I asked Western Copper and Gold’s president and COO Paul West-Sells how it felt to finish the Casino copper and gold feasibility study. It was out Monday and initiated a rally in Western Copper shares. He laughed and replied, “It’s a lot of work and then it really just spits out two numbers – CAPEX and IRR.”

It would seem investors liked these two numbers, giving Western Copper a 10-percent or so shareprice boost Monday. The after-tax IRR was 20.4 percent and the capital cost was C$2.5 billion, which would fund what is seen as a 120,000 tonne per day open pit project that would have both conventional sulphide flotation and heap leach gold components and, in terms of reserves, 8.5 million ounces gold and 4.5 billion pounds copper. 

In fact, the overall shape of the Casino project has not changed much. It is broadly in line with a prefeasibility study that Western Copper and Gold produced in 2011 that showed a 16 percent IRR and a C$2.1 billion CAPEX. Perhaps this lack of surprise pleased the speculating class. A C$400 million jump in capital costs on a multi-billion mine build may not have much scare factor in an age of capital cost bloat. The increase in IRR, of course, came in part thanks to higher gold price assumptions. Now as a base case Western Copper can assume around C$1,400 per ounce gold whereas back in 2011 the base case used C$1,064 per ounce gold.

But there were still some notable tweaks that have improved the basic outline of Casino beyond the appreciation in gold price. While the amount of sulphide ore to be mined, which accounts for the bulk of the project, is more or less unchanged since 2011, heap leachable gold has vastly increased. The proven and probable heap leach reserve was 82 million tonnes @ 0.37 g/t Au back in 2011. Now, however, Western Copper and Gold intends to heap leach 157 million tonnes @ 0.292 g/t Au. It’s a doubling of tonnage, though the grade obviously drops somewhat by just under 0.1 g/t Au or 21 percent. The substantial rise in heap leach gold comes thanks not to the price of gold but a jump in assumed recoveries. With plans to crush heap leach ore, instead of using run of mine ore, Western Copper says it can get 66 percent recovery instead of the 50 percent it had previously assumed. 

Another major change in terms of mining equipment is a plan to use haulage trucks run on liquid natural gas (LNG). Of course it’s a somewhat large assumption because, as Western Copper noted, the trucks do not yet exist in large classes for mining. LNG-fueled vehicles already exist in more conventional lines – such as for transport trucks and public transit – but its application in mining is in its infancy. Caterpillar – which Western Copper confirmed was its assumed supplier – is developing LNG haul trucks for mines, which could end up saving nicely on operating costs. It, as Western Copper noted, puts development of a line of large scale haul trucks within five years (or 2017).

Western Copper said the development timeline of LNG-trucks gives it plenty of breathing room. But still, the timing could be tight. Western Copper hopes to mine (assuming smooth permitting and financing timelines) for the heap leach pad as soon as 2017, so if Caterpillar takes the full five years to get the line out, the junior miner could conceivably find itself waiting to the very last minute for its first generation LNG haul trucks.

But then, it doesn’t sound like a matter worth sweating too much about. West-Sells said while the LNG haul trucks are hands down cheaper in the long run as far as operating costs, in terms of the impact to Casino IRR the difference was almost negligible – under 1 percent, which would drop the 20.4 percent after-tax IRR to just under the 20 percent mark. 

Otherwise, Western Copper’s plan on how to power Casino is much the same, using an LNG power plant. Western Copper wants to truck LNG in – using LNG fueled transport trucks (which do exist) – from Fort Nelson, about 1,000 kilometres away by road in Northern, B.C., where supply from nearby natural gas fields is expanding.

Without a doubt now Western Copper faces its most daunting task: To get Casino permitted and financed. Permitting-wise support from local First Nations will be key as ever in the Yukon. West-Sells said, “I’ve got no indication that they don’t support the project. Their primary concern is making sure we have minimal impacts on the environment.” Clearly as the projects heads to permitting the level of support Western Copper has built will become more apparent as the official process runs its course. Western Copper puts the process timeline at two years.

As for financing, Western Copper’s prospects received a huge boost in December when it announced selling a 2.75 percent net smelter return (NSR) royalty on the Casino project for C$30 million. Of course, it’s a drop in the bucket on a project of this size, but at the same time, as I pointed out in these pages, the entity doing the buying has now spent C$65 million to get that Casino NSR – amounting to a decent-sized bet on Casino’s future – and also appears to be one with links to some heavy hitters in the royalty sector. Which begs the question: is something greater afoot in the royalty sector?

Post feasibility study, the question many investors will start thinking about is: Are majors now paying more attention to Western Copper? Some clearly have already made up their minds that Western Copper is a decent bet for mine development, following suit whoever bought the 2.75 percent NSR back in December. In a few weeks since then, Western Copper’s shareprice has near doubled and now it has maintained strength on news of the feasibility study.