Western Copper & Gold: Developing a Premier Copper-Gold Mine

As introductions to start off, my name is Paul West-Sells. I'm the President and CEO of Western Copper and Gold. Western Copper and Gold is a very simple company. We have one asset which is the very large Casino, Copper and Gold project which is located up in the Yukon. I'd like to pause right here and show you a picture. That shows a picture of the site. What you're looking at there is our exploration camp and what’s in the foreground is the actual deposit.


00:00:09 As introductions to start off, my name is Paul West-Sells. I'm the President and CEO of Western Copper and Gold. Western Copper and Gold is a very simple company. We have one asset which is the very large Casino, Copper and Gold project which is located up in the Yukon. I'd like to pause right here and show you a picture. That shows a picture of the site. What you're looking at there is our exploration camp and what’s in the foreground is the actual deposit.

00:00:41 I will be making forward-looking statements, so I encourage you to review this before you make any investment decision. Start off with our ownership structure and cash and those sort of things. We ended last year with $7 million in cash. We burnt through a bit of that. We're probably sitting around $6 million cash in the bank right now. In terms of what we want to do over the next year, that’s more than ample for what we need to do.

00:01:12 Our share prices has been sitting around $1.50. We had a high of $2.00. We've pulled back to $1.40 right now, so I would say it's a good opportunity to buy into the name.

00:01:26 We have about 100 shares outstanding. There's a few options. We have no warrants. Where are the shares? 8 percent is with management and board, but 6 percent of that is with our Executive Chairman Dale Coreman.

00:01:41 A group of high network individuals and there is about a dozen names in there that have the bulk of our shares. These are people that have followed our story for a long time. They are personal friends of our Chairman Dale's or myself. We have a fairly constant contact with this group.

00:02:03 Okay, let's talk about the project. This is the number one ranked copper project according to Goldman-Sachs. We're up in the UCON. I'm going to talk a bit more about this. If you look at what's been happening in the Yukon, over the past 12 months, it's been an absolute frenzy of investment from the majors over the past 12 months. This is a project and for those of you that did not see the previous presentation he was talking about the importance of looking at after tax NPV.

00:02:36 This is a project with a 22 percent IRR and a 2 billion network present value after tax at today's commodity prices with a full feasibility study. This is an absolutely key and why we represent very good value.

00:02:55 There's a map there that has disappeared. Key thing here, let's talk about size. 9 million ounces of gold, 4.5 billion pounds of copper in the reserve. Another 9 million ounces of gold and 5.4 billion pounds of copper in the inferred resource.

00:03:14 How does that compare? Let's look at this first from the copper perspective because when you look at that amount of copper and gold, half of the value in the deposit is copper and half of the value in the deposit is gold. When you look at from a copper perspective, just the copper in the deposit is about the size of the Rosemount Project which was bought a few years ago Hudbay for 550 million.

00:03:37 He looked at it in terms of copper equivalent we're double that size. When you look at this from a gold perspective, with just the gold in the deposit we're about the size of the Detour Gold Mine which has started up a few years ago. If you look at us in terms of Gold equivalent we're actually larger than NoveGold's done the Project. This is a significant sized copper gold project.

00:04:05 One take away that I hope to leave you guys with is that these sized deposits, these large double digit million ounces of gold deposits and large copper deposits are very, very few and far between. We feel very honored to have one in the great jurisdiction in the Yukon. To talk a little bit about the copper and gold markets here. First of all I'm going to talk about copper. I'm sure you guys have heard lots of gold companies talking about gold.

00:04:36 There're lots of gold deposits out there. In terms of copper deposits and deposits with sizeable amount of copper they're actually fairly rare. When you look at the copper market. Look at this graph. This is a fairly common graph and in the copper industry. The green line on the top represents the demand. Demand is straight forward, grows about 1 to 2 percent per year.

00:04:59 It's fairly consistent. Copper is a big commodity in terms of the supply and demand. Then you look at the supply. The supply as you can see is consistently dropping. You have to constantly be building more mines to supply that supply-demand deficit. If you look at what's predicted by 2000 and in 10 years time 2027 it's predicted that there's going to be a 5 million ton copper deficit. We talked about the size of the casino project and the copper gold project I have.

00:05:29 Even a project of that magnitude it would take 65 mines the size of the casino to make up that supply deficit that’s anticipated happening in the next 10 years. That graph is actually it's a win McKenzie graph. They're completely independent in terms of their analysis. New mines need to come on line to provide additional copper. It's just really where those mines going to come from.

00:05:55 On the gold side of the equation it's fairly simple. There's just hasn’t been a number of significant deposits discovered in the gold space. That shows the amount of gold found throughout the sector. You can see that it's just been dropping year after year after year.

00:06:12 When were sitting here with a deposit that has a close to 18 market ounces of gold, we feel fairly confident that this something that’s going to be attractive to a number of investors. This shows our share price of over the past year and really what this shows is why people buy a junior mining company's when they're interested in investing in gold and base metals. Okay.

00:06:44 If you go back to beginning of 2016, we were sitting about 30 cents. What happened at the beginning of the year is that the price of gold went up by $200 an ounce. We essentially doubled. Then you go to about a year ago summer of 2016.

00:07:00 The summer of 2016 the first major mining company Golcorp makes an investment in the You know, buys Kaminak for $500 million. We see our share price move on the back of that. Then you go to around October of last year. That’s where you see real significant move of our share price. That’s on the back of copper.

00:07:23 When copper went from $2 and there had been $2 for years. It finally went up to 2.50 and then up to 2.76. You saw our share price go up significantly. That’s really where and during that time you also saw a significant investment from a number of other major gold companies like Agnico Eagle, Barrick and Newmont in the Yukon. We've seen our share price go up by almost four times in the past year really on the price of copper and the price of gold going up and the investment in the Yukon.

00:07:55 I tell people look if you believe in copper and you believe in gold and you want good leverage to that we're a good name to hold. We still have more room to grow. If you look at our value, if you look at the enterprise value of the company per pound of copper or a per pound of copper equivalent in the ground you can see as this shows that we;re still fairly undervalued as compared to our peers.

00:08:22 Then on the gold space you see that even more so. The gold space in terms of enterprise value per ounce of gold equivalent on the ground. We still have a significant way to go before were at the full evaluation of the share price.

00:08:38 Okay. I don’t know what that slide had. Let's talk a little bit about the company. This shows management and board. We're missing a couple of pictures. We've got our Chairman Dale Corman. He's been in the mining industry his whole life.

00:08:57 His big win was with Western Silver. In 2006 he sold that company to Glamis Gold for 1.6 billion. We spun out of that and sort of continued on from there. I've been in the industry my whole life. I worked for a number of majors before joining Western 10 years. Cam, he's one of the key guys. He worked for Bechtel Engineering. He's built large copper gold projects such as this one.

00:09:28 When we're talking about the mine and the design of the mine this is really Cam's mind. Last, we've got Julian whose been with us for 10 years as well. Everybody in that entire senior management team has been with the company for 10 years and really we're a fairly simple company. What we love to do is to create value by derisking assets. We acquired it in 2006. We acquired it from Ross Beauty Lumina Resources.

00:09:55 We took the project, finished off the drilling. We did two pre-feasibility studies then a full bankable feasibility study. Then we brought it in to permitting. We're about half way through permitting at this point and time. It's a very, very simple, straight forward, derisking the asset and moving it forward.

00:10:16 One of the things we're very proud of is how we're working in the Yukon and our outreach in the Yukon. We're worked very, very close with the local communities. We're very, very happy that we've got agreements with all the key first nations in the area. I've been talking for a while about the – how good the government of the Yukon is to ask something there, to help sponsoring us being here. The nice thing is that over a year they put their money where their mouth is. They put together a $200 million infrastructure package for infrastructure in the Yukon.

00:10:49 $130 million of that infrastructure directly benefits Western Copper and Gold's Casino Project. When people ask is it mining friendly? Absolutely. Unfortunately we're missing our cross section here but really what this is to show is that there's two parts to the deposit. If any one's got a print out you can see it. The surface of the deposit is depleted and copper and enriched in gold. That’s mined off first and goes into a heap letch.

00:11:24 That’s the 157 million tons at 0.3 gram per ton gold. Beneath that is the – the main part of the deposit, 965 million tons at 0.5 percent copper equivalent. Importantly, over the first four years the grade is quite a bit higher. That’s the 172 million tons at 0.7 percent copper equivalent which is quite a good grade. As I said from the onset the thing that really separates this project from the pack is the economics.

00:11:58 This is at 12.50 gold, 250 copper. We ran these number both three weeks ago. 2.1 billion net present value. 21.7 percent IRR after tax to days prices. This is an incredibly economic project for a project of this scale at today's commodity prices. There's some very – we're were not going to talk about the reasons why because that’s slide's disappeared. One of the key reasons why is that this project has one of the best strip ratios in the business at 0.6 to 1.

00:12:36 Strip ratio is one of those boring metrics that mining engineers look at. The key thing is that if compared to a typical Porphyry copper deposit having that lowest strip ratio drops my operating cost by about 25 percent. Yes. That shows the strip ratio. That early high grade, low strip ratio. Those are the two key things that really drive the good economics of the project.

00:13:02 Capital cost, big projects take a big capital. The capital cost is 2.5 billion. That sounds like a of money because it is a lot of money. I want to talk a little bit about what that actually means. If you look at the capital intensity so that’s U.S. dollars per ton of copper equivalent produced per year. We're right in with the pack. It's tough to read but if you look at all those projects those are 85 projects that are poised to potentially come online in the next 10 years. You find that half of them actually have capital cost greater than what we have at Casino.

00:13:39 The last two slides I'm going to leave you with is this one and then the next one. If you don’t like what I'm saying this is Goldman-Sachs. They took 85 copper projects from owned by the majors to owned in junior mining companies such ourselves, put them together, say what copper price do these need to forward? We were number one that list.

00:14:03 When the new copper mine start to get built it's going to be us, point one. Point two is really what's been happening in Yukon. When people talk about the majors moving in to the Yukon then majors making investment in the Yukon, they're not talking about any part of the Yukon, they're talking about our neighborhood. That’s mentioned of orange in the middle. Everything to the west in green, that’s Gold Corp.'s acquisition of Kaminak.

00:14:29 If you look at all the stuff in yellow, to the east that’s the Agnico Eagle. If you look at the brown it's Newmont, on and on. These are claims touching our claims. That district is where you're seeing the investment. We'll continue to see that going forward.

00:14:47 To finish this is sizable copper-gold deposit. We're seeing significant investment right in our area from the majors. We're got great leverage to copper and gold and even though the consensus is there's a looming copper deficit coming. We're got to clear path to creating value.

00:15:06 Thank you very much.