MINING MARKETS AND INVESTMENT NEWS — INVESTMENT COMMENTARY — Analysts see exploration upside for Western Copper

Mining analysts Glenn Brown and Richard Gray of Canaccord Capital see more upside for Western Copper Holdings (WTC-T), a Vancouver-based junior which holds a 45% interest in San Nicolas, a classic Kuroko-type volcanogenic massive sulphide (VMS) deposit in central Mexico.

In a recent research report, which includes an excellent description of Kuroko deposits, Brown and Gray discuss the growing resource at the San Nicolas zinc-copper-silver-gold project in the Zacatecas-San Luis Potosi district. Their preliminary model suggests an inferred resource of 88 million tonnes with a weighted average grade of 1.36% copper, 1.89% zinc, 0.42 gram gold and 24.95 grams silver per tonne.

While San Nicolas is clearly Western Copper’s core asset, the analysts see “excellent potential” for additional finds on ground joint-ventured with Teck (TEK-T) and Rio Tinto (RTP-N) subsidiary Kennecott.

“The partnership with Teck and strategic alliance with Rio Tinto will make Western Copper the lead explorer in central Mexico,” the analysts say.

“The nearby region, where the company has interests in an additional 1.2 million acres, covers favorable host formations in the Lower Cretaceous, including a promising project in the Concepcion del Oro district of northern Zacatecas.” The properties have significant geologic upside, they add, noting that exploration over the next year will include drilling of geophysical targets at Ramos, San Jeronimo, and Penasquito beginning this spring.

Western Copper shares the El Salvador project, of which San Nicolas is part, with Teck (55%), while Mexican company Luismin retains the option to participate with a 25% interest, or reduce to a 15% holding, thereby reducing Teck and Western Copper’s interests. Western Copper’s strategic alliance with Kennecott relates to properties other than El Salvador (or any of Kennecott porphyry copper targets).

“San Nicolas is the first chapter of a story that is gaining momentum,” Brown and Gray conclude. The analysts describe Western Copper as a “speculative buy,” with a target price of $12.75.