Categories: Base Metals / General Market Commentary
Topics: General Base Metals / General Market Commentary

Copper Miner Gears Up for Summer Drill Season

Vince Sorace, the president and CEO of Kutcho Copper Corp., tells Resource Stock Digest about the company's plan of attack for the 2018 field program, which he believes will generate substantial news flow over the coming months.

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me is president and CEO of Kutcho Copper Corp. (KC:TSX.V), Mr. Vince Sorace.

You know it's been quiet as far as the share price goes, until recently. And it's not a coincidence that news flow is really picking up. You had some news yesterday. And it's an important piece of news because you've now commenced field mobilization, and this includes the mobilization of heavy equipment, camp facilities, and as important as anything, the drill rigs. Let's talk about the 2018 field program and what you're trying to accomplish, Vince.

Vince Sorace: We're getting to work. There's been a lot of planning going on in the last four months. And so at this point we are going to start executing on everything that we said we were going to. That's going to involve a number of exciting aspects with respect to the project. As we've talked to you in the past, the real potential behind this project is that it's already a very highly economic, high-margin project with a manageable capex. We see the potential to expand the size of this and make it even more robust.

That'll be our plan of attack this year and what we're going to capture during this field season. The drill rigs will be looking to capture a lot of upside potential and that resides in converting a bunch of the inferred resources—there's a lot of low-hanging fruit there—and potentially some new stuff on the exploration side. All this will feed into the feasibility study in Q2/2019. But the results of that will be apparent coming throughout the summer. There'll be lots of news flow this summer with respect to the drilling that we're doing, with respect to optimized metallurgical programs that we're advancing, with respect to restating our resources in the fall. As a result of this field season, we're targeting a 65–70% increase in reserves heading into the feasibility study. And all this will have a significant positive impact on the already robust economics of the project.

Gerardo Del Real: You mentioned how robust those economics are, and let me just provide a bit on context. The base case estimate of the last prefeasibility study gives an after-tax net present value, at an 8% discount rate, of CA$265 million and an internal rate of return (IRR) of 27.6%. And that's using metal prices way below where they're at right now. That's using metal prices of $2.75/pound copper, $1.10/pound zinc, $17/ounce silver, and $1,250/ounce gold.

Also, you're basing that on reserves from a Measured and Indicated resource that is 49% smaller than what's currently stated in the 2017 preliminary feasibility study. So I think that should provide some context as to what the upside is. You are starting this drilling program with two diamond drill rigs. Is that correct, Vince?

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