PR Newswire
$2.3 billion
After-Tax NPV (8%) at Base Case metal prices
After-Tax IRR 18.1% at Base Case metal prices
Cashflow over the first four years of
$951 million
per year at Base Case metal prices
Base Case development contemplates 27-year mine life
Base Case metal prices: Cu:
US$3.60
/lb, Au:
US$1,700
/oz, Ag:
US$22
/oz, Mo:
US$14
/lb
VANCOUVER, BC , June 28, 2022 /PRNewswire/ - Western Copper and Gold Corporation ("Western" or the "Company") (TSX: WRN) (NYSE: WRN) is pleased to release the results of its Feasibility Study (the "Study") on its wholly-owned Casino copper-gold-molybdenum deposit in the Yukon, Canada ("Casino" or the "Project"). The Study considered the Project being constructed as an open pit mine, with a concentrator processing 120,000 tonnes per day (t/d) to recover copper, gold, molybdenum and silver, as well as a 25,000 t/d oxide heap leach facility to recover gold, silver and copper.
The Study supersedes all previous studies and incorporates an updated mineral resource and mineral reserve with an effective date of April 29 , 2022. The Study examines the development of the Casino Project, which comprises the processing of 1.43 billion tonnes of Mineral Reserve for both the mill and heap leach, with deposition of mill tailings and mine waste in the Tailings Management Facility ("TMF") consistent with the design concepts considered during the Best Available Tailings Technology ("BATT") Study as a base case development.
"The results from the Feasibility Study confirm the project's robustness and ability to withstand inflationary pressures.", said Paul West-Sells , President & Chief Executive Officer. "This Study reaffirms Casino as one of the very few long-life copper-gold projects with robust economics in a top mining district, the Yukon. We are continuing to collaborate with our strategic investor, Rio Tinto, and continue to engage with First Nations and community stakeholders to advance this project toward the submission of Casino's Environmental and Socio-Economic statement in mid-2023."
In this news release, unless otherwise indicated, all references to "$" are to Canadian dollars and references to "US$" are to United States dollars.
|
|
Base Case* |
|
Payback period, years |
3.3 |
|
|
|
|
NPV pre-tax (8% discount) |
$3.47 billion |
|
NPV after-tax (8% discount) |
$2.33 billion |
|
|
|
|
LOM pre-tax free cash flow |
$13.71 billion |
|
LOM after-tax free cash flow |
$10.02 billion |
|
|
|
|
IRR pre-tax (100% equity) |
21.2 % |
|
IRR after-tax (100% equity) |
18.1 % |
|
|
|
|
Initial Capital Investment |
$3.62 billion |
|
Total Reserve |
1.4 billion tonnes |
|
Mill Reserve |
1.2 billion tonnes |
|
Heap leach Reserve |
210 million tonnes |
|
|
|
|
Mill operation |
27 years |
|
Heap leach operation |
24 years |
|
LOM strip ratio |
0.43:1 |
Base Case metal prices: Cu: US$3.60 /lb, Au: US$1,700 /oz, Ag: US$22 /oz, Mo: US$14 /lb.
The Study in general took the design from the 2021 Preliminary Economic Assessment ("PEA") and brought the engineering to a Feasibility Study level; however, there are some notable changes from the PEA.
Heap Leach Operation
Metallurgical results obtained in 2021 indicated that gold recovery from the heap leach could be increased from 70% as outlined in the PEA to 80% by crushing the ore going to the heap leach to a p80 of 16 mm. This updated gold recovery and crush size have been incorporated in the Feasibility Study along with additional capital for the crushing circuit.
This change, along with minor changes in grades and tonnage reporting to the heap leach pad, resulted in 20% greater gold predicted to be recovered through the heap leach circuit.
Milling Operation
Minor changes to the grades in tonnage treated through the mill resulted in 4.4% greater metal production predicted to be recovered through the heap leach circuit as compared to the PEA.
Cost Escalation
Due to inflation over the past 12 months since the PEA was issued, there were cost increases to certain capital and operating cost inputs. Items of particular note were diesel price, which saw a price increase of 40.3%, and steel, reflected by a price increase in grinding media of 33.2%.
The Study indicates that the potential economic returns from the Project justify its further development and securing of the required permits and licenses for operation.
The financial results of the Study were developed under commodity prices that were based on analyst projections of long-term metal prices and a CAN$:US$ exchange rate of 0.80 ("Base Case" prices).
The following table summarizes the financial results:
|
|
Base Case |
|
Copper (US$/lb) |
3.60 |
|
Gold (US$/oz) |
1,700 |
|
Molybdenum (US$/lb) |
14.00 |
|
Silver (US$/oz) |
22.00 |
|
Exchange Rate (C$:US$) |
0.80 |
|
|
|
|
NPV pre-tax (5% discount, $millions) |
5,768 |
|
NPV pre-tax (8% discount, $millions) |
3,473 |
|
IRR pre-tax (100% equity) |
21.2 |
|
|
|
|
NPV after-tax (5% discount, $millions) |
4,059 |
|
NPV after-tax (8% discount, $millions) |
2,334 |
|
IRR after-tax (100% equity) |
18.1 |
|
|
|
|
LOM pre-tax free cash flow ($millions) |
13,713 |
|
LOM after-tax free cash flow ($millions) |
10,019 |
|
|
|
|
Payback period (years) |
3.3 |
|
Net Smelter Return ($/t milled) |
29.08 |
|
|
|
|
Copper Cash Cost (net of by-product credits) ($/lb) |
(1.00) |
|
Copper Cash Cost (co-product basis) ($/lb) |
1.92 |
|
Gold Cash Cost (co-product basis) ($/oz) |
908.53 |
The financial results of the Study are significantly influenced by copper and gold prices, as is shown in the tables below:
|
Copper Price (US$/lb)* |
$3.00 |
$3.50 |
$3.60 |
$4.00 |
$4.50 |
$5.00 |
|
NPV pre-tax (8%) ($M) |
2,547 |
3,318 |
3,473 |
4,090 |
4,862 |
5,634 |
|
NPV after-tax (8%) ($M) |
1,655 |
2,221 |
2,334 |
2,786 |
3,351 |
3,917 |
|
IRR pre-tax |
18.2 % |
20.7 % |
21.2 % |
23.0 % |
25.3 % |
27.4 % |
|
IRR after-tax |
15.5 % |
17.7 % |
18.1 % |
19.7 % |
21.6 % |
23.5 % |
|
Payback (years) |
3.8 |
3.4 |
3.3 |
3.0 |
2.8 |
2.6 |
|
Gold Price (US$/oz)* |
$1,300 |
$1,500 |
$1,700 |
$1,850 |
$2,050 |
$2,200 |
|
NPV pre-tax (8%) ($M) |
2,412 |
2,943 |
3,473 |
3,871 |
4,402 |
4,800 |
|
NPV after-tax (8%) ($M) |
1,551 |
1,944 |
2,334 |
2,627 |
3,017 |
3,310 |
|
IRR pre-tax |
17.5 % |
19.4 % |
21.2 % |
22.5 % |
24.2 % |
25.5 % |
|
IRR after-tax |
14.9 % |
16.5 % |
18.1 % |
19.2 % |
20.7 % |
21.8 % |
|
Payback (years) |
4.0 |
3.6 |
3.3 |
3.1 |
2.9 |
2.8 |
*All other metal prices except those noted are the same as the Base Case.
Higher grade material is fed to the concentrator during the first four years of the concentrator operation. This factor, combined with the concurrent heap leach facility operation, results in higher yearly cash flows and other metrics during this period and contributes significantly to the Project's financial performance.
|
|
Years 1-4 |
Life of Mine |
|
Average Annual Pre-tax Cash Flow ($millions) |
1,033 |
662 |
|
Average Annual After-tax Cash Flow ($millions) |
951 |
517 |
|
Average Net Smelter Return (NSR) ($/t ore milled) |
43.15 |
29.08 |
|
% of Revenue - Copper |
48.5 |
46.8 |
|
% of Revenue - Gold |
38.8 |
36.0 |
|
% of Revenue - Silver |
2.1 |
2.4 |
|
% of Revenue - Molybdenum |
10.6 |
14.8 |
Total initial capital investment in the Project is estimated to be $3.62 billion , which represents the total direct and indirect cost for the complete development of the Project, including associated infrastructure and power plant. The following table shows how the initial capital is distributed between the various components.
|
Cost Item |
Total ($M) |
|
Process Plant and Infrastructure |
|
|
Project Directs including freight |
2,116 |
|
Project Indirects |
431 |
|
Contingency |
369 |
|
Subtotal |
2,916 |
|
Mining |
|
|
Mine Equipment |
433 |
|
Mine Preproduction |
228 |
|
Subtotal |
661 |
|
Owner's Costs |
41 |
|
Total Initial Capital Costs |
3,618 |
|
Sustaining Capital |
751 |
|
Total Life of Mine Capital Costs |
4,369 |
Operating costs for the milling operation were calculated per tonne of material processed through the mill over the life of mine:
|
|
LOM |
|
|
($/tonne) |
|
Milling |
$6.42 |
|
General & Administrative |
$0.46 |
|
Total |
$6.88 |
Heap leach operating costs were calculated per tonne of material processed through the heap leach over the life of the heap leach.
|
|
LOM |
|
|
($/tonne) |
|
Heap Leach Operation |
$1.93 |
|
ADR/SART |
$4.80 |
|
Total |
$6.73 |
Mining costs were calculated to average $2.30 per tonne of material moved and $3.65 per tonne of mineralized material.
|
|
($/tonne) |
|
Cost per tonne material (material moved) |
$2.30 |
|
Cost per tonne mill feed (mill + heap leach material) |
$3.65 |
|
Cost per tonne mill feed |
$4.28 |
The combined mining and milling costs are $11.16 per tonne material milled for the life of mine, which compares favorably to the life-of-mine net smelter return of $29.08 per tonne at Base Case metal prices.
The Study evaluates the development of the Casino deposit as a conventional open pit mine, concentrator complex, and heap leach operation. The initial production will focus on the deposit's oxide cap as a heap leach operation to recover gold and silver in doré form. The main sulphide deposit will be processed using a conventional concentrator to produce copper-gold-silver and molybdenum concentrates. Key metrics of the processing plant are shown below:
|
|
Years 1-4 |
Life of Min
|
