Storm Copper Project PEA and the Importance of Additional...

Storm Copper Project PEA and the Importance of Additional Drilling Data

A PreliminaryEconomic Assessment (PEA) for a new sedimentary copper open pit project likeStorm Copper would typically incorporate several key aspects to assess itsviability. Here's a breakdown considering the details of AW1's Storm projectand possible reasons for the significant delay:

Key PEA Elements:

• Geology & Resources: This section outlines the geological understanding of the deposit, including the type of copper mineralization, the size and grade of the orebody based on current drilling data (maiden JORC resource of 205,000 tonnes of copper metal in Storm’s case).
• Mining Plan: This details the proposed mining method (open pit in this case), potential pit design, waste rock management, and ore extraction rates based on the resource estimate.
• Processing: The chosen processing method is described, including crushing, screening, and the innovative Ore Sorting technique for AW1 to upgrade the copper grade from 1.2% to a targeted 20% Cu Direct Shipment Ore (DSO) product.
• Infrastructure: The PEA outlines the necessary infrastructure for the project, including access roads, power supply, water management, and waste disposal facilities.
• Capital and Operating Costs: Estimates for establishing the mine, processing plant, and ongoing operational costs are included.
• Economic Analysis: This section assesses the project's potential profitability, considering factors like capital and operating costs, projected metal prices, metal recoveries and potential revenue. The maiden JORC resource estimate was based on Open pit mining assumptions of copper price being USD$3.85 per pound (USD$8,487.90/t) with 90% recovery of total copper. Costs are USD$5/t for mining, USD$10/t for processing, and USD$12/t for G&A, leading to a cut-off grade of 0.35% copper. Risks and uncertainties are also identified.

Why AdditionalDrilling Might Delay the PEA:

The delay inreleasing AW1's PEA likely stems from their desire to incorporate additionaldrilling data into the assessment. Here's why that information is crucial:

• Resource Expansion Potential: AW1 expects the maiden resource to potentially increase by 100% to 150%. This significant increase could substantially improve the project's economics by providing more copper to be mined and processed than what was considered in the maiden base case scenario.
• Confirmation of Orebody Extensions: The orebody being open in all directions suggests there's a high chance of rich copper mineralization extensions. Including data from these extensions in the PEA would provide a more accurate picture of the mineable resource.
• Improved Mine Plan: With a larger resource, the mine plan could be optimized, potentially leading to a longer mine life or higher production rates.
• Metallurgical metric assumptions: Does the company want additional Ore Sorting testwork completed to more accurately define the copper upgrading characteristics of different ore domains identified at Lightning Ridge, Thunder, Cyclone North, etc.

By incorporating newdrilling data, AW1 may be aiming to present a more robust and realistic PEA topotential investors. This can be a strategic decision, even if it leads to adelay. Investors are more likely to be confident in a project supported by acomprehensive resource estimate and a well-defined mine plan.

Technical Risk:Incomplete Data

The delay in the PEAhighlights a technical risk associated with early-stage exploration projects:incomplete data. Relying solely on the maiden JORC resource estimate mightunderestimate the project's potential. While it might seem faster to release aPEA based on existing data, the lack of confirmation drilling could lead to aninaccurate assessment and potentially deter major investors. Also, could the PEAbe delayed due to Aston Bay Holdings (BAY) delayed release of their version of the Stormresource estimate?

In conclusion,careful consideration of additional drilling data, even if it causes a delay,can strengthen the PEA for the Storm Copper Project. This approach demonstratesa commitment to providing a more complete picture of the project's potentialand could ultimately benefit AW1 in attracting investment.