@coldtoes from CEO.CA, I agree that expectations might have been set too high for a repeat of Summer 2023. However, this year’s progress with AW1 and the Storm Copper Project indicates things are more advanced, which makes it less of a wild speculative play and more of a sure bet. I’m actually surprised the market hasn’t responded more to the developments. Here's why:
Taurus Royalty Deal: Taurus paid $12.5 million USD for a 1% royalty, valuing the resource at a minimum of $1.25 billion USD. But, based on their expectations of making a profit and the contract's condition that AW1 needs to put 400k tonnes of Cu in the ground, Taurus likely values the resource at more than $3.48 billion USD. This is a massive endorsement for both $AW1.AX and $BAY.
AW1 Institutional Raise: They secured $7 million without even going to market. This shows serious confidence in both the company and its resources.
Ongoing Assays: We still have results coming from the 24,000 meters of drilling completed this year.
Nunavut Government Support: Last year, AW1 received $250k for drilling, and this year a local MLA was onsite—this isn’t your typical "Junior Explorer" stuff. It speaks to Tom's connections and AW1’s growing credibility.
Successful Sea Lift: This year’s sea lift was completed without issues, showing that not only is it feasible, but it’s also a huge money-saver.
Upcoming PFS: We’re still expecting a Pre-Feasibility Study this year.
Direct Shipping Ore (DSO): AW1 is targeting early 2025? (I think this is more like 2027 - 2028) for DSO, accelerating revenue generation.
@learningwithgratitude and @coldtoes from CEO.CA—I think you both have it spot on. Taurus purchasing that 1% royalty indicates they expect at least a 5-10x return, especially considering it takes 10-25 years to realize those gains. Being conservative, even at a 5x multiple, the resource could be valued at over $6.25 billion.
Now, IMHO if we look at the numbers:
- Storm Copper Project Resource Valuation (JORC Code 2012): 17.5Mt @ 1.171% Cu, 3.4g/t Ag (205Kt Cu, 1.9Moz Ag)
Resource Value (AUD$) once processed:
Current Estimate: 205,000 tonnes Cu x 90% pit-to-plant recovery, 65% DSO recovery (Crush, Screen, Ore Sort & Jig to DSO) x AUD$6.56/lb x 2,205 (pounds to tonnes) = AUD$1.734 billion, excluding silver credits
Updated MRE (Dec 2024): 400,000 tonnes Cu x 90% recovery, 65% DSO recovery x AUD$6.56/lb x 2,205 = AUD$3.385 billion
Mineral Processing Rate (Annual) for shallow copper deposits like Cyclone and Chinook:
1,500,000 tonnes/year (proposed rate) x 1.5% Cu x 65% DSO recovery (average) x AUD$6.56/lb x 2,205 = AUD$260.4 million/year (excluding silver credits, Cu price at current values)
Mine Life: Based on 1.5 Mt/year, processing the current 17.5Mt resource will take about 11.7 years.
Given the exploration plan’s goal to hit a 400,000-tonne Cu resource by the updated MRE, that implies a resource size of 34.2Mt @ 1.171% Cu or 40.0Mt @ 1.0% Cu. This translates into 23-27 years of mineral processing at the current 1.5 Mtpa plant capacity. That’s a career-long project for any young mineral processing engineer since the exploration geo's have done their job!
Here’s my question: Considering that the proposed plant design (1.5 Mtpa) would take decades to process the known resource, doesn’t it make sense for AW1 to plan for a larger processing plant?
If we scale up to 3 Mtpa, we could halve the mine life to 13 years while increasing revenues from AUD$260M to AUD$423M per year— a 63% increase in revenue for a relatively small capital investment.
New Processing Plant Estimate (3 Mtpa rate):
- 3,000,000 tonnes/year x 1.5% Cu x 65% DSO recovery x AUD$6.56/lb x 2,205 = AUD$423 million/year (excluding silver credits)
With this potential and the continued exploration upside in the Tornado, Blizzard, and Tempest areas, the case for a plant expansion (Phase 2 development after a few years of operating) seems like a no-brainer. Any initial process plant design will require provisions for expansion.
(20min delay)