World Copper Ltd. (WCU:TSX.V; WCUFF:OTCQB) increased the total resource at its Zonia copper oxide porphyry project in Arizona by 54% to 1,030,000,000 pounds, Fundamental Research Corp. analyst Sid Rajeev reported in an April 4 research note.
"Based on the new expanded resource estimate, we believe the upcoming preliminary economic assessment (PEA) should return stronger economics," Rajeev wrote.
Trading at a Discount
The copper explorer and developer is trading at about CA$0.21 per share, a 46% discount to the sector average, noted Rajeev, and is a Buy. In comparison, Fundamental's fair value estimate on World Copper is CA$1.28 per share, implying a significant potential return for investors.
Fundamental recently revised its fair value estimate, the average of its discounted cash flow and comparables valuations, Rajeev wrote. The new figure, CA$1.28 per share, is down from CA$2.28.
Highlights of the Update
Of the 54% increase in Zonia's total resource since the previous estimate in 2017, the Inferred resource grew 272%.
The Measured and Indicated resource, on the other hand, decreased by about 12%. The overall grade dropped as well, from 16% to 0.27%. This suggests opex will be higher as a result.
However, Rajeev wrote, "The positive impact of higher resources more than offsets the negative impact of lower grades."
Next for Zonia
The British Columbia-based mining company intends to conduct a 5,000-meter, 18-hole resource expansion drill program at Zonia once it receives the necessary permits. Given its prospectivity, Zonia Norte is a top-priority target to explore.
A new PEA on Zonia will be done later this year, relayed Rajeev, as the most recent one is from 2018.
Drilling in Chile
As with Zonia, World Copper plans to drill this season at its Escalones project in Chile, to include the East Skarn area.
"Upon completing additional resource expansion drill programs, we believe the company will likely advance to a prefeasibility study in 2024," Rajeev wrote.
Given the impending advancement of World Copper's projects in Arizona and Chile this year, investors should watch for drill results from Zonia and Escalones and an updated PEA of Zonia. Each event has the potential to move up the company's stock.
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