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Australian copper explorer American West Metals (ASX: AW1; FRA: R84) is on track to become Canada’s next copper producer – extremely low-cost and high-yielding. It would take just three years to recoup the initial CAPEX of US$47.4 million. This is the conclusion of the first Preliminary Economic Analysis (PEA) the Company has just released for the Storm Copper Project in Canada. The study demonstrates a rapid, highly cost-effective path to start up a ten-year modeled open-pit, direct shipping DSO copper concentrate production from 10.3 million t @ 1.3 % Cu, 3.7 g/t Ag for 454,000 t of high-grade copper-silver concentrate with 18.3 % Cu and 52 g/t Ag. Direct shipping of copper concentrate is highly compatible with ESG criteria because it does not require chemical processing and does not produce environmentally harmful tailings. Above all, however, the simple optical-mechanical separation of the copper ore minimizes the high initial capital expenditures that are otherwise typical of mining projects. Even over the entire modeled life of 10 years, the calculated CAPEX is only US$80.3 million. The low operating costs make the project extremely competitive. The huge exploration potential in the more than 2,000 km² license area on Somerset Island remains as an upside for shareholders.

According to the study, the project shows a strong financial return with an after-tax net present value of $149 million and an IRR of 46%. A 100% debt financing could drastically increase the return even further. In this case, the pre-tax IRR would rise to 135%. Assuming that the mine life can very likely be significantly extended by expanding the resource, the calculated financial return on the investment increases again. As AW1 management has indicated, the company is already in discussions with several parties regarding options for offtake financing or debt financing.

The current year 2025 is expected to be a big year for the expansion of the deposit. American West plans extensive drilling to expand the copper resource at Storm, which already contains 20.6 million tons at 1.1% Cu and 3.8 g/t Ag. The program includes several high-value exploration targets along a 110-kilometer copper belt. Management sees great potential for a significant extension of the mine life and an expansion of operations.

Approval process for copper-silver production begins

On the basis of the available scoping study, the company is now in a position to begin the approval process for the proposed mine. The submission of the approval process will unlock US$3.5 million under the existing royalty agreement, which would mean a non-dilutive form of financing.

Conclusion

With the results of the scoping study, American West is laying the foundation for long-term growth and a significant increase in value for its investors. While attentive observers had already expected the study to confirm the outstanding quality of the project, the paper could still have the effect of a turning point in the perception of the company since the market has not unanimously welcomed the company’s strategy of early cash flow and independence. Added to this was the fear of further dilution in the event of a cheap capital raise, which caused the share price to fall back to AUD 0.04, corresponding to a market capitalization of just AUD 26 million – less than was invested in exploration to date! American West does indeed not easily fit with conventional expectations. The vast majority of copper explorers have no choice but to focus on rapid resource growth and “blue sky” projections, because it is clear from the outset that the CAPEX for these companies will not be viable. This applies particularly to porphyry copper projects. However, American West’s Storm project is an asset with a completely different profile. It is extremely rare for a project that an open-pit mine, simple processing, and high copper grades come together so favorably that even a junior can consider its own starter production. The required funds of less than 50 million US dollars are almost peanuts for off-takers or other financial partners compared to what is called for in other projects. The scoping study makes it clear that American West does not have to wait for a takeover, but has the opportunity to be master of it’s own destiny. We see American West on the fast track to becoming the next copper producer in Canada. This also means that the company would not have to share the massive exploration upside of it’s huge license area with anyone else.

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