American West presents new resource estimate in preparation for DSO mining scenario

American West Metals (WKN A3DE4Y / ASX AW1) has increased its copper resource at the Storm Project on Somerset Island, Nunavut, to 20.6 Mt @ 1.1% Cu and 3.3g/t Ag (229Kt copper and 2.2Moz silver) in the recently completed 2024 drilling season while significantly improving the confidence of the resource estimate.

The Storm MRE includes data from 185 reverse circulation (RC) and 95 diamond drill holes, 49% of which were completed during the 2024 field season. The main focus of the geologists was on upgrading the resource category from inferred to indicated resources. More than 61% of the contained metal is classified in the “Indicated Resources” category: 10.6 Mt @ 1.3% Cu, 4.1 g/t Ag (138 kt copper and 1.4 Moz silver). Previously only approximately 28% (4.8MT) of the global resource @ 1.26% Cu was classified in the indicated category. 100% of the MRE is within 200m of surface, highlighting the strong potential for open-pit mining. 100% of the MRE is classified as fresh chalcocite-dominant copper sulfide, with detailed studies confirming its amenability to simple processing, including pea-size grinding.

The expansion of the indicated resource is strategically important for the validation of future economic calculations, but also for approval procedures. Investors had apparently hoped for a larger quantitative expansion of the resource in the former. The stock therefore closed at a one-year low of A$0.048 on around A$500,000 in trading volume. American West is planning a webinar on December 17, 2024 to discuss the announcement. Time: 8:30 AWST (Perth), 11:30 AEDT (Sydney/Melbourne) Register: The Company invites investors to submit questions via the registration page or by emailing investors@investability.com.au.

Dave O’Neill, CEO of American West Metals, commented: “The updated JORC-compliant MRE for the Storm project has delivered what we believe to be the foundation for Canada’s next copper mining camp. This year’s drilling has significantly de-risked the Storm resource and brought much of the copper metal in the Cyclone and Chinook deposits into the JORC Indicated category. This classification is essential for the granting of permits and the ongoing evaluation of the project and allows us to develop robust mine plans and economic models. The updated JORC-MRE also highlights the strong growth potential of the Storm area, with the known copper deposits remaining open. In addition, the high-grade Gap and Cyclone Deeps discoveries from 2024 are not yet included in the MRE. Accelerating the definition of further copper resources within Storm and the regional areas will be a focus of future drilling programs. The updated JORC MRE is already being incorporated into a revised mine plan and development scenario that we believe will underscore the exceptional opportunities at Storm.”

The rapid upgrade of copper resources from inferred to indicated highlights the continuity and quality of the current Mineral Resources. This provides the Company with a high degree of confidence in further resource growth and the potential definition of new copper resources at the Storm Project. All mineralization defined within the MRE is classified as fresh sulfide and consists predominantly of chalcocite. The deposits remain open in most directions and require further drilling to determine the full extent of copper mineralization.

Figure 1: Plan view of total MRE blocks (shown + inferred) for the Storm project overlaid on aerial photography. Resource blocks are colored at a 0.35% cut-off and also illustrate the portion of the MRE that is over 1.2% Cu.

Strong Exploration Potential: Only 5% of the Project Area Explored

The open-ended mineralization of the known deposits, the recent discoveries of high-grade copper mineralization in the Storm area and the largely untested 100-km prospective copper horizon underscore the outstanding potential for discovery and definition of further resources within the project area. Six immediate opportunities to expand and add further resources at Storm have been defined, including the recently discovered high-grade The Gap Prospect, as well as the earlier-stage Squall, Hailstorm, Tornado/Blizzard, Seabreeze and Tempest areas.

Hailstorm is a new discovery for the 2024 season, with reconnaissance activities identifying massive blocks of chalcocite on surface. One of the chalcocite boulders (sample Y007193) assayed over 50% copper. Reconnaissance work was followed up by a dense soil sampling program that identified a 250m x 250m copper in soil anomaly that remains open to the south. Hailstorm has not been drill tested and is a high priority target for 2025 drilling.

Conclusion: American West deliberately chose a cautious strategy in 2024 that emphasized increasing the quality of the resource rather than rapidly expanding it in the low-end “inferred” category. The investors, including many private investors, had apparently hoped for exactly the latter, given the rapid resource growth of the previous year, and perhaps also for new discoveries within the 100 km long prospective copper-bearing horizon in the project area, of which only 5 percent has been explored to date. One could almost come to the conclusion that management has disappointed its audience for professional reasons. It is therefore extremely important that American West explains its actions better: the new resource estimate is primarily intended to prepare for a DSO mining scenario at Storm! The company has already completed detailed mining and economic studies, which are a critical step in preparing for future mining permit applications. In addition, ongoing metallurgical studies by American West have confirmed that the ores are amenable to a range of low-cost ore sorting and processing techniques. In our view, the current share price is not based on supposedly disappointing results, but on insufficient management of expectations. We maintain our view that American West stands out among other copper explorers because very few have the opportunity to extract DSO material in an open-cast mine – especially at average grades of 1.3 percent copper. This is precisely where the opportunity for investors lies.