American West Metals’ preliminary economic assessment has knocked out a whopping US$839 million (A$1.33 billion) revenue number for a 10-year mine with a net cashflow after tax of US$191 million (A$305m) at its flagship Storm Copper project in Nunavut in Canada.
The company’s development plans include an initial mining operation to target a resource of 10.3 million tonnes at an average grade of 1.3 per cent copper and 3.7 grams per tonne (g/t) silver.
The mine is forecast to produce almost 487,000t of high-quality copper concentrate at its back end, running at a grade of 17.1 per cent copper and 49g/t silver.
American West says the study has firmed up the economics of going down the lower-cost direct shipping ore (DSO) route for processing the Storm project, making it potentially one of the lowest cost producers out there.
The decision to pursue a DSO solution has come about because the near-surface, high-grade copper mineralisation is easy to process using simple ore sorters and pressure jigs.
DSO eliminates the need for a traditional flotation plant and tailings facility, reducing the project’s environmental impact and its capital costs.
Assuming a C1 cash cost of US$2.63 (A$4.20) per pound (lb), the study concluded the post-profit net present value of the project would be US$149m (A$240m) using a conservative 8 per cent discount rate.
As proof of its economic efficiency and profitability, the study has pinned down an impressively low initial capital expenditure of US$47.4m (A$76m), suggesting the project may be able to pay for itself within three years.
American West is exploring financing options, including off-take agreements and debt solutions, which could dramatically increase investor returns. A fully debt-financed scenario would push the project’s pre-tax internal rate of return to an impressive 135 per cent and an even quicker payback of less than one year.
An additional recent $18.8m funding deal - in exchange for offtake - with New York-based Taurus Funds Management has further strengthened American West’s financial position.
American West Metals managing director Dave O’Neill said: “The initial economic study is an enormous milestone for the Storm Copper project. It is exciting to announce a low capital cost pathway to mine development with significant upside to expand the production profile and mine life as our continuing exploration identifies further copper resources.”
The project sits in good company on Somerset Island in Nunavut and is close to some major base metal deposits, such as the long-running Polaris mine, which has 22mt running at 14.1 per cent zinc and 4 per cent lead.
Nanisivik, another closed mine, hosted an 18mt resource grading 9 per cent zinc and 0.7 per cent lead.
Both mines ran for more than 20 years.
American West is now building on a highly successful 23,000-metre drilling program in 2024, which unearthed several new high-grade copper discoveries. The company has set its sights on growing its inventory.
A strong electromagnetic anomaly, dubbed the Gap, was among the standout targets picked up last year and returned an impressive 20m at 2.3 per cent copper from just 28m depth.
The Cyclone Deeps prospect has hinted at a possible continuation of the already substantial main Cyclone deposit at depth, with drill intercepts such as 10m at 1.2 per cent copper from 311m.
The Squall prospect has also proved its promise, with drilling intersecting 1.5m at 2.36 per cent copper from 181.4m and ending in mineralisation.
Not to be left out of the excitement, the company’s Hailstorm prospect, within a broad 3 square kilometre geochemical soil anomaly, delivered a remarkable set of results, with surface chalcocite boulders assaying more than 50 per cent copper.
Encouraged by these results, American West will start a follow-up exploration program as soon as possible, aiming to unlock additional potential across its 110km-long project leases.
Management says there is very strong potential to quickly add tonnes to the existing mineral resource estimate.
The company saved almost $4 million in logistical costs by pre-positioning bulk supplies at site prior to the winter freeze, enabling it to make a cost-effective start to the 2025 field season.
American West can now start the paperwork for mining permit applications – with its preliminary economic assessment now in the bag - paving the way for feasibility studies and eventual production.
On the back of a strong financial case, low capital requirements and significant exploration upside, the Storm Copper project looks to be shaping up as one of the most attractive copper development opportunities in North America.
And with a new exploration drilling program just over the horizon, the American West appears extremely confident of increasing its resource base, coinciding nicely with a surging demand for the red metal from the green transition sector.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
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