The Australian copper explorer American West Metals (ASX: AW1; FRA: R84) is well on its way to becoming Canada’s next copper producer – extremely cost-effective and profitable. It would take only three years to amortize the initial CAPEX of $47.4 million USD. This is the conclusion of the first Preliminary Economic Assessment (PEA) that the company has just published for the Storm Copper Project in Canada. The study shows a rapid, highly cost-effective path for the start of a ten-year modeled open-pit mine with associated DSO copper concentrate production from 10.3 million tonnes @ 1.3% Cu, 3.7 g/t Ag for 454,000 tonnes of high-grade copper-silver concentrate with 18.3% Cu and 52 g/t Ag. Direct shipping of copper concentrate highly meets ESG criteria because it does not require chemical processing and produces no environmentally harmful tailings. Above all, the simple optical-mechanical separation of the copper ore minimizes the high initial investments usually associated with mining projects. Even over the entire modeled life of ten years, the calculated CAPEX is only $80.3 million USD. The low operating costs make the project extremely competitive. The enormous exploration potential on the more than 2,000 km² license area on Somerset Island remains as upside for shareholders, of course.

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

The current year 2025 is set 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 tonnes at 1.1% Cu and 3.8 g/t Ag. Several high-quality exploration targets along a 110 km long copper belt are on the program. Management sees great potential for significantly extending the life of the mine and expanding operations.

Permitting Process for Copper-Silver Production Begins

Based on the present scoping study, the company is now in a position to initiate the permitting process for the planned mine. The submission of the permit application will release $3.5 million USD under the existing license agreement, which represents a non-dilutive form of financing.

Conclusion

With the results of the scoping study, American West lays the foundation for long-term growth and significant value creation for its investors. While attentive observers had already expected the study to confirm the outstanding quality of the project, the paper could also act as a liberating force for the company. This is because the market has not unanimously welcomed the company’s strategy focused on early cash flow and independence. Additionally, fears of further dilution in another round of capital raising caused the stock to fall to 0.04 AUD recently, corresponding to a market value of just 26 million AUD. American West actually stands contrary to typical expectations. The vast majority of copper explorers have no choice but to focus on rapid resource growth and demonstrating ‘blue sky’ potential, as it’s clear from the outset that the CAPEX will be unattainable for these companies. This is especially true for porphyry copper projects. However, with the Storm project, American West possesses an asset with a completely different profile. It is extremely rare for open-pit mining, DSO, and high copper grades to come together so favorably that even a junior company 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 present scoping study makes it clear that American West doesn’t have to wait for a takeover but has the chance to take control of its own destiny. We therefore 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 exploration upside of the vast license area with anyone else.