READ THE FULL WCUFF RESEARCH REPORT
World Copper Limited WCUFF WCU is a junior mining company focused on the exploration and development of two copper-oxide properties, the Escalones Copper-Gold Porphyry-Skarn Project in Chile and its soon-to-be acquired Zonia Copper-Oxide Project in Arizona (through a merger with Cardero Resource Corp.). Management is fast tracking a PEA on the Escalones Main deposit and has plans to expand the resource base at Escalones (Mancha Amarilla) and Zonia (NE target). In addition, the company holds an option to earn 100% of the Cristal Project, a prospective copper porphyry property in northern Chile.
In 2020, management's focus started to evolve toward pursuing the potentially economically viable oxidized copper mineralization (as opposed to traditional sulfide mineralization) situated less than 300m below the surface of the Main deposit at the Escalones Project (underlying the Meseta) and the contiguous prospective Mancha Amarilla ridge. A recent revised NI 43-101 Technical Report (dated October 6, 2021) estimates Inferred Resource of copper oxides at the Escalones Main deposit contains 3.447 billion pounds of copper Management is fast tracking a PEA (Preliminary Economic Assessment) on the Main deposit. In addition, management is planning a small Phase 1 drill program at Mancha Amarilla as soon as the necessary permits are obtained.
The merger with Cardero Resource Corp. is expected to close in the very near future. Through this share transaction, World Copper is acquiring 100% of the Zonia Copper-Oxide Project. After the merger has closed, management plans to commission an updated PEA that considers expanding the resources beyond the 100% privately-owned land by including the estimated resources on BLM and Arizona state land.
As part of management's strategy to increase the company's resource based, two prospective target areas are scheduled for further exploration: the Northern Target Cluster of porphyry-related mineralization at the Escalones Property (Rio Negro, Argüelles East and Argüelles) and the northeast Copper-Porphyry target at the Zonia Property. All have been investigated and explored through geophysical surveys and geochemical surface sampling. Among the three prospective northern targets, the central area of Rio Negro is management's priority drill target.
World Copper's stock is benefitting from several catalysts. Currently, there is a very positive macro-tailwind for the copper mining industry, driven by the outlook for a looming supply shortage based on the confluence of increased demand from green electrification initiatives and an impending reduction of mine production. By 2030, projected demand for copper is expected to exceed expected mine production by 5.7 million tonnes, according to S&P Global Market Intelligence.
Moreover, there are impending company-specific catalysts, including the upcoming PEA on the Main deposit at Escalones and the advancement of the soon-to-be acquired Zonia Copper Project in Arizona. In addition, the company should experience continuous news flow from management's exploration initiatives at Rio Negro at Escalones and the northeast target at Zonia.
Escalones Project
Management is advancing the Escalones Copper-Gold Porphyry Project in a novel direction, specifically as an oxide copper resource. Historically, the prior owner of the property, Gold Springs Resource Corp. (formerly known as TriMetals Mining, South American Silver and General Minerals) pursued the advancement of the porphyry-related deposit as a precious metals project, concentrating on the supergene body of sulfide mineralization. Gold Springs was and is a junior gold-silver company. As a result, the prior owner explored, evaluated and advanced Escalones as a sulfide porphyry mineral resource with special interest in precious metals.
Since the management of World Copper has been focusing on the oxide copper mineralization that overlies the sulfide deposit. First, shallow copper-oxide ore can be more economically mined with an open pit design with a lower strip ratio than deeper copper sulfide ore. Second, oxidized ore can be processed less expensively through heap leaching and in a greener manner.
To date, 24,939 meters (53 holes) of drilling has been completed on the Escalones Main Zone deposit and associated skarns. The drilling programs were carried out between 1998 and 2013 by General Minerals Corp. (1998-2001) and South American Silver Corp. (2007-2013). Essentially, both companies are the same entity, which changed its name and corporate structure several times between 2006 and 2019.
Management is fast tracking a PEA on the Escalones Main deposit. There is also a significant opportunity to expand the Escalones resource by drilling the immediately adjacent Mancha Amarilla target, which management believes is an extension of the Main deposit.
Escalones Expansion Targets
The Escalones Main deposit remains open for oxidized mineralization laterally to the south (Mancha Amarilla) over an area roughly equal to the outline of the Estimated Mineral Resource of the Escalones Main deposit, itself. Furthermore, geophysical and geochemical anomalies indicate that two skarn extensions flanking the Escalones Main deposit on the east and west are highly prospective. All three (Mancha Amarilla and both skarns) are high priority expansion targets.
Additionally, there is a cluster of three (3) prospective porphyry and skarn targets (Rio Negro, Argüelles Este and Argüelles) that are situated between 8km and 10km to the north of the Escalones Main deposit. These three large geochemical anomalies (with diameters ranging between 2,000m and 3,000m) have not yet been drilled, though two surfacing sampling programs have been conducted, the first by General Minerals in 1999 and the second by World Copper in 2021. Management is planning an initial 2,000-meter drill program in order to test the more promising hydrothermal alteration zones at Rio Negro.
During March and April 2021, World Copper conducted rock sampling program, along with a mapping effort, over two of the Escalones extension targets (Mancha Amarilla and East Skarn) and all three northern targets (Rio Negro, Argüelles Este and Argüelles). 336 samples were collected from Mancha Amarilla and East Skarn targets, while over 180 samples were taken from the Rio Negro, Argüelles Este and Argüelles. Having interpreted the geochemical analysis of the surface samples, management is planning a Phase 1 (2-hole) drill program at Mancha Amarilla. World Copper is proceeding in the process of obtaining the necessary permits. Also, the central area of Rio Negro is management's priority drill target among the three prospective northern targets.
Zonia Property
On April 13, 2021, World Copper entered into a letter agreement with Cardero Resource Corp. to combine the businesses of the two companies with 60% of the post-transaction company to be owned by existing shareholders of World Copper. On December 10, 2021, Cardero shareholders agreed to the business combination. Through this share transaction, World Copper is acquiring 100% of the Zonia Copper-Oxide Project located in Arizona. The merger is expected to close in the very near future.
The 4,280-acre Zonia Property encompasses a near-surface copper-oxide resource, along with a brownfield site which was mined in the late-1960s and 1970s (see Production Section below). Since the discovery of mineralization in the 1880s, the property has been historically explored by many owners and lessees through over 600 drill holes (50,000m), geochemical sampling, aerial photogrammetric surveys, topographic surveys, geologic mapping and metallurgical studies (indicated recoveries between 71% and 81%), along with being developed with exploration shafts and five levels of approximately 4,000 feet of laterals and crosscuts (between 1916 and 1920).
In April 2018, a PEA was completed which only considered the resources underlying private lands. The Estimated Measured and Indicated Resources contain 510 million pounds of Cu while the Inferred Resource is estimated to contain 154.6 million pounds Cu. With plans to update the PEA to include all known resources underlying the Zonia Property, management expects to expand the Estimated Resource by 30% to 50%.
In addition, a prospective copper-porphyry target (situated northeast of the main deposit) has been identified. Applications have been filed for a 5000-meter drilling program that pertains to both BLM administered public lands and Arizona state land. The prospective target northeast target is located at the unpatented claims, which are administered by the BLM.
Longer-term, management contemplates advancing toward a Phase I production stage, mining ore contained within the privately-owned land, which has an accelerated permitting process.
Valuation
Based on our calculation of share value of attributable resources, our target for World Copper's stock is $2.03. Our calculation of share value of attributable resources is primarily based on the ascertained net asset value of the Escalones Project, which is determined by adjusting the value of estimated resources for the expected recovery rate and mining/processing costs.
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