According to experts at MST Access, the Storm Copper Project, 80% owned by Australian American West Metals (WKN A3DE4Y / ASX AW1), possesses world-class potential. The analysts further state that Storm is located in northern Canada in Nunavut, amidst several mining operations, and the Canadian government has taken significant steps to financially support new projects and accelerate approval processes.
And given its strategic importance, the project is receiving substantial support at all government levels, it was further stated. American West is therefore focusing on, on the one hand, bringing the existing, high-quality resource into production quickly to generate cash flow, and on the other hand, increasing the size of the resource through further exploration work.
American West Already Has Financing and Off-take Agreements
As MST Access further explains, Managing Director David O’Neill’s company has already secured Ocean Partners, a leading metal trading, consulting, and financing company, as a partner. Ocean Partners has committed to financing up to 80% of the initial investment costs, estimated at USD 40 million. Taurus, a financing company specializing in the mining sector, has also provided USD 12.5 million in exchange for a royalty payment.
American West had only presented an initial economic assessment (PEA, Preliminary Economic Assessment) in March of this year. This, according to analysts, confirms a 10-year open-pit operation with high margins and a production of 487,000 tonnes of copper and silver concentrate. MST estimates that the output will consist of 83,000 tonnes of contained copper and 760,000 ounces of contained silver. The PEA assumes a low initial capital expenditure of USD 47.4 million, C1 cash costs of USD 2.63 per pound of copper, and a post-tax net present value of USD 149 million, it was further stated.
MST Access also points out that the Storm project covers an area of 2,200 square kilometers, has a strike length of 110 kilometers, and covers a sedimentary copper belt with world-class potential. The current resource, according to the experts, accounts for only 5% of this copper belt.
Becoming a Copper Producer Possible in the near Future
According to MST analysts, Storm is perfectly positioned to become a copper producer in the near future and also has a pipeline full of additional growth potential. The project’s prime location, existing transport infrastructure, low capital expenditure, government support, the silver content of the planned production, and strong customer interest would perfectly position Storm to become a new copper producer in a relatively short time – MST considers a production start within two to three years possible.
MST Access believes that the Storm project is favorably positioned compared to other copper projects that are not yet in production. There is high growth potential, and the initial copper production could finance large exploration programs, an expansion of mining, and an extension of the mine life.
Copper Crucial for Decarbonization
Furthermore, the experts continue, copper is the crucial element in global decarbonization and the electrification of energy systems. The red metal alone is needed in all key energy technologies, which MST includes solar and wind energy, electric vehicles, power grids, and also artificial intelligence. Globally, the grades of existing copper mines are also continuously declining, and a lack of new discoveries is making supply scarce. In the long term, the fundamentals of the copper market would therefore point to a high price environment.
Valuation
Analysts see the price target for American West’s stock at AUD 0.11, with the Storm project being the value driver. This represents an upside potential of currently around 244%. They apply a discounted net present value and assume growth beyond that of the current PEA, according to the experts. They consider American West’s shares to be substantially undervalued and see significant upside potential for the share price. As possible catalysts for an increase, MST names an expansion of the existing resource through the latest drilling campaign, the submission of a preliminary feasibility study (PFS), and significant progress towards project development. The experts see the biggest risks in disappointing PFS results, delays in permits, and copper prices.
The full research from MST Access on American West Metals is available in English at:
