Like working a giant jigsaw puzzle, Western Copper and Gold Corp. has gradually pieced together components of the Casino Mine project in Yukon Territory, hoping to usher the project into production within the next few years.

For 14 years, the industrious junior has chased the dream of producing copper, gold, molybdenum, and silver from the Casino deposit, known as one of the most prospective mineral concentrations of its type in the world.

But with the turn of a drill a year ago – several drills, actually – everything changed. Instead of potentially advancing to final permitting and a production decision within two years, Western is marching back to the drawing board, hoping to map out a new path to more lucrative production.

Copper-gold bonanza

Located 380 kilometers (236 miles) northwest of Whitehorse, Yukon's capital, Casino is described by some mining industry analysts as a "little Pebble" because of its many geological similarities to the gargantuan Pebble copper-gold project in western Alaska.

But the Casino deposit has its own story to tell, and over the years, its unique geology and distinct development advantages have emerged as Western explored the property and then wrangled agreements that could pave the way to production.

Though the first mineral claim recorded on the property was filed in 1917, it wasn't until 1969 that porphyry-style mineralization was discovered at Casino. Numerous companies since explored the property off and on, until 2006 when Western acquired it from previous owner, Lumina Copper Corp.

According to the Yukon Geological Survey, Casino is a calc-alkaline porphyry copper-gold-molybdenum deposit hosted in Late Cretaceous quartz monzonite of the Casino suite and associated breccia along the margins of the intrusion. Though the deposit exhibits features of a typical porphyry copper deposit, with a central core of potassic alteration grading outwards to concentric phyllic and propylitic zones, Casino is considered unique among Canadian porphyry deposits in that it has a substantially preserved, outcropping leached cap; an upper, copper oxide supergene mineralized zone; and a lower, copper sulfide supergene mineralized zone; as well as an underlying hypogene zone.

Puzzle comes together

Today, Casino is regarded as one of the most prospective copper-gold projects north of the 60th parallel with proven and probable reserves totaling 965 million metric tons mill ore plus 157 million metric tons heap leach ore yielding 8.9 million ounces gold and 4.5 billion pounds of copper. The project also boasts an inferred resource totaling 1.7 billion metric tons mill ore yielding 9.4 million oz gold and 5.4 billion lb copper.

Total resources of the Casino deposit in the measured, indicated and inferred categories includes 101 million metric tons, grading 0.39 grams per metric ton gold in the oxide gold zone, 87 million metric tons grading 0.25% copper, 0.29 g/t gold, 0.02% molybdenum and 1.7 g/t silver in the supergene oxide enriched zone and 2.7 billion metric tons of sulfide ore grading 0.16% copper, 0.19 g/t gold, 0.02% moly and 1.5 g/t silver in the combined supergene sulfide and hypogene zone.

Casino's mineralization compares favorably with its peers, and Western had outlined a mine development plan that includes a gold heap leach operation with enough reserves for 17 years, a milling operation with reserves for 22 years and enough inferred resources to extend mine life at least another 25 years.

According to a 2013 feasibility study, due to be updated later this year, Western envisioned employing 600 workers at peak production, a capex of $2.5 billion with an internal rate of return of 27% and payback of the investment in 2.2 years.

In addition to securing important permits, the company has inked socioeconomic agreements with local First Nations; secured contracts for delivery by truck of liquefied natural gas from Fort Nelson, B.C., to fuel a 200-megawatt power plant at the mine; joined federal and territorial officials in funding and designing road construction projects that will provide access to the mine; and refined a tailings plan to incorporate best available technologies for managing waste material generated by the mine in ways that effectively protect the environment.

Western also entered into a memorandum of understanding with the Alaska Industrial Development and Export Authority with the concept that AIDEA would build additional storage capability at the Port of Skagway and lease the space at an already existing ore terminal to Western for storing and loading concentrate shipments from Casino onto barges bound for overseas markets.

The port currently provides space for shipments of copper concentrates from the Minto Mine in Yukon.

The junior's vision of bringing online an open pit copper-gold mine at Casino was perhaps two years from final permitting and another two years from first gold from a heap leach pad at a new mine.

Everything changes

As good as the recent outlook was for Casino, the project's prospectivity recently got even better. While piecing together an efficient development plan for current reserves and resources, Western continued to explore the property and its surrounding areas.

In 2019, the junior completed 13,590 meters of diamond drilling in 69 holes. In addition to the recently acquired Canadian Creek property, it drilled two other targets: in-fill drilling of inferred mineralization located in the 22-year pit outlined in the 2013 project feasibility study and step-out drilling to the north.

In the latter foray, the junior encountered significant widths of mineralization above the cut-off grade of 0.20% copper equivalent in nine of 10 holes drilled in an area not previously associated with a satellite intrusive and breccia complex located near the main Casino intrusion. This area represents a new zone.

Western said seven of the 10 holes terminated in above cut-off grade mineralization, which indicates potentially more mineralization at depth and the area remains open to the north.

In the step-out drilling to the west, the explorer intercepted mineralization greater than the project's cut-off grade in all six holes drilled and three holes terminated in above cut-off grade mineralization, demonstrating that the Casino hypogene mineralization system is continuous onto the Canadian Creek property and remains open at depth and to the west.

The in-fill drilling campaign, targeting the edges of the deposit, also succeeded, with 49 of the 53 holes drilled intercepting mineralization greater than the cut-off grade. In addition to hole DH19-21 that returned 55.1 grams per metric ton gold over 2.97 meters at a depth of 147.98 meters; additional intercepts include hole DH19-10 that returned 4.78 g/t gold over one meter at a depth of 174 meters and hole DH19-13 that returned 3.55 g/t gold over two meters at a depth of 129 meters.

These high-grade gold intercepts, subsequently dubbed the High Gold zone, occur in fault structures and are associated with late phase alteration cross-cutting the earlier porphyry related alteration. Additional, closer spaced drilling is needed to determine the full extent of these gold-enriched structures, the junior said.

New plans in 2020

Western said its 2019 exploration program was so successful, the company would return to the three target areas this year for further study.

Earlier this month, the company resumed exploration of the High Gold zone as well as the Northern Porphyry and Canadian Creek targets.

At the High Gold zone, the structures are associated with minor amounts of a lead-copper-bismuth sulfide, galena, silver telluride and pyrite and trend east–westerly and generally occur on the south side of the deposit over a distance of more than two kilometers. 2020 drilling is designed to confirm the controls, general continuity and variability of grade in the gold-bearing structures. Nineteen holes will test gold structures across 2,000 meters at 10 locations with two "scissor" holes in most cases.

At surface, Northern Porphyry appears to be at a higher erosional level in the porphyry system than the main Casino deposit and suggests potential for improving copper and gold grades at depth. The proposed drill program will test the dimensions of the Northern Porphyry at 200-meter centers with 12 holes to establish its dimensions and to drill a single deep hole to assess the potential for improving copper and gold grades at depth.

The Canadian Creek drilling will test two primary targets – the Casino West extension and the Ana Target – on ground the company acquired in 2019.

The Casino West target is an area measuring 800 meters by 500 meters immediately west of the Casino deposit. Eight holes are proposed to test the area between the Casino deposit and the closest historical holes to the west.

At the Ana Target, three holes will test for porphyry copper-gold mineralization near surface and at depth. Past exploration shows an untested IP chargeability and copper-in-soil anomaly surrounded by historical holes with moderate to strong propylitic to potassic alteration associated with low levels of copper, gold and molybdenum.

"Further delineation of the High Gold zone, the key component of the 2020 drilling campaign, has the potential to significantly change the project, and further delineation of the Northern Porphyry and Canadian Creek areas should further establish the district potential of the Casino land package," said Western Copper and Gold President and CEO Paul West-Sells.

With three diamond drill rigs, initial 2020 exploration scheduled to begin in mid-June, was to consist of 43 holes between 150 meters and 500 meters in depth, and the drill program should be completed by the end of the third quarter, the junior added.

As it resolved to follow up with new exploration of the three areas explored in late 2019, Western informed the Yukon Environmental and Socio-Economic Assessment Board that would defer submitting its environmental assessment for the Casino project until Dec. 31, 2021.

Submission of the document, titled "Environmental and Socio-economic Effects Statement," to YESAB is an important milestone in final permitting for a mine project in Yukon.

Western Copper and Gold Corp.

Geologists examine core from drilling at Casino. One hole drilled last year cut 2.97 meters averaging 55.1 g/t gold at High Gold, a zone of higher grade gold mineralization that runs some 2,000 meters across the copper-gold deposit.