Mitsubishi enters Casino project in Yukon, acquiring 5% stake in Western Copper

Site of the Casino copper-gold project in Yukon. Credit: Western Copper and Gold

Western Copper and Gold (TSX: WRN) announced Friday a strategic equity investment by Japan’s Mitsubishi Materials to further advance the company’s Casino copper-gold project in Canada’s Yukon Territory towards development.

Mitsubishi has agreed to acquire approximately 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 Canada elects to exercise its pre-existing right to participate in equity financings by the company to maintain its current ownership interest of approximately 7.84%.

Assuming Rio Tinto elects to exercise its participation right in full, then it is expected that approximately 8.09 million shares will be issued to Mitsubishi for gross proceeds of C$21.3 million, and around 880,000 shares will be issued to Rio Tinto for gross proceeds of C$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 C$362.3 million ($263.7m).

In connection with the investment, Western and Mitsubishi will enter into an investor rights agreement whereby the latter could appoint a member to the Casino project technical and sustainability committee and have one or more representatives on the Western board.

Mitsubishi will also have the right to participate in future equity financings to maintain its ownership in the company. These rights can be exercised within 24 months of Mitsubishi’s investment, unless its share ownership falls below 3%.

“The investment by Mitsubishi Materials is a strong endorsement of the Casino project. We look forward to working with Mitsubishi Materials to advance Casino,” Paul West-Sells, CEO of Western Copper, said in a news release.

Following the investment, 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.

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 g/t gold and 1.5 g/t 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, outlining an after-tax net present value, at an 8% discount rate, of C$2.3 billion with an internal rate of return of 18.1%.

Over the 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, the study shows.