Publisher’s Note: Premium subscribers and I have written checks to Kutcho Copper (TSX-V: KC)(OTC: KCCFF) as high as C$0.65. It currently trades at C$0.25. Kutcho controls a high-grade copper-zinc-gold-silver deposit in British Columbia that attracted Wheaton Precious Metals early on as a funding partner. The project is now moving to Feasibility. Prefeasiblity showed a C$265 million net present value at US$2.75 copper. Yet Kutcho trades with a C$18 million market cap. See why that valuation gap could start to close quickly in the interview our Gerardo Del Real conducted with Kutcho CEO Vince Sorace, below.
Call it like you see it,
Nick Hodge
Publisher, Resource Stock Digest
Interview with Kutcho Copper (TSX-V: KC) CEO Vince Sorace
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Kutcho Copper (TSX-V: KC)(OTC: KCCFF), Mr. Vince Sorace. Vince, how are you?
Vince Sorace: Doing fantastic, Gerardo. Thanks for having me today.
GDR: You had some news today that I wanted to speak with you about. The headline reads "Kutcho Copper Announces Feasibility Study on its High Grade Copper-Zinc Project."
And I chuckled a bit because I remember just a few months ago when zinc was a bad word and, not you, but a lot of companies were leaving the zinc part of the copper-zinc project off the headline. And now, we have copper at $3.20 per pound, we have zinc at $1.21 per pound, and it looks like 2021 is going to be a very consequential year for both metals — and the companies that have exposure to them. You have a very, very, advanced stage project and I wanted to chat with you about the news and just kind of get an overview from you about it.
VS: Sure. Yeah, so we did financing a couple of months ago, and that was for our ability to kick off the feasibility study. We had to go through a process selecting the right engineering firms. And we did. So we kicked off a few weeks ago and through the process, CSA Global are the consultants we chose. Very reputable, maybe not a household name here in North America, but very strong through Australia, Africa, and again, very solid reputation, great guys. So they're going to be spearheading our feasibility study for us, along with our internal team.
We're off to the races. I'm looking forward to it. As you alluded to, I think for the first time in a few years, we have timing in front of us. We've seen the rise in copper prices as you suggested, zinc as well, and I think 2021, for a number of reasons, is going to continue to be strong with respect to those metals. And again, with our feasibility study projected to be ready here midway through 2021, I'm thinking we've got timing on our side.
GDR: You just completed the financing that you alluded to here recently. So you're cashed up. You've initiated the feasibility study. You have a lot of very high potential targets still on the property and frankly, there is a severe disconnect between the pre-feasibility study that demonstrated a net present value of C$265 million and the current market cap of sub C$18 million.
For shareholders, or potential shareholders, what do the next several months look like for Kutcho to help and start unlocking that value? Because at some point, with copper and zinc being as favorable as they are right now, and the fundamentals being as supportive as they are, I have to believe Kutcho starts looking like a very accretive takeout target. And obviously you, as the CEO, you're renowned for your deal-making. I got to believe that you have a plan in place to make sure that doesn't happen at current levels, right?
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VS: Yeah, and listen, a lot of our lives are dependent on market sentiment, so we've seen sentiment shift. And with the sentiment shift, I would say that I've been receiving a lot of incoming calls. And listen, at some point we're going to do something strategic with respect to Kutcho. So all those opportunities open themselves up. Again, I've been receiving more interest than I have in a long time with respect to Kutcho.
I think the market recognizes a couple of things. Kutcho is a solid project and I think more than not believe Kutcho is going to be a mine one day. So in saying that, yes, I mean, we're trading at an extremely low market cap. And there's been a disconnect with what's been done in the past with the project and I think what's going to be presented with the project.
And I think this is going to be a very, very big point of clarity and de-risking with respect to completing the feasibility study. I'll do my best over the number of coming months here to keep shareholders updated with respect to progress through the feasibility study. And obviously, people behind the scenes, the strategics, will see us progressing through it as well. And yeah, I'm quite confident that the complexion of a number of things should be changing here within the number of months coming.
GDR: I mentioned the exploration upside. So just between you and I, Vince, are there internal discussions being had about potentially unlocking some of that exploration potential while the feasibility study progresses?
VS: Yes. There's no lack of exploration upside in two categories. We have a substantial number of brownfield targets that we can go at very quickly. So around the existing lenses, they're open in a number of areas and a number of directions. And that drilling would essentially add to the resource model very, very quickly.
The other side of it is this is a VMS district, and we've got a substantial land package. We've got substantial geology similar to where these lenses reside. And most people know that in VMS districts, there continues to be a lot more found as you start working through those districts. So we've got both: blue sky exploration potential, brownfield exploration potential. The only thing that's been holding me back is essentially my cost of capital to go at and hit these things hard. And I think hopefully in the next couple of months here as these markets continue to go, and if I can execute on a few of my plans, as my cost of capital becomes cheaper, you're going to see me raising money to go at those targets.
GDR: Well, the last time you sounded this excited was back in December 2017, if I'm not mistaken. And at that point, you ended up striking one of the best deals in the junior space that year with the financing package that you put together along with your partner, Wheaton Precious Metals. I'm excited to have you back on here over the coming months, Vince, to see what develops. And it should be a fun end of the year and a very critical 2021. Is there anything else that you'd like to add to that?
VS: No, I think, again, Kutcho is well-positioned, it's cheap. And both the leverage to copper with this project and the economics — the project is substantial. So if it comes to fruition, and with a lot of people thinking copper goes substantially higher, Kutcho is a great bet.
GDR: Well put. Vince, Thank you so much.
VS: Thank you, Gerardo.
Let's get it!
Gerardo Del Real
Editor, Resource Stock Digest For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Resource Stock Digest, Junior Resource Monthly, and Junior Resource Trader. For more about Gerardo, check out his editor page.
