Gunnison Copper update lifts project value to near $2B

Gunnison Copper (TSX: GCU) updated a preliminary economic assessment (PEA) for its namesake project in Arizona, increasing the value by half and advancing towards prefeasibility, permitting and financing.

The update issued Wednesday raises the Gunnison project’s net present value (at an 8% discount) to $1.95 billion, assuming a copper price of $4.60 per lb., compared with the initial PEA from 2024. Mine life rises by three years to 21.

The post-tax internal rate of return (IRR) grows to 23% from 21%, though initial capital costs increase by 18% to $1.54 billion. The site is about 105 km east of Tucson.

“The updated PEA underscores the scale and compelling economics of the Gunnison copper project,” CEO Stephen Twyerould said in a release. “Gunnison offers shareholders meaningful exposure to a large-scale, long-life US copper asset.”

The project dwarves Gunnison’s existing producer – the Johnson Camp mine (JCM) that started output last year – with eight times the size. The heft is going to be needed as the West grapples with a looming copper shortfall in the face of rising demand for the plumbing and wiring metal. Some 60 new copper mines are needed in just four years, Benchmark Mineral Intelligence says.

Enhancements drive NPV

About 83% of the $692 million increase in the net present value over the initial PEA was driven by operational enhancements at the site, Twyerould said. These include the addition of the high-grade Strong & Harris satellite deposit, material sorting and optimization initiatives. The Strong & Harris deposit would add about 25 million tonnes for the open-pit and heap leach operation.

The updated study envisions output of 3.2 billion lb. of copper cathode over the mine life, with average annual production of 174 million lb. in the first 15 years. Like JCM, Gunnison would use solvent extraction and electrowinning processing.

The PEA update follows a year of milestones for Gunnison, when JCM was the first to produce copper cathode using Rio Tinto (NYSE, LSE, ASX: RIO) venture partner Nuton’s sulphide bioleaching technology. Three months before that, Gunnison produced its own cathode, making JCM the US’s newest red metal producer.

Company shares gained 10% to C$0.61 apiece on Thursday, before falling 3.3% on Friday morning to C59¢ apiece in Toronto, valuing the company at about C$254 million ($186 million).

Gunnison’s mother lode

While JCM is more advanced than the Gunnison project, the namesake site hosts 831.6 million measured and indicated tons grading 0.31% copper for 5.1 billion lb., according to the initial PEA prepared by predecessor Excelsior Mining. Gunnison is about 2 km north of JCM.

Inferred resources total 79.6 million tons grading 0.2% copper for 325 million lb. of contained metal. A ton is 0.91 of a tonne. The new PEA did not update Gunnison’s resource.