Western Copper and Gold Chairman Dale Corman provides insight into the copper market and the development of the company’s Casino deposit in the Yukon.
Western Copper and Gold (TSX:WRN,NYSEAMERICAN:WRN) Chairman Dale Corman believes the price of copper will reach $4.50 per pound by the end of 2018. Driven by demand from Chinese power plants and the electric vehicle market, demand is positioned to outweigh supply.
Below is a transcript of our interview with Western Copper and Gold Chairman Dale Corman. It has been edited for clarity and brevity.
Investing News Network: You had noted success with Western Silver, and during the last copper cycle you were able to sell Peñasquito for $1.6 billion. Tell us about the size and stage of your latest project, Casino, and how it compares to the Peñasquito site.
Western Copper and Gold Chairman Dale Corman: The two deposits are basically the same size. Peñasquito is a lead–zinc–silver-gold deposit and the other, Casino, is a copper-gold-moly deposit. Both are huge and Peñasquito has been operating for 10 to 15 years, and is good for another 10 or 15 at least. While Peñasquito has a higher NSR, the stripping ratio at Casino is much lower: 0.59:1 to Peñasquito’s 2.5:1. I rank the deposits equally, with one of them being more comparable to the large copper porphyry deposits in the world.
INN: The projects are in two different locations. As we begin moving into the next copper cycle, how does geography and jurisdiction play a role in the value of each project?
DC: Mexico has always had a large and strong mining community. The Yukon, meanwhile, goes back to the early days of its gold rush prior to the turn of the 20th century. I believe that we are on the brink of a mining resurgence in the Yukon. We have seen one sizeable gold deposit, and eventually Casino will become one of the largest open-pit mines in Canada. The cashflow from this will be tremendous for the Yukon’s local economy.
INN: The copper market is in a trough at the moment, and it has been a long, protracted cycle. Based on your 60 years of experience as an analyst, what do you see happening currently that gives a sense that the environment is starting to change?
DC: The cycle turned in 2008, 2009. Before that, everything was moving full speed ahead. When the market turned, everything just froze. Then copper prices rose to $4.50 in 2011, and tanked again. We have been in that position for almost a decade now.
There has been very little development in the copper space. In fact, there are only a few deposits out there capable of being developed. The next few years are going to see a massive appetite for copper with supply dwindling and consumption on the rise.
INN: So you’re saying that the key is to be appropriately poised to move quickly and capitalize on the market?
DC: We have to be in a position where we have a project that is as close to shovel ready as possible. That has been our focus. We have done two prefeasibility studies, and a full feasibility study in 2013 followed by an update in 2017. For the update we did a trend analysis to see what had shifted in the last four years, and we found very little change. The numbers in the feasibility still stand.
Over the last couple of years, we have focused on permitting, which is becoming a more time-consuming and costly program across the world. Yukon is no exception.
INN: Being shovel ready means having done extensive work beforehand and undergoing the required approval and permitting process.
DC: Yes. Casino is so large that it is going to take a major mining company to build it. We don’t have the staff to do it, but we will have everything ready for either a joint venture or an outright sale.
INN: When we look at the copper market, do you think that the combined growth in renewable energy sources and the demand for electric vehicles are at the core of driving copper demand?
DC: The increase in demand is driven by the electrical industry, particularly in power plants. China is building tremendous power plants every year, and that has been driving the price and consumption of copper. There is also India, which is just emerging, and is going to be a force of their own. They are building infrastructure that requires significant amounts of copper.
Electric vehicles will also put another strain on the copper market. An electric vehicle will consume something like 230 pounds of copper, compared to a total 50 to 70 pounds in a conventional gasoline car. As we move forward with electric vehicles, you are going to need copper for the cars themselves, but also for all the infrastructure associated with them, such as charging stations around the city, at homes and at office buildings. I don’t think there’s enough copper to meet that demand.
INN: The gold market has already seen some major acquisitions. When do you think that we will start seeing similar movements for properties like Casino?
DC: I think all the majors are looking right now. The big drivers are going to be smelting companies in Korea, Japan and China, because they need concentrates to stay in business. These companies recognized the upcoming shortage two to three years ago, and have been looking for partnerships with big mining companies who can operate the projects.
INN: Are you getting interest?
DC: We have seen a lot of interest from smelting companies, with renewed interest from Chinese companies. We are also seeing growing interest from domestic companies.
INN: So everything is looking positive?
DC: It is. I have no doubt in my mind that Casino is going to be a big mine, but I’m very patient, and we won’t see a lot of activity until we start to see movement in the copper prices, which I expect to go up to $4.50 by the end of the year.
INN: How have your investors been able to remain patient and have faith in a positive outcome?
DC: I think investors recognize the value of Casino and see that it will be a source of both copper and gold. If you look at the total number of pounds and ounces and the total number of shares outstanding, it’s a tremendously rich play. My advice for those that aren’t involved in big copper or gold companies, they should own a little bit of Western. That will allow them to be in a position to make money when it comes to turn.
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