FS due for Casino then Rio talks

Rio invested C$25.6 million in the junior to take a 7.8% stake in 2021 to fund an 18-month work programme geared towards completing a technical work programme to get the major comfortable with potentially buying the junior.

Casino is a large, at surface open pit deposit which could sustain production for decades, including a high-grade starter pit, which could see the multi-billion project development payback in under three years.

"The past two years have been transformative for the company. We have done the heavy lifting and there is no more work to be done under the scope of work. The metallurgical programme will be complete in a month and so in November the idea is to sit down and talk about a deal," said West-Sells.

Casino is due to produce 176Mlb/y of copper, 262,000oz/y of gold, 1.4Moz/y of silver and 16Mlb of molybdenum throughout its life, with substantially higher output during its first four years, following a US$2.6 billion capital investment, according to the 2021 preliminary economic assessment.

Western has drilled 130,000m at Casino to define a measured and indicated resource of 7.6 billion pounds of copper and 14.5 million ounces of gold. It also hosts 3.3Blb of copper and 6.6Moz of gold in inferred resources. It also hosts molybdenum and silver.

The company has also started drilling a deep hole targeting a geophysical anomaly which could be a porphyry feeder system.

The 2km by 2km deposit includes what Western calls the Core Zone, which is a breccia hosting 331Mt grading 0.7% copper equivalent, double the overall deposit grade. A confirmation hole drilled for Rio in the breccia last year returned 289.6m grading 1.01% copper equivalent.

The plan is for the first four years of mining to exploit this zone with a grade of 0.72% copper equivalent and a throughput of 45.4 million tonnes per year via a 124,000 tonnes per day mill, the next billion tonnes of ore will be 0.5% copper equivalent and the subsequent billion tonnes 0.4% copper equivalent.

Western says the metallurgy is relatively straight forward with recoveries of 86% copper, 67% gold, 71% molybdenum and 53% silver, with levels of arsenic and antimony, "an order of magnitude below when you have to pay penalties in the concentrate. I am a Phd metallurgist and the metallurgy of Casino is really boring," said West-Sells.

In addition to grade and scale, Casino has also agreed the tailings storage facility design over a two-year period involving first nations, government and regulators using best available tailings technology.

Casino also benefits from federal funding for the development of a road from Carmacks to the project site. Construction has commenced on the first half of the road which the government is funding 100%. The government will fund 30% of the second half of the road.

"We estimate about four years for permitting, but importantly, the road and the tailings storage facilities have already obtained broad agreement from first nations and the authorities. We are investing C$10 million on permitting this year," said West-Sells.

Western has planned to use liquified natural gas (LNG) to provide the 200MW of power the project requires for the past 10 years. With investors increasingly concerned about greenhouse gas emissions, it will still plan to commence operations using LNG but it will look at how it can transition to a lower carbon energy source in the future. "Casino will double the power consumption in Yukon so the project could be a catalyst to connect the Yukon grid to the British Columbia gird, build a small modular nuclear reactor or something else," said West-Sells.

Shares in Western Copper and Gold are trading at C$2, valuing the company at C$303 million.