Expansion of existing and definition of new resources planned
Australian copper company American West Metals (WKN A3DE4Y / ASX AW1) sees an opportunity to develop its Storm project in Nunavut, Canada, into a “globally significant copper district”. According to the company, there is a possibility to establish a potentially low-cost mining operation with a high profit margin relatively quickly. In order to move forward as rapidly as possible, American West has now secured a total of AUD 10 million in fresh capital.
On the one hand, the financing consists of AUD 6.977 million from so-called flow-through shares from Canada. (Flow-through shares provide subscribers in Canada with tax advantages). These shares will be placed at the equivalent of AUD 0.1471 per share. This, American West points out, represents a 22.5% premium to the company’s closing price of AUD 0.12 last Friday.
Directors of American West invest their own money
This means a premium of 40% compared to the capital increase carried out in parallel with institutional and major shareholders at AUD 0.105 per share. In total, another AUD 3.024 million will be raised from institutional an sophisticated investors. Dave O’Neill (Managing Director) and Dan Lougher (Director) of American West plan to participate in the financing round, subject to shareholder approval.
American West plans to invest the fresh capital from the flow-through financing in exploration and further resource definition work given the tremendous opportunities at Storm. This includes the expansion of the existing resource, which already contains 17.5 million tons averaging 1.2% copper and 3.4 g/t silver in the indicated and inferred categories under the 2012 Australian JORC Code.
Expansion of existing and definition of new resources planned
In addition, resources for further high-grade ore zones such as Thunder, Lightning Ridge, The Gap and others will be defined, while regional target areas within Storm (Blizzard, Tornado and Tempest) will also be explored and targets generated.
The funds raised from the institutional side are intended to further strengthen the company’s balance sheet and will also be used to finance the company’s activities on its projects in Utah (studies, development work, exploration), among other things. American West intends to use this money to advance the development and approval work for Storm as well as the studies required for the approval process for the West Deser project. In addition, exploration activities on the Copper Warrior project are planned to follow on from last year’s work.
Dave O’Neill is delighted that this “significant” capital increase has been successfully implemented. As he explains, the financing was heavily oversubscribed in Australia and worldwide, which, according to American West Metals’ Managing Director, is a “recognition of the high quality of the Storm project” – and the enormous valuation potential it offers.
O’Neill continued, “The proceeds from the equity raise further strengthens the Company’s balance sheet and allows us to expand the work program at Storm, which will commence in March. Key milestones are planned for 2024, including upgrading the Storm resource and completing metallurgical processing and economics studies, which we believe will add significant value to American West.”
Cyclone North potential
Exploration drilling to the north of the Cyclone deposit (4100N zone) in 2023 intersected a thick interval of copper sulphide. Drill hole SR23-55 intersected a 24.4m thick interval of breccia and copper sulphide vein mineralisation, which is thought to occur in the same prospective horizon as the copper mineralisation at Cyclone. The mineralised zone contains a stronger sulphide breccia intercept of 7.6m of 1% Cu containing 1.5m of 2% Cu. The >2% copper mineralisation is interpreted to be the source of the EM anomalies.
Significantly, the untested FLEM anomaly, located over 300m north of drill hole SR23-55, has higher conductivity and may represent larger amounts of >2% copper mineralisation. These two anomalies cover an area of approximately 16 hectares and have the potential to host significant amounts of additional resources given the current size of the Cyclone deposit (12.1M tonnes at 1.2% Cu and 3.8M tonnes Ag).
American West believes there is significant potential to expand the MRE through further exploration in the Storm and regional areas. Four immediate opportunities have been defined for the expansion and addition of further resources at Storm, specifically the recently discovered high-grade Thunder and Lightning Ridge zones, Cyclone North and The Gap Prospect.
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