General Base Metals
Kutcho Copper (TSX-V: KC) CEO Vince Sorace on Expansion Drilling Results and Upcoming Feasibility Study at the Kutcho Project & the Greenfield Potential of the Nearby TCS Project
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of Kutcho Copper (TSX-V: KC)(OTC: KCCFF), Mr. Vince Sorace. Vince, how are you today?
Vince Sorace: Great, Gerardo. How you doing?
Gerardo Del Real: Fantastic, fantastic. It's good to hear from you. I've been hoping for an update and you provided a great one this morning. You are in the process of doing some expansion drilling at the Kutcho Project. And you drilled 28 meters of 5.7% copper equivalent, including 10.4 meters of 12% copper equivalent. I think it's important for people to realize that the broader intersection, it was 28 meters of specifically 2.09% copper, 6.1% zinc, 65.8 grams per tonne silver and 0.82 grams per tonne gold.
Can you provide some color there, Vince?
Vince Sorace: Yeah. It's a great intercept and it speaks to the high-grade tenor of the Esso lens in particular at the project and the overall nature of things. Grade is king. When you have a project like this that can yield robust tonnage such as this, that's what we like about this project and I think that's what's going to make it a very economic project at the end of the day.
Gerardo Del Real: Now you're also in the process of gathering data for a feasibility study that you're hoping to have completed by Q2 of 2019. Is that accurate?
Vince Sorace: Yes, that's correct. The crux of all the work we're doing in the field this year is to feed into that feasibility study. We're probably seven, eight months away I'm guessing from something like that. We've been doing everything in the field, from all of the hydrogeological drilling, geotechnical drilling, metallurgical drilling, everything on the environmental side, collecting baseline data. All that stuff that kind of feeds into the feasibility study, which eventually feeds into permitting, is what we've been working hard on.
At this point now we're getting into the more exciting phase of the program where we're doing our resource expansion and conversion drilling. So there will be lots of news around drill results over the coming number of months.
Gerardo Del Real: Now, all of this takes money. I know in mid-August, August 15th if I'm not mistaken, you completed a $4.14 million financing and then a week later you followed that up by receiving an additional $3.5 million US from Wheaton Precious Metals. What's the cash position looking like?
Vince Sorace: We're spending money pretty quickly these days because the program's pretty intense for this field season. We're sitting around maybe $6 million, give or take some right now. But we're spending. We want to get this done. We want to get it done right and we're not slowing down. Markets are tough but we're going to keep progressing this project to get this feasibility study done. I think that's going to be one of the biggest benchmarks or changes for Kutcho and potential re-rates for valuations on this project. We're going to hit that mark.
Gerardo Del Real: I have to imagine with the due diligence that goes into receiving funds from Wheaton Precious Metals, they have to be a happy partner up until now.
Vince Sorace: Yes. They've always really liked this project and they see it as a good, viable piece to their pipeline moving forward. Wheaton's been a great partner in the project and great supporters of Kutcho.
Gerardo Del Real: You also have, and this is something that doesn't get a lot of attention, but you also have a project called the TCS property. You've initiated a surface program at that property. Can you tell me a bit about that project for those that aren't familiar?
Vince Sorace: Yeah, the TCS property is a nice greenfields opportunity. It resides close to Kutcho. It's the same Kutcho formation, so the same geology that goes through this. We've got some good soil anomalies and it's completely untested. Not a drill hole into these anomalies and as I said, sitting in similar geology and within proximity to our site.
If there was a discovery there, it could be part of the same mine plan. We're going to start work on that. We're doing some mapping on it this year and I think coming into the new year we'll be getting a little more aggressive with the exploration plans on TCS. It does offer that pure greenfield upside opportunity.
Gerardo Del Real: You mentioned the re-rating potential with the feasibility study. You already have a pre-feasibility that has a net present value at 8% of $265 million Canadian, payback in three and a half years, pretty low Capex.
What's the market cap looking at right now? Because there's obviously a disconnect between value and share price throughout the sector.
Vince Sorace: There is a big disconnect. It's not only us of course, it's a lot of guys are feeling the pain out there right now. I just think Kutcho's trading exceptionally cheap. I think we must be trading at maybe about 0.1 P to NAV right now. Our market cap’s about $15, $16 million dollars. Yeah, I think it's extraordinary value down here.
Gerardo Del Real: Well, we talked off air about the cyclicality of these markets. They always come back. Kutcho's as compelling of an opportunity as I can find, frankly. You have an established resource. I believe in copper. I believe in the infrastructure buildup, the electrification of everything and how copper's going to contribute to that. And I think zinc's held up well despite the most recent pull back.
Any thoughts on the overall markets before I let you go?
Vince Sorace: Yeah, from what I gather and consensus on the street amongst analysts and the investment community is copper is where everyone's kind of putting their bets. I think what we're seeing is a bit of noise in the markets, well a lot of noise in the markets with respect to the trade wars going on around the world, especially the US and China. And I think that's kind of dampening the current copper price.
But I think the current copper price is not reflective of the fundamentals. It is just getting beat up because of all the trade noise. Hopefully, we can get over that hurdle and we see copper bounce. But nevertheless, I think the fundamentals are still in place, so the future for copper looks really good.
Gerardo Del Real: Vince, you have a lot of news flow these coming months. I'm looking forward to having you back on as you get some of these assays published and these results from all the studies.
Vince Sorace: Thanks, Gerardo. Always a pleasure.
Gerardo Del Real: Thank you, Vince.