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Copper Firm in BC Switches Focus to Arizona Project
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The decision to advance a smaller-scale asset in Arizona versus a larger one in Chile is prudent, according to a Red Cloud Securities report.

In a strategic move, World Copper Ltd. (WCU:TSX.V;WCUFF:OTCQX; 7LY0:FRA) decided to advance its Zonia project in Arizona now instead of its Escalones asset in Chile, currently at a standstill, reported Taylor Combaluzier, Red Cloud Securities vice president and mining analyst, in a May 23 corporate update note.

"Given the current robust copper market environment, we believe the company's focus on developing its smaller-scale Zonia project is prudent and more feasible for a junior mining company to tackle," Combaluzier wrote.

New Target, 129% Implied Return

Upon this news, Red Cloud revised its model on the Canadian copper company to reflect the new direction, revised timelines, and "uncertainty surrounding Escalones," explained the analyst. The changes resulted in a lower target price, CA$0.80 per share, versus CA$2 previously.

Given World Copper's price of CA$0.35 per share at the time of the report, the target implies a potential gain for investors of 129%.

Red Cloud reiterated its Buy rating on the resources firm.

"With a new management team and technical committee, along with a current cash balance of about CA$4.9 million, we believe the company is well positioned to execute on its refined U.S. strategy," wrote Combaluzier.

Why The Change in Focus

Combaluzier reported the reasons why World Copper chose to concentrate on its U.S. assets. A major one is the current situation with Escalones, in an area recently designated by Chile as a nature sanctuary. The company is in discussions with governmental authorities about moving forward with Escalones and obtaining drill permits.

Given the uncertainty about this South American project's future, Red Cloud now estimates a production start there in 2035 instead of in 2030.

Also, according to World Copper, the U.S. currently is a better choice of jurisdiction in which to pursue a copper project and potentially mergers and acquisitions activity. The country is home to numerous mining-friendly jurisdictions, offers various governmental funding programs for critical metals and has a robust domestic demand for the red metal.

Two-Phased Approach

Combaluzier relayed how World Copper intends to go about advancing Zonia. The general plan is to complete a feasibility study then move to construction.

The company divided the work into two phases, to be carried out simultaneously. In phase one, efforts will be limited to the part of Zonia consisting of private land and will include infill drilling to convert Inferred resources to Indicated ones.

The focus of phase two will be the portion of Zonia on non-private land (i.e.,) owned by the U.S. Bureau of Land Management, which will take longer to get permitted. Along with applying for permits, this phase likely also will include doing environmental studies and some exploration drilling.

World Copper estimates a production start at Zonia in three to five years. Red Cloud's updated forecast for the same is 2030, previously 2028.

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Important Disclosures:

  1. World Copper Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
  2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of World Copper Ltd.
  3. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Disclosures for Red Cloud Securities, World Copper Ltd., May 23, 2024

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Company Specific Disclosure Details

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