WESTERN COPPER AND GOLD CORPORATION 
By January 7, 2013 Release 01-2013
WESTERN COPPER AND GOLD ANNOUNCES POSITIVE FEASIBILITY STUDY ON CASINO$1.8 billion After-Tax NPV (8%) at long term metal prices
After-Tax IRR 20.1% at long term metal prices
Long term metal prices: Cu: US$3.00/lb, Au: US$1,400/oz, Ag: US$25/oz, Mo: US$14/lb
8.9 million ounce gold reserve - an increase of 0.5 million ounces
4.5 billion pound copper reserve
VANCOUVER, B.C. Western Copper and Gold Corporation ("Western" or the "Company") (TSX:WRN; NYSE MKT:WRN) is pleased to release the results of its definitive feasibility study (the "Feasibility Study", or "Study") on its wholly-owned Casino copper-gold-molybdenum deposit in the Yukon ("Casino" or the "project"). This Study recommends that the project be constructed as an open pit mine, with a concentrator processing nominally 120,000 tonnes per day and a gold heap leach facility processing nominally 25,000 tonnes per day. Under the Study these facilities would produce an average of 399,000 ounces of gold, 245 million pounds of copper, 15 million pounds of molybdenum, and 1.8 million ounces
of silver per year during the first four years of production.
The Study succeeds the pre-feasibility study dated May 17, 2011 (the "Pre-Feasibility Study"). The Study incorporates an updated reserve, significant updated engineering, particularly in the areas of energy supply, metallurgy, and flow sheet design, and brings the engineering on the project to a feasibility level.
"We are enormously pleased with the Casino Feasibility Study", said Dale Corman, Chairman and Chief Executive Officer. "This Study establishes Casino as one of the very few world-class, long life, copper- gold projects with robust economics at a feasibly study level. The Yukon is a top mining district, and we look forward to securing permits as our next step of development."
In this news release, unless otherwise indicated, references to "$" are to Canadian dollars and references to "US$" are to United States dollars.
*Based on Long Term metal prices (discussed under "Financial Results" below).
1
TSX: WRN NYSE MKT: WRN
KEY CHANGES FROM PRE-FEASIBLITY STUDYA significant amount of engineering, field work, and test work was completed between the issuance of the Pre-Feasibility Study and the Feasibility Study. This work resulted in the following key changes between the two studies:
Heap Leach
The operation of the heap leach has been changed from a run-of-mine operation to a coarse crush and conveyer stack operation in order to achieve a higher gold recovery of 66%. The heap leach reserve has increased from 82 million tonnes to 157 million tonnes in part as a result of the increased gold recovery.
Metallurgy & Flow Sheet
An extensive metallurgical test work campaign was completed in 2012, including test work on fresh ore obtained from the field specifically for this campaign. The improved metallurgical recoveries obtained in the recent test work are reflected in the Study.
The results of comminution test work conducted in 2012, which examined the ore characteristics of the major rock types and alterations, indicates that an average concentrator design throughput of 124,000 tonnes per day can be obtained compared to 120,000 tonnes per day reported in the Pre-Feasibility Study. Annual production varies slightly from year to year based on ore hardness and this variation has been accounted for in the financial model.
A pyrite leaching circuit for gold recovery was included in the Pre-Feasibility Study. A cost-benefit analysis of this facility during the feasibility study has resulted in this circuit being removed from the project, but may be incorporated at a later date.
Power
Electrical power for Casino will be provided by a gas fired power plant based on liquefied natural gas ("LNG") sourced from a new facility to be constructed by a third party near the existing gas processing facilities currently in operation at Ft. Nelson, BC. The LNG supply chain used in the Study is based upon various engineering studies undertaken by Western and its consultants and as a result of extensive discussions with potential third party suppliers in the Ft. Nelson area.
LNG will be hauled by over-the-highway tankers to an on-site LNG storage facility, then vaporized and fed to the power plant to generate electrical power.
LNG Fueled Mining Fleet
The LNG infrastructure required for the power plant will also be utilized to enable LNG to fuel the mine haulage fleet, including over-the-highway tractors hauling concentrates, lime, grinding media, and LNG. The technology to fuel mine haul trucks of the class required for Casino is still in development, but haul truck suppliers have publically stated that they are targeting 2017 to make this technology commercially available, which is well before the date required for Casino.
2
TSX: WRN NYSE MKT: WRN
The use of LNG for mine haulage, and indeed for power generation, represents a significant reduction in greenhouse gases as compared to other alternative fuels. The use of LNG also has a significant impact in lowering the unit cost for mine haulage.
The Feasibility Study indicates that the economic returns from the project justify its further development and securing the required permits and licenses for operation.
The financial results of the Study were developed for three different metal price scenarios. Long term prices ("Long Term") were based on long term copper price projections from Wood Mackenzie, and typical analyst projections of long metal prices for the other metals and of the long term CAN$:US$ exchange rate. United States Securities and Exchange Commission ("SEC") pricing guidance uses LME three-year historical rolling average prices as of the end of December 2012. The Long Term prices used in the Study are consistent with, or more conservative than, the prices using the guidelines of the SEC. Spot prices ("Spot") are the spot prices from December 31, 2012.
Note that an exchange rate of CAN$:US$ of 1.0 was used for the capital cost estimation for all metal price scenarios.
The following table summarizes the financial results from using three metal price scenarios:
Long Term | SEC | Spot | |
Copper (US$/lb) | 3.00 | 3.67 | 3.57 |
Molybdenum (US$/lb) | 14.00 | 14.67 | 11.80 |
Gold (US$/oz) | 1,400 | 1,488 | 1,658 |
Silver (US$/oz) | 25.00 | 28.80 | 29.95 |
Exchange Rate (C$:US$) | 0.95 | 1.00 | 1.00 |
NPV pre-tax (5% discount, $millions) | 4,430 | 5,330 | 5,300 |
NPV pre-tax (8% discount, $millions) | 2,820 | 3,470 | 3,460 |
IRR pre-tax (100% equity) | 24.0% | 26.8% | 27.1% |
NPV after-tax (5% discount, $millions) | 2,990 | 3,620 | 3,600 |
NPV after-tax (8% discount, $millions) | 1,830 | 2,290 | 2,280 |
IRR after-tax (100% equity) | 20.1% | 22.5% | 22.7% |
Payback period (years) | 3.0 | 2.7 | 2.6 |
Net Smelter Return ($/t milled) | 22.59 | 24.62 | 24.27 |
Copper Cash Cost* (US$/lb) | (0.81) | (0.85) | (0.90) |
*Net of byproduct credits.
3
TSX: WRN NYSE MKT: WRN
Higher grade ore is fed to the concentrator during the first four years of the concentrator operation. This factor, combined with the concurrent heap leach facility operation, results in higher yearly cash flows and other metrics during this period and contributes significantly to the project's financial performance.
Years 1-4* | Life of Mine* | |
Average Annual Pre-tax Cash Flow ($millions) Average Annual After-tax Cash Flow ($millions) Average NSR ($/t ore milled) % of Revenue - Copper % of Revenue - Precious Metals % of Revenue - Gold % of Revenue - Silver % of Revenue - Molybdenum | 773 682 31.59 48 40 37 3 12 | 531 400 22.59 46 37 34 3 17 |
*Based on Long Term metal prices.
CAPITAL COSTS
Total initial capital investment in the project is estimated to be $2.46 billion, which represents the total direct and indirect cost for the complete development of the project, including associated infrastructure and power plant. The following table shows how the initial capital is distributed between the various components. Sustaining capital for the project is $362 million.
4
TSX: WRN NYSE MKT: WRN
OPERATING COSTSOperating costs for the milling operation were calculated to average $5.47 per tonne of ore processed through the mill over the life of mine:
($/tonne) | |
Milling | $5.13 |
General & Administrative | $0.34 |
Total | $5.47 |
Heap leach operating costs average $4.04 per ton of ore processed through the heap leach over the life of the heap leach.
($/tonne) | |
Heap Leach Operation | $1.31 |
ADR/SART | $2.73 |
Total | $4.04 |
Mining costs were calculated to average $1.66 per tonne of material moved and $2.63 per tonne ore due to the low strip ratio of 0.59:1:
($/tonne) | |
Cost per tonne material (ore + waste) | $1.51 |
Cost per tonne ore (mill + heap ore) | $2.63 |
Cost per tonne mill ore | $3.05 |
The combined mining and milling costs are $8.52 per tonne ore milled.
The mineral resource estimate first reported in November 2010 was used unmodified for this Feasibility
Study.
The Feasibility Study estimates a National Instrument 43-101 ("NI 43-101") compliant proven and probable mill ore reserve of 965 million tonnes and a proven and probable heap leach ore reserve of 157 million tonnes, as outlined below. Total contained metal in the combined proven and probable mineral reserve is equal to 4.5 billion pounds of copper, 8.9 million ounces of gold, 483 million pounds of molybdenum, and 65 million ounces of silver. The effective date of the mineral reserve estimate is January 7, 2013.
5
TSX: WRN NYSE MKT: WRN
Tonnes (millions) | Copper (%) | Gold (g/t) | Moly (%) | Silver (g/t) | |
Mill Ore Reserve Proven Mineral Reserve Probable Mineral Reserve | 91.6 873.6 | 0.336 0.190 | 0.437 0.219 |
The Feasibility Study evaluates the development of the Casino deposit as a conventional open pit mine, concentrator complex, and heap leach operation. The initial production will focus on the deposit's oxide cap as a heap leach operation to recover gold and silver in doré form. The main sulphide deposit will be processed using a conventional concentrator to produce copper-gold-silver and molybdenum concentrates. Key metrics of the processing plant are shown below:
Mill (tpd) 120,000 120,000
Heap (tpd) 25,000 25,000
Copper (Mlbs) 245 171
Gold (kozs) 399 266
Silver (kozs) 1,777 1,425
Molybdenum (Mlbs) 15.3 15.5
Copper (%) 0.307% 0.204% Gold (g/t) 0.371 0.240
Silver (g/t) 2.103 1.74
Molybdenum (%) 0.025% 0.023%
Copper (%) 83.7% 86.4% Gold (%) 67.7% 67.1% Silver (%) 55.8% 53.4%
Molybdenum (%) 64.8% 70.7%
Gold (%) 66.0% 66.0% Copper (%) 18.0% 18.0%
Silver (%) 26.0% 26.0%
6
TSX: WRN NYSE MKT: WRN
Years 1-4 | Life of Mine | |
Annual Concentrate Production Cu (dry ktonnes) Mo (dry ktonnes) Average Concentrate Grade Copper Concentrate Cu (%) Au (g/t) Ag (g/t) Molybdenum Concentrate Mo (%) | 395 12 28.0% 27.3 127.7 56.0% | 275 13 28.0% 25.6 147.8 56.0% |
A new 132 km, all weather access road will be developed extending from the end of the existing Freegold Road and generally following the alignment of the existing "Casino Trail" to the mine site. Concentrates will be transported, stored and loaded on ships via upgraded facilities provided by the Port of Skagway,
Alaska. The project operating cost estimate includes the anticipated concentrate handling service charges based on use of the upgraded facilities.
The next step in the development of the project, which is submitting the initial applications in the permitting process, is anticipated to occur by the end of 2013. It is expected that permitting will take approximately two years. Subject to securing the necessary permits and project funding on acceptable terms, construction is anticipated to commence in early 2016 with production from the heap leach expected in 2017 and from the concentrator in 2019.
The economics of the Feasibility Study do not take into account the opportunity for improvement based on sharing Freegold Road extension and other project infrastructure costs with other parties.
In addition, the project contains a significant inferred mineral resource estimate as disclosed in the technical report dated May 17, 2011.
Based on the positive results of the Feasibility Study, Western plans to finalize its application for environmental assessment under the Yukon Environmental and Socioeconomic Assessment Act ("YESAA"), the first step in the permitting process.
7
TSX: WRN NYSE MKT: WRN
CONFERENCE CALL
Western will hold a conference call on Tuesday, January 8, 2013 at 10 am Pacific Time (1 pm Eastern
Time) to discuss the Feasibility Study. To access the conference call, please dial:
Toronto and International: 1-416-764-8688
Toll Free North America: 1-888-390-0546
An archived recording of the conference call will be available on the Company's website at
www.westerncopperandgold.com
M3, a full service Engineering, Procurement, Construction & Management firm, is recognized for its experience in copper processing and capabilities in the development and construction of mines and mineral processing plants. The executive summary of the Feasibility Study, prepared by M3, will be posted on the Company's website (www.westerncopperandgold.com) as well as on Sedar (www.sedar.com), in the form of a NI 43-101 compliant technical report, and Edgar within 45 days.
Conrad Huss, P.E. of M3 is the qualified person responsible for the scientific and technical information in this news release in accordance with NI 43-101. Michael G. Hester, FAusIMM of Independent Mining Consultants, Inc. is the qualified person responsible for the preparation of the reserve estimate in this news release in accordance with NI 43-101.
The following companies also contributed to the Feasibility Study:
