Western Copper and Gold (TSX: WRN; NYSE-AM: WRN) announced Friday a strategic equity investment by Japan's Mitsubishi Materials to advance the company's Casino copper-gold project in Yukon towards development.
Mitsubishi has agreed to acquire about 5% of Western's outstanding shares at $2.63 per share. The exact number of shares to be issued (and by extension, total proceeds received) will depend on whether Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) elects to exercise its right to participate in equity financings to maintain its 7.84% ownership.
Assuming Rio Tinto elects to exercise its participation right in full, about 8.1 million shares would be issued to Mitsubishi for gross proceeds of $21.3 million, and around 880,000 shares would be issued to Rio Tinto, bringing in $2.3 million.
Western Copper's shares gained 0.8% by 12:45 p.m. ET on the investment by Mitsubishi. The Vancouver-based miner has a market capitalization of $362.3 million.
Located 300 km northwest of Whitehorse, the Casino property is host to a porphyry copper-gold-silver deposit containing 2.4 billion tonnes of measured and indicated resources at grades of 0.14% copper, 0.19 gram gold per tonne and 1.5 grams silver, for 7.6 billion lb. copper, 14.5 million oz. gold and 113.5 million oz. silver.
In summer 2022, Western published a feasibility study on the Casino project, which pegged capital costs at a whopping $3.6 billion. The study estimated Casino's after-tax net present value, at an 8% discount rate, at $2.3 billion and its internal rate of return at 18.1%. Over a 27-year project life (in the case of heap leach, 24 years), annual production would reach 163 million lb. copper, 211,000 oz. gold and 1.3 million oz. silver.
In connection with the investment, Western and Mitsubishi will enter into an investor rights agreement that gives Mitsubishi the right to appoint a member to the Casino project technical and sustainability committee, as well as one or more representatives to Western Copper's board.
Mitsubishi will also have the right to participate in future equity financings to maintain its ownership level. These rights can be exercised within 24 months of Mitsubishi's investment, unless its interest falls below 3%.
In a release, Paul West-Sells, CEO of Western Copper, said Mitsubishi's investment is a "strong endorsement" of the Casino project.
Western will remain the sole owner and operator of the Casino project, which it has been developing since 2008. The project encompasses the construction of a conventional open pit mine along with a mineral processing plant and heap leach facility, for which the environmental and socio-economic impacts are currently being reviewed by the Yukon government.