Kutcho Copper (TSX-V: KC)(OTC: KCCFF) CEO Vince Sorace on Advancing through Drilling the Flagship Kutcho Copper Project, British Columbia, Canada, toward a Positive Construction Decision


Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Kutcho Copper — Mr. Vince Sorace. Vince, how are you today?

Vince Sorace: I'm doing great, Gerardo. Thanks for having me back.

Gerardo Del Real: Thank you for coming on. Let's get right into it. It's been a very, very tough junior market for 97% — and I'm being generous — of junior companies here in the last couple of years. 

I think that's starting to turn… and I always say that it's going to be producers and, then, companies with robust assets that, frankly, have market caps that are just so disproportionate to the underlying asset. Kutcho Copper absolutely checks that box. 

You have an asset that has an NPV of roughly C$600 million or C$700 million, yet you sit here with a market cap that’s sub-C$20 million. And so I wanted to have you on because I'm a huge copper bull. I believe that copper is headed much, much higher. 

And Kutcho, unlike a lot of the exploration companies out there looking to find something, already has a great asset in place. So for those not familiar with the Kutcho Copper story, can you give us a brief overview of the company and the asset? And then, I want to talk exploration upside because that's pretty significant as well.

Vince Sorace: Yes, as you mentioned, Kutcho has an asset that has been derisked to a Feasibility Study that we completed a few years ago. And that Feasibility Study, at US$4 per pound copper, produced economics of C$536 million Net Present Value (NPV) at a 30% IRR. It's located in British Columbia here in Canada… so a very, very safe mining jurisdiction. 

We have financial partners such as Wheaton Precious Metals in the deal. We are situated in an area where there's lots of existing infrastructure. We have very favorable First Nations support in the area. And again, this isn't something that we're looking for; it's something that we have. 

And there has been a lot of money spent on this asset already to get to where we have probably north of C$70 million. So we've got a well-defined asset that we believe is one that will get put into production one day. We've been steadily making progress down that path post-feasibility study.

And at today's copper prices, to reiterate what you said, we've seen a fantastic run in copper. The industry, and myself, believes that that's going to continue as we sit around US$4.50 per pound copper. The NPV of the company has increased substantially from there; obviously, very sensitive to copper prices and now sits at about C$688 million NPV.

So yes, we've got an asset that the money has been spent, it's been found, it's there. We're trading below a C$20 million market cap. And that deserves some attention. We're starting to see it ourselves from other industry participants we've been talking to. So yes, I believe we are ready, when this junior market picks up a bit, to capitalize on this.

Gerardo Del Real: The one criticism I've had for Kutcho Copper — and listen, you were right the last couple of years, by the way, Vince, so that criticism had a good reason for it — but the one criticism I've had is that I am really attracted to exploration plays. And the upside with VMS-type deposits tends to be significant when you only have one that you've discovered because of the fact that VMS-type deposits tend to happen in clusters. 

And so the criticism from me has always been, ‘Hey, Vince, why aren't you drilling?’ The answer, of course, was valid. You were not drilling because the market wasn't there and raising capital was extremely dilutive. 

However, we have a better copper market now. And I really want to highlight the exploration upside because, as great as the current asset is and then the value that underpins that market cap, the exploration upside is pretty attractive. Can you speak to that a bit?

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Vince Sorace: Yes, and when we acquired this asset years ago, the objective and strategy at that time was to go for the quickest path to a Feasibility Study and permitting. And that is where a lot of our capital went. 

The market slowed down a bit in the last couple of years, as you said. But we did raise some money last year, and we did a very extensive geophysical program with some other exploration techniques. And we’ve generated a number of, what we believe are, very significant targets on the exploration side. 

We would classify them as brownfield targets, and probably the most pertinent one at this point would be the Esso target. We have always known that the Kutcho deposit comprises three lenses; Esso being the smallest in footprint but the highest grade. It sits deeper than the others, and it has had some historical drill holes; 300 meters to the west of it that were clipping mineralization.

Now, we didn't go out and further test that because they were pretty deep drill holes. And so we took last year and spent a couple million dollars on a big geophysical and ground-truthing program. And we lit up a pretty significant number of targets. 

One in particular that's really exciting us is what we're calling Esso West, a significant anomaly sitting to the west of our Esso deposit. There are some existing drill holes that we interpret as clipping something that's there that is resembling in mineralogy and grade to the Esso deposit. 

And it’s quite extensive in size, which could lend to the theory that, yes, VMS districts tend to form in clusters, meaning there’s typically more there. Adding to that, nothing like what we did last year has ever been done in the past; we've conducted the most extensive, call it, exploration-type program on this property that's ever been done.

So no one has done this before; we've lit up these targets. The Esso deposit itself, being the smallest footprint with these three lenses, contributes to about half of the value of the project for our company on an NPV basis. So with the new Esso West target, that could be a very significant change to the value of the asset should we be tapping into similar mineralization that Esso has. 

So that's high on the objective list. Outside of that, again, we've generated a number of exciting drill targets that we intend to pursue.

Gerardo Del Real: What comes next? When do you intend to pursue them, Vince?

Vince Sorace: We're working on that now. We've been in talks with contractors and lining up plans to proceed with this… so there'll be more to come about that.

Gerardo Del Real: Looking forward to it. I absolutely love buying low and selling high. The stock is near a 52-week low. Copper is right around a 52-week high. The contrast couldn't be any more apparent to me. I’m absolutely looking forward to seeing what Kutcho does in this market. Anything to add to that, Vince?

Vince Sorace: I think we've covered it. And as you said, we’re starting to see the producers respond to this favorable move in copper… but a lot of that hasn't yet translated down to the juniors. But I believe it's coming. And when it does, it should be a pretty robust move within the junior space.

Gerardo Del Real: I absolutely agree. Vince, thank you so much. I appreciate the time.

Vince Sorace: Thank you.

Gerardo Del Real: Alright, cheers.

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