative newcomer to the copper exploration and development sector, it has already outlined an alternative economic development case for the Escalones project in Chile, and it is set to add an even more advanced asset, the preliminary economic study-level Zonia copper-oxide project in central Arizona to its portfolio before year-end.

World Copper was created by founder Henk van Alphen, who has a long history in the mining industry. He has built successive mining success stories that have, over the years, created millions of dollars in shareholder value.

“We’re looking to replicate that success,” Peterson said in a recent interview.

Peterson said World Copper aimed to answer the copper industry’s existential question about where future supplies of the metal needed to drive the global energy revolution will come from.

“The challenge is to find new resources. Chile is always a great jurisdiction for mining. And then, with the shift to electric vehicles and electrification, we saw an opportunity open up. So, they [Van Alphen & company] found some good, undervalued properties in Chile – Escalones and the earlier-stage Cristal project – packaged them together, and created World Copper,” recounts Peterson.

The company listed on the TSX Venture exchange in January, and then, in April, it announced the merger with Cardero Resources to bring the Zonia project into the fold. About one week later, Peterson was brought on as CEO to manage the value creation process.

World Copper’s involvement with the Escalones project has already paid dividends.

The copper porphyry project lies 35 km east of Codelco’s El Teniente, one of the world’s largest underground copper mines, and within the renowned Chilean Porphyry Copper Belt that runs north-south in the central Andes Mountains. The project has excellent infrastructure, including road access, electricity, access to seaports, and a gas pipeline that crosses the 70 sq. km. property.

Escalones was discovered through greenfield exploration work in 1996 by Ralph Fitch, the former president and CEO of General Minerals ‘s and Felipe Malbran, the company’s former Vice President for exploration in South America.

“In 2020, World Copper recognized that the shallow, higher-grade mineralization was significantly oxidized, rendering it mostly acid-soluble and potentially amenable to cost-effective, heap-leach copper production,” said Peterson. “Redefining the project as a copper oxide deposit significantly enhanced its value by lowering costs of capital and operating development options compared to the previously contemplated sulphide flotation project.”

As it stands, Escalones has inferred resources of 426 million tonnes grading 0.37% copper, based on nearly 25,000 metres of drill core from 53 holes. According to Peterson, the contained 3.45 billion pounds of copper should be amenable to heap leaching with an average recovery of 71%.

The mineralization sits within four sq. km of hydrothermal alteration and is comprised of quartz-sericite, potassic, and calc-silicate alteration groupings. Concurrent copper, gold and silver geochemical anomalies are associated with replacement-style ‘skarn’ mineralization hosted in calcareous sedimentary rocks that flank central porphyritic intrusive rocks with porphyry-style (fracture-fill and disseminated) mineralization.

Notably, the copper mineralization at Escalones occurs as the sulphides chalcopyrite, bornite, and covellite, which are partial to completely replaced within about 300 metres from the surface with secondary copper oxides, sulphates and carbonates. This replacement has led to higher grades at shallower depths and, since the mineralization sits within a high-standing ridge, makes it ideal for surface mining.

“The resource update has changed Escalones from a primarily sulphide project to a predominantly oxide resource base,” Peterson said. “It has really opened up the development path.”.

According to Peterson, the project is currently the largest primary copper oxide project in development in Chile, which makes it an important future contributor to copper output. An oxide project brings an accelerated production timeline, and importantly, it brings lower water consumption, he explained.

“That translates into easier permitting, no tailings facility, and it means higher operating margins,” said Peterson. “That, in turn, translates to lower initial capital and a whole slew of better development benefits. And with the scale that it’s at right now, that’s why we think it’s such a compelling story.”

World Copper has started work on a preliminary economic assessment for Escalones, which is expected to be ready for publication by the first quarter of 2022.

However, it is looking to add scale and grade to the oxide story.

More recently, the company reported that surface exploration conducted earlier this year had confirmed two porphyry targets and one priority skarn target at Escalones. The Rio Negro skarn target produced five samples grading over 1% copper. Multiple samples also returned over 0.5% copper, thus moving it to the top of the exploration priority list to target future drill programs.

At the project’s Main Zone, which hosts the inferred resources, half of the lithocap remains untested by drilling. This so-called ‘Mancha Amarilla’ provides a low-hanging opportunity to add grade and tonnage to the oxide resource.

As a standalone sulphide project, Peterson said Escalones would require at least a doubling or tripling in tonnage to become viable for economic development and make it compelling enough to spend the billions of dollars it would require to get it off the ground. However, as a standalone primary oxide project it is large enough as is right now, and scale will only make it better.

Elsewhere in the country, World Copper owns the Cristal property in northern Chile in another prospective porphyry copper belt and with potential for additional significant porphyry discoveries.

Various companies carried out exploration work on the under-cover deposit during the 1990s. However, the first significant work on the project was conducted by BHP (NYSE: BHP; LSE: BHP; ASX: BHP) under an option agreement in 2012.

The area has extensive post-mineral cover rocks, and therefore exploration was mainly geophysical with limited drilling of widespread holes.

Although the results of these initial airborne magnetics, gravity and electromagnetic studies, along with the limited drilling, were prospective for a potential discovery of a buried porphyry copper deposit, no exploration work was conducted on the property since that time.

“The prior work suggests there’s something buried deep,” said Peterson. “The idea is to continue our systematic exploration of the deposit. If it results in a major discovery, we’ll probably look to vend it to a major in the region or to form some kind of joint venture structure on it.”

At the same time, the company is also awaiting the closure of the deal to acquire the Zonia copper-oxide porphyry project in Arizona. It had signed a definitive agreement to acquire Cardero Resource (TSXV: CDU) in September.

The advanced project will be 100% owned and is in a favourable mining jurisdiction with good access and infrastructure.

Peterson stressed that the acquisition would present the company with its fastest route to production.

The PEA-level mine plan is located entirely on private land and with minimal required permitting.

The deal would give Cardero shareholders 40% ownership of the then-issued and outstanding shares of World Copper, with the remaining 60% to be held by existing shareholders.

The Zonia property is in the Walnut Grove mining district,and is made up of 261 mineral claims plus surface rights acquired from the state, totalling about 1,732 hectares. .

The brownfields Zonia site was mined in the late 1960s and 70s. The project has  seen over 50,000 metres of drilling, with substantial amounts of detailed engineering completed.

Based on past drilling covering 30% of the property, the Zonia copper resource is estimated at 15.6 million measured tonnes grading 0.43% copper (129.3 million lb copper), 61.4 million indicated tonnes grading 0.31% copper (380.6 million lb copper) and 27.2 million inferred tonnes grading 0.28% for 154.6 million lb copper.

A 2018 PEA on the copper-oxide deposit outlined a mine plan and development strategy entirely on private land, which could significantly reduce the timeline for permitting. Based on a copper price of US$3.00 per lb, the study showed an after-tax net present value (NPV) of $225 million (US$175 million) and an internal rate of return (IRR) of 29%.

“The signing of the definitive agreement with Cardero is another milestone for World Copper and one that will bring significant value to our shareholders,” Peterson said. “Our team sees upside potential at Zonia that has, to this point been unrealized, including a low-cost development and permitting path.”

“We will apply the same knowledge and expertise to Zonia as we have to our Escalones property, and work to advance and de-risk the project going forward.”

The Toronto-quoted equity of World Copper last traded on October 12 at 42.5c, giving the company a market capitalization of $21.2 million (US$17 million).