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Western Copper and Gold — Transforming Resources into Mines

Western Copper and Gold Corporation

Overview

Western Copper and Gold Corporation (TSX:WRN) is a mining company focused on developing its billion-tonne Casino project. Casino is 100% owned, and a large copper-gold deposit located in the politically-stable territory of Yukon, Canada.

Western Copper and Gold’s experienced management team is committed to advancing Casino toward production. The fully bankable 2013 Feasibility Study shows excellent economics for the project which has the potential to be a low cost producer. An Environmental Assessment Application (mine proposal) was submitted in 2014. First production is anticipated for 2017.

The project is well-funded through to a production decision, and well-positioned to take advantage of the widely-projected copper supply deficit of 6.3 million tonnes by 2022.

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Investment Highlights

  • World Class Resource: 1.13 billion-tonnes Reserve
  • Upside Potential: Additional Inferred Resource of 1.7 billion tonnes of ore
  • 100% ownership of the Casino Project
  • Prime Location: Politically-stable Yukon, Canada
  • Feasibility Study completed in 2013
  • Excellent Economics: $1.83 billion NPV; 20.1% IRR after tax;
  • Projected to be low cost producer, primarily due to low strip ratio of 0.59:1
  • Environmental Assessment submitted in 2014
  • Mine construction slated for 2016 with first production anticipated in 2017
  • Proven Management: Experienced management and directors, many in place since Western Silver, which sold the Penasquito project to Glamis Gold (Goldcorp)

World-Class Deposit in Stable Jurisdiction

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The Casino Project is a large porphyry-type copper-gold-molybdenum deposit located 560 km from the year-round port of Skagway, Alaska and 380 km from the capital city of Whitehorse in the territory of Yukon, Canada.

The Casino project is considered to have low political risk given its location. The Yukon is in the top 10 most politically-stable mining jurisdictions in the world. In the past seven years, four mines have received permitting in the Yukon. Land claims in the region have been settled with First Nations.

Casino is one of the largest undeveloped copper-gold deposits in Canada. The 2013 Feasibility Study estimates a NI 43-101 compliant Proven and Probable Reserve of 8.9 M oz @ 0.29 g/t Au and 4.5 B lbs @0.5% CuEq for a total of 1.12 B tonnes of ore. Casino holds plenty of upside potential with Inferred Resources of 9.0 M oz of gold and 5.4 B lbs of copper.

Feasibility Study: Excellent Economics

In January 2013, Western Copper and Gold released the results of the Feasibility Study on its Casino Project. The Feasibility Study establishes Casino as a robust copper-gold project with positive economics at conservative commodity prices. While 46% of the projected revenue from Casino is derived from copper, gold will be a significant contributor (34%) to the project as well.

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The Feasibility Study evaluates the development of the Casino deposit as a conventional open pit mine, concentrator complex, and heap leach operation. Initial production will focus on the deposit’s oxide cap as a heap leach operation to recover gold and silver in doré form. The main sulphide deposit will be processed using a conventional concentrator to produce copper-gold-silver and molybdenum concentrates.

The study shows a favourable CAPEX for Casino compared to emerging copper projects; total initial capital investment in the project is estimated to be $2.46 billion. Combined mining and milling operating costs are estimated at $8.52 per tonne ore milled, well below the industry average and gives Casino the potential to be a low cost producer. The study estimates a Net Present Value of $1.83 billion with a 20.1% (after tax) Internal Rate of Return.

Mining costs were calculated to average $1.66 per tonne of material moved and $2.63 per tonne ore due to the low strip ratio of 0.59:1.

 

Highlights of the Feasibility Study:

Initial Capital Investment $2.46 billion
Payback period* 3.0 years
NPV pre-tax* (8% discount) $2.82 billion
NPV after-tax* (8% discount) $1.83 billion
IRR pre-tax* (100% equity) 24.00%
IRR after-tax* (100% equity 20.10%
Total Reserve 1.12 billion tonnes
Mill operation 22 years
Heap leach operation 18 years

*Based on Long Term metal prices (discussed under “Financial Results” below).

 

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Moving Forward Toward Production

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Field program complete

In September 2013, Western Copper and Gold completed a six-year year engineering and baseline data collection program to support the Yukon permitting process. The program included studies for engineering, hydrology, and hydrogeology planning, fisheries research, wildlife surveys and analysis, socio-economic analysis, heritage and archaeology studies and water quality sampling for both the mine site and along the proposed access road.

Environmental Assessment

In January 2014, the Company submitted its environmental assessment application to the Yukon Environmental and Socioeconomic Assessment Board (YESAB). Once the project receives a positive recommendation from YESAB, Western will secure a Quartz Mining License and Land Use Permit from the Yukon Government and a Water Use License from the Yukon Water Board. Once these licenses and permits are issued construction can begin.

The Company is on target to be permitted for construction by early 2016.

Engineering and Construction

Project engineering at Casino is actively advancing with formal initiation of basic and detailed engineering expected in 2014. Key aspects of the engineering work completed to date include detailed planning and scheduling of the access road and airstrip. Western Copper and Gold is in discussions with the Alaska Industrial Development and Export Authority on the use of existing concentrate storage and load-out facilities at Skagway to store and load-out Casino concentrates. The Company continues to work with existing and potential suppliers of liquefied natural gas to develop the best solution for providing power to the Casino Project.

Well-funded through production decision

Western Copper and Gold completed a royalty sale in December 2012 where it converted an existing 5% net profits interest royalty on all claims (except the Casino B claims) comprising the Casino Project for US$32 million in exchange for a 2.75% net smelter returns royalty on the future sale of any metals and minerals derived from the Casino Project (except the Casino B claims). The transaction provides the Company with sufficient funds for the assessment and permitting stages for the Casino Project.

Proven Management

Dale Corman, B.Sc, P.Eng.— Chairman & CEO

Mr. Corman has 40 years of experience as a senior corporate officer of publicly-listed companies; as well as extensive expertise in mineral exploration & development, financing, property evaluation and acquisition. He was formerly Chairman & CEO of Western Silver Corporation.

Paul West-Sells, Ph.D.— President & COO

Dr. West-Sells has 20 years of experience in the mining industry in management and metallurgical engineering roles. He has worked with BHP, Placer Dome, and Barrick in senior roles in Research and Development and Project Development.

Julien François, C.A.— VP Finance & CFO

Mr. François has served as Vice President, Finance and Chief Financial Officer since the Company’s inception in 2006. Prior to joining the Company, he was the Controller of Western Silver Corporation and worked for five years in the audit practice at PricewaterhouseCoopers LLP.

Cameron Brown, P.Eng.— VP Engineering

Mr. Brown has 40 years of experience in mineral processing. He has been responsible for plant maintenance, project management and engineering of major base and precious metal projects. He was formerly Project Manager for Bechtel Engineering and Western Silver Corporation.

Jonathan Clegg, P.Eng.— VP Engineering

Mr. Clegg has more than 30 years of experience in design, management and construction of mining projects. He was formerly VP & General Manager of Kilborn Engineering and VP Engineering of Western Silver Corporation.

Jack McClintock, MBA, P.Eng.— Consulting Geologist

Mr. McClintock has 30 years of experience in all facets of the mineral exploration business. He was formerly Global Exploration Manager with BHP Billiton and is currently CEO of Northisle Copper and Gold.

Jesse Duke, P.Geo.— VP Environment Affairs

Mr. Duke has extensive experience dealing with public communications, stakeholder consultations and community relations for major mining projects. Held senior management positions for both government and the private sector and has led the environmental team advancing Casino since 2008 as well as supported government and community relations.