American West Metals has sealed a US$12.5 million (AU$18.8 million) royalty funding deal from TMRF Canada to boost the development of its Storm copper project in the Nunavut territory in northern Canada.
As part of the deal signed with the subsidiary of Australian-based Taurus Funds Management, the first tranche of US$1 million will be paid in the next few days and it will be followed by a further US$4 million after the company completes the royalty paperwork at the Nunavut Mining Recorder’s Office in two to three weeks’ time.
A further payment of US$3.5 million under the royalty package will be transferred once a prefeasibility study (PFS) has been completed on the project and the company has applied for the relevant development permits. A final US$4 million payment will then be dished out once the JORC-compliant resource at Storm hits at least 400,000 tonnes of contained copper, with a grade of at least 1 per cent copper.
Specifically, American West can now continue to push forward with its drill program, which at double the rate of any previous campaign, has already completed 22,000m for the year.
In a smart move, the funding has also allowed the company to buy up bulk supplies for next year’s exploration campaign. The supplies are expected to soon be delivered by ship, shaving almost AU$4 million off the likely logistics bill for next year.
The cash will also be used to accelerate the long-lead environmental, mining and development work needed to confirm the potential of a direct shipping ore (DSO) operation as management moves closer to a forecast PFS date in early 2025.
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. It eliminates the need for a traditional flotation plant and tailings facility and therefore reduces both the project's environmental impact and its capital costs.
American West Metals managing director David O'Neill (99114) said: “We are very pleased to have finalised formal documentation of the royalty funding, which allows us to commence accessing substantial non-dilutive funding for the Storm Copper Project. The royalty funds have allowed us to expand activities at Storm this year, resulting in considerable advancement of the project, which is rapidly taking shape as a potentially globally-significant copper mining operation.”
The project, which is 80 per cent-owned by American West and 20 per cent held by TSX-listed Aston Bay, sits on Somerset Island in Nunavut and covers more than 2200 square kilometres within the Polaris mineral district, 120km south of Resolute Bay. With already existing facilities, including a 60-person camp, the project has prime access to Aston Bay – a deep-water bay on the Northwest Passage.
The project has got off to a strong start with a sizable maiden resource estimate in January, reporting 17.5 million tonnes at 1.2 per cent copper and 3.4 grams per tonne silver, equating to 205,000 tonnes of copper and 1.9 million ounces of silver. But management believes there may still be substantial upside given that the shallow deposit is open in all directions and at depth and will be the focus of the upcoming drill programs.
Additionally, high-grade satellite discoveries at the nearby Thunder, Lightning Ridge, Cyclone North and Cyclone South-west prospects – with hits that include 48.6m grading 3 per cent copper, 15.2m at 2.3 per cent, 27.4m running at 1.1 per cent and 15.4m coming in at 1.4 per cent – have not yet been included in the resource estimate.
To emphasise the scale of American West’s potential at the site, only five per cent of the 100km-long copper belt within its acreage has been tested with geophysics and drilling to date, with several other copper-rich gossans still up for grabs.
With its saddle bags now full of cash, the company will waste no time plunging the drill bits into Storm in the hope of rapidly expanding its copper footprint in northern Canada. And with demand for copper for renewable energy technology remaining so strong – current prices are hovering just below US$9500 per tonne (AU$14,250 per tonne) – management will be looking to brew up a significant red metal storm in the next few months.
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By James Pearson
