Excelsior Mining Announces Updated Technical Report for Gunnison Copper Project and Johnson Camp Mine
NEWS RELEASE
Excelsior Mining Announces Updated Technical Report for
Gunnison Copper Project and Johnson Camp Mine
March 30, 2022
Excelsior Mining Corp. (TSX: MIN) (PFSE: 3XS) (OTCQX: EXMGF) ("Excelsior" or the “Company”)
is pleased to announce the results of its Prefeasibility Study Update (“PFS” or “Report”) on the North Star
Deposit of the Gunnison Copper Project and Preliminary Economic Assessment (“PEA”) on the Johnson
Camp Mine Heap Leach, both located in Cochise County, southeastern Arizona. The Gunnison Project
is designed as a copper in-situ recovery (“ISR”) mine using solvent extraction-electrowinning (“SX-EW”)
to produce copper cathode and the Johnson Camp mine is a heap leach operation. Results of the PFS
and PEA disclosed in this press release are in United States dollars.
GUNNISON PROJECT PREFEASIBILITY STUDY
Highlights of the PFS (United States dollars)
Net Present Value (“NPV”) of $1,348.5 million after-tax
o at 7.5% discount rate using a life of mine (“LOM”) average copper price of $3.93/lb;
Internal Rate of Return (“IRR”) of 44.9% after-tax;
Pre-production capital costs of $45.1 million
o includes 15% contingency, EPCM, freight, mobile equipment, owner’s costs and capital
spares;
Payback period for pre-production capital of 4.8 years after-tax;
Average life of mine operating costs of $0.91/lb;
Total Operating Cash Cost (including royalties, non-income taxes, salvage, reclamation and
closure) of $1.21/lb
All-In Cost (LOM capital costs plus operating costs) of $1.70/lb;
Life of Mine: 2,153 million pounds of commercial production over 24 years;
Staged production profile: initial production rate of 25 million pounds of copper cathode per
annum, followed by an intermediate expansion stage to 75 million pounds per annum and final
expansion stage to full production of 125 million pounds per annum (includes the construction of
an acid plant at full production). The staged production profile makes possible the funding of future
expansions out of cash flow;
Approximately 15 months of wellfield pre-conditioning (additional operations) to dissolve and
remove calcite, along with the addition of a raffinate neutralization plant to assist with the
flushing and removal of accumulated CO2 gas;
Requirement for some additional work to reduce risk and optimize process and production.
A detailed sensitivity analysis to copper price, including a comparison to the results of the 2016 Feasibility
Study, is set out below under the heading “Financial Analysis”. In addition, the risks and opportunities
associated with the Gunnison Project are discussed below.
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Commenting on this Report, President & CEO, Dr. Stephen Twyerould said, “Excelsior is committed to
innovative and environmentally sustainable copper production through our flagship asset, the Gunnison
Copper Project. Production challenges have highlighted the need to re-engineer wellfield ramp-up,
including the introduction of a long period of pre-production CO 2 flushing and calcite removal. Capital
costs, operating costs and the production schedule have been re-estimated to account for wellfield pre-
conditioning and flushing using neutralized raffinate. These changes have been incorporated in the new
PFS, which highlights the value of our Gunnison Project along with the need for additional time and work
before commercial production is achieved. The Company looks forward to undertaking the
recommendations of the PFS and getting back-on-track.”
The PFS was completed by M3 Engineering & Technology Corporation (“M3”) of Tucson, AZ and is
effective as of March 11, 2022. The Technical Report (the “Report”) summarizing the results of the PFS,
and prepared in accordance with National Instrument (“NI”) 43-101, will be filed on SEDAR today.
Financial Analysis
The PFS base case generates an after-tax NPV of approximately $1,348.5 million (at a cash flow discount
of 7.5%) and an IRR of 44.9%. This financial analysis is based on a number of assumptions which will
be fully set out in the Report.
The base case uses the following parameters over the 24-years of production:
Copper selling price of:
o Years 1 thru 5: $4.25/lb
o Years 6 thru 15: $4.00/lb
o Years 16 and beyond: $3.75/lb
Total copper recovery of approximately 48% (based on a combination of metallurgical recovery
and estimated sweep efficiency);
Average of approximately 9.5 pounds of acid consumed for every pound of copper produced;
Acid plant construction in year 7 with the price of sulfuric acid prior to that of approximately
$120/ton and the price of sulfur of $120 per ton delivered after that:
Combined state and federal tax rate of 32.9%;
Staged production commencing at 25 million pounds per annum, ramping up to 75 million pounds
in year 4, and then to 125 million pounds per annum in Year 7.
The introduction of an additional year of pre-production calcite removal and neutralized raffinate
flushing for every well to address CO2 flow restrictions.
FINANCIAL ANALYSIS SUMMARY
Pre-Tax Post-Tax
IRR 50.3% 44.9%
Pre-Production Capital Payback (years) 4.4 4.8
NPV (million $) @7.5% 1,777.5 1,348.5
Ratio of New Capital of NPV7.5 0.025 0.033
COST METRICS
Cost/lb Copper
Direct Operating Costs 0.91
Royalties, Taxes, Recl. & Salvage 0.30
Total Cash Cost 1.21
Total initial (pre-breakthrough) capital expenditures (including 15% contingency, EPCM, capital spares,
owner’s costs, mobile equipment and freight) are estimated at $45.1 million. The production wellfield is
estimated at $6.1 million for drilling and wellfield infrastructure and $29.7 million is estimated for the water
treatment plant. Capitalized pre-production costs for the wellfield and water treatment plant total $9.3
million. Initial production of copper cathode is estimated to be 25 million pounds per annum. Total
sustaining capital costs over the life of the mine are $1,026.6 million, which includes production wellfield
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expansion, SX-EW expansion, acid plant construction and water treatment facilities. The average life of
mine Direct Operating Cash Cost is $0.91/lb and the average life of mine Total Operating Cash Cost
(including royalties, non-income taxes, salvage, reclamation and closure) is $1.21/lb.
The Company has also evaluated an Alternate case without an Acid Plant. This case generated a pre-
tax [email protected]% of $1,585.7 million and an IRR of 51.9% (after-tax: [email protected]% of $1,218.6 million and
IRR of 46.6%). Total initial capital expenditures remain the same as the “Acid Plant” scenario. Total
sustaining capital costs over the life of the mine are $873.1 million, which includes production well-field
expansion, SX-EW expansion and water treatment facilities. Average life of mine Operating Direct Cash
Costs are estimated at $1.24/lb for the “No-Acid Plant” option with an average life of mine Total Operating
Cash Cost of $1.53 per pound.
Sensitivity analysis on copper price is shown in the table below.
Sensitivity Analysis (After-Tax)
Sensitivity Base Case (Acid Plant)
-20% -10% 0 +10% +20%
Cu Price $3.15 $3.54 $3.93 $4.33 $4.72
IRR 30.3% 37.6% 44.9% 52.1% 59.5%
NPV* $821 $1,086 $1,348 $1,609 $1,870
Alternate Case (Non-Acid Plant)
-20% -10% 0 +10% +20%
Cu Price $3.15 $3.54 $3.93 $4.33 $4.72
IRR 31.1% 39.1% 46.6% 54.0% 61.5%
NPV* $691 $957 $1.219 $1,480 $1,741
*million $ at 7.5% discount rate
The impact of the changes compared to the 2016 Feasibility Study can be estimated by comparing the
2022 PFS Base Case at a copper price of $2.75/lb to the Acid Plant case from the 2016 FS at $2.75/lb
copper price (see table below).
2022 Base Case
at $2.75/lb Cu
Price
2016 Acid Plant
Case at $2.75 Cu
Price
Years of Commercial Production 24 24
Total Copper Produced (million lbs) 2,153 2,165
LOM Copper Price (avg $/lb) * $2.75 $2.75
Initial Capital Costs (million $) $45.1 $46.9
Sustaining Capital Costs (million $) $1,026.6 $742
Payback of Capital (pre-tax/after-tax) 7.9/8.0 4.5 / 6.4
Internal Rate of Return (pre-tax/after-tax) 25.8%/23.3% 48.4%/40.2%
Life of Mine Direct Operating Cost ($/pound Cu Recovered) $0.914 $0.65
Acid consumption (lb/lb) 9.53 8.98
Pre-tax NPV at 7.5% discount rate (million $) $769 $1,173
After-Tax NPV at 7.5% discount rate (million $) $590 $808
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Mineral Resources and Mineral Reserves
Mineral Resource Estimate
The total mineral resource estimate for the North Star Deposit is based on results from 122 drill holes
totalling 158,785 feet and is effective as of October 1, 2016 (unchanged from the original 2016 Feasibility
Study on the Gunnison Project). The estimate is classified as a measured, indicated or inferred mineral
resource, consistent with the CIM definitions referred to in NI 43-101. Excelsior is not aware of any
environmental, permitting, legal, title, taxation, socio-political, marketing or other issues which may
materially affect its estimate of mineral resources.
North Star Resources (Oxide and Transition at 0.05% cut-off)
Category Short Tons (million) Total Copper (%) Pounds of Cu (million)
Measured 199 0.36 1,427
Indicated 674 0.27 3,567
Total M&I 873 0.29 4,995
Inferred 187 0.17 630
Notes:
1. Mineral Resources are inclusive of Mineral Reserves.
2. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
3. Oxidized + Transitional Mineral Resources are reported at a 0.05% total-copper cut-off in consideration
of potential mining by in situ recovery.
The North Star mineral resources were modeled to reflect the detailed lithologic, structural, and oxidation
modeling completed by Excelsior. Copper mineral domains were interpreted on east-west vertical cross
sections on 100-foot spacing, which encompass the 2.3-mile north-south and 1.3-mile east-west extents
of the deposit. These domains were then used to explicitly constrain the estimation of copper grades into
50 x 100 x 25-foot (x, y, z) model blocks using 20-foot composites and inverse-distance interpolation. The
grade estimation is further controlled by the incorporation of search ellipses that reflect the orientations
of modeled structural zones, as well as those of favorable stratigraphic units in areas unaffected by the
structures.
All samples were prepared from manually split half-core sections on-site in Arizona. Split drill core
samples were then sent to Skyline Assayers & Laboratories (“Skyline”) in Tucson, Arizona, an
independent laboratory, for Total Copper and Sequential Copper analyses. Skyline is accredited with
international standard ISO/IEC 17025:2005 General Requirements for the Competence of Testing and
Calibration Laboratories. Analytical results for Total Copper, Acid Soluble Copper, and Cyanide Soluble
Copper were reported. Excelsior has no relationship with Skyline Labs other than Skyline being a service
provider. Standards, blanks, and duplicate assays are included at regular intervals in each sample batch
submitted from the field as part of an ongoing Quality Assurance/Quality Control Program.
Mr. Jeffrey Bickel, C.P.G., with the independent firm Mine Development Associates (MDA) of Reno,
Nevada, is a Qualified Person as defined by NI 43-101 and is responsible for this mineral resource
estimate. He has verified, reviewed and approved the technical disclosure contained in this section of the
news release. Mr. Bickel has verified the data underlying the results by reviewing the drilling, sampling,
assay, and quality assurance and quality control data, as well as the geologic interpretations completed
by Excelsior. Mineral resources that are not mineral reserves do not have demonstrated economic
viability.
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Mineral Reserve Estimate
The PFS mineral reserve is based on an economic analysis of the mineral resource using a copper price
of $2.75/lb and key parameters developed from prior test work. The economic optimization was
performed on Measured and Indicated Resources at a cut-off grade of 0.05% Total Cu (“CuT”). EBIT
(earnings before interest and tax) was calculated on a resource block-by block-basis using the key
economic and technical parameters. For a column of resource blocks to be included in the reserve, the
capital costs of establishing the wells for those blocks would have to be less than the combine EBIT for
the same blocks. The mineral reserve was estimated after applying engineering and operational design
parameters which removed the thinner and deeper portions of the mineral resource. Internal dilution has
been included in the final mineral reserve estimate. MDA is of the opinion that the mineral reserve
estimate derived in this PFS reasonably quantifies the economical mineralization of the North Star
Deposit. The reserve estimate is as of October 1, 2016 and the mineral reserves presented in the table
below are included in the mineral resource estimate set out above.
North Star Mineral Reserves (Oxide and Transition at 0.05% cut-off)(1)
Category Short Tons (million) Total Copper (%) Pounds of Cu (million)
Probable 782 0.29 4,505
1. 48% of the total copper reserve is considered recoverable
Mr. Neil Prenn, with the independent firm Mine Development Associates (MDA) of Reno, Nevada, is a
Qualified Person as defined by NI 43-101 and is responsible for reviewing and approving this mineral
reserve estimate. He has verified, reviewed and approved the technical disclosure contained in this
section of the news release. Mr. Prenn has verified the data underlying the results by reviewing the
drilling, sampling, assay, and quality assurance and quality control data, as well as the geologic
interpretations completed by Excelsior.
Risks
A number of risks are highlighted in the Report. Those that are more specific to in-situ mining include:
Potential for lower than predicted (modelled) sweep efficiency.
Potential for mineral precipitates to restrict flow paths, porosity, and permeability.
Potential for gas bubbles to restrict flow paths, porosity, and permeability.
Flushing with neutralized raffinate to remove CO 2 may be less effective than modelled.
The observed CO 2 attenuation could be masking other wellfield problems.
Short circuiting can occur through very permeable structures, reducing overall sweep efficiency
and effecting modelled parameters.
Opportunities
Opportunities at Gunnison are also highlighted in the Report. Those that are related to in-situ mining
include:
Well stimulation has the potential to alleviate or solve CO 2 gas blocking and greatly improve
porosity, permeability, sweep efficiency and flow rates.
Grouting, down-hole packers, and down-hole flow control valves have the potential to minimize
short circuiting.
Wellfield optimization including well spacing, pump sizing, borehole diameter, hole configuration
and down-hole differential flow control have the potential to greatly improve wellfield performance.
Anticipated copper recoveries could be higher than the estimate of 48 percent of total copper,
which would increase total revenue during the life of the mine.
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The conversion of the 187.2 million tons of inferred mineral resources to measured or indicated
categories has the potential to increase mineral reserves.
The Project has high quality limestone resources that could be used to supplement imported lime
in the water treatment process.
Recommendations
A number of recommendations are included in the report aimed at improving wellfield performance,
reducing risk, and tightening up engineering and design prior to construction of the raffinate neutralization
plant. Excelsior intends to investigate and implement these recommendations prior to further
development which include:
Metallurgical Testwork Recommendations: Investigating in situ leaching with different lixiviants
as opportunities to leach metals without the formation of gypsum.
Wellfield Recommendations: Conducting experimentation to ensure that neutralized raffinate is
effective in dissolving CO2 in the subsurface while the engineering, procurement, and construction
is at an early stage to enhance the water treatment design criteria.
Well Stimulation Trials : Well stimulation trials should be undertaken to determine if the
technique(s) have the potential to alleviate or solve CO 2 blocking, improve connectiveness, and
increase flow rates and sweep efficiency. Given that the results of well stimulation have the
potential to reduce the need for raffinate neutralization or change the design criteria for the
neutralization plant, it should be undertaken before or in parallel with design activities on the water
treatment plant. Well stimulation is allowed under Class III Underground Injection Control permits
but requires EPA approval of the stimulation programs.
Water Treatment: A scope of work and bid package should be assembled to select a water
treatment vendor to design the water treatment system. Selection criteria should favor rapid, low-
cost solutions to demonstrate that the technology is effective in solving the wellfield challenges.
JOHNSON CAMP HEAP LEACH PRELIMINARY ECONOMIC ASSESSMENT
Economic Analysis
The Johnson Camp Mine (“JCM”) has historically been an open pit, heap leach operation since Cyprus
Minerals opened the property in the 1970’s. The operation includes two open pits, a two-stage crushing-
agglomerating circuit, a fully functioning SX-EW plant capable of producing 25 million pounds of cathode
copper per year, a complete set of PLS and raffinate ponds, and full infrastructure (ancillary facilities,
access, power, water, and communications).
Excelsior is exploring re-opening the Burro and Copper Chief pits for open pit mining to produce run-of-
mine (ROM) material that can be placed on a new leach pad (Pad 5) as a means of extracting copper
from the remaining mineral resources within the two pits. A Preliminary Economic Assessment (PEA) has
been completed by M3 with respect to this planned re-opening.
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Mining of JCM would be by traditional open pit and the highlights of the PEA financial model are tabulated
below assuming a copper price of $4.25/lb. (Year 1 through 5) and $4.00/lb (beyond Year 5).
Mine Life and post mining processing ~5 years
Heap Leach Material Mined 19.64 M ton
Total Copper Grade (CuT%) 0.387%
Acid Soluble Copper Grade (AsCu%) 0.187%
Cu Produced 65.9 M lb
Total Tonnage Mined 34.4 M ton
Initial Capital for new heap leach pad $26.5 million
Initial Mine Capital $14.3 million
Total Operating Cash Cost ($/lb Cu) $2.83
After-Tax NPV/IRR (7.5% discount rate) $7.8M / 13.4%
The table below sets out the sensitivities of the After-Tax NPV and IRR to copper price:
Sensitivity Analysis
Sensitivity -20% -10% 0 +10% +20%
Cu Price $3.40 $3.83 $4.25 $4.67 $5.10
IRR After-Tax (11.2)% (4.8)% 13.4% 29.7% 42.9%
NPV* After-Tax ($38) ($16) $7 $27 $44
*million $ at 7.5% discount rate
The PEA is preliminary in nature and includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations applied to them that would enable them to
be categorized as mineral reserves. There is no certainty that the conclusions reached in the PEA will be
realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Based on the current pit shell limited mineral resources for the two pits is approximately 61.5 million tons
at a cut-off grade of 0.2% CuT. The amount that is included in the conceptual mine plan over four years
of mining is 19.6 million tons. It is possible that more than the initial 19.6 million tons can be mined from
the JCM open pits if copper prices continue to be favorable.
“With the positive NPV result of the Johnson Camp open pit, heap leach PEA, Excelsior has an
opportunity to increase copper production in the short to medium term with conventional mining and
utilizing our existing Solvent Extraction infrastructure. Infill drilling and capital risk reduction has the
opportunity to further improve JCM economics as we complete the necessary recommendations on our
core Gunnison asset”, says Robert Winton, Sr. VP Operations.
Excelsior management has launched a small drilling program to confirm mineral resources and additional
column leach metallurgical testing to confirm prior test work.
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Mineral Resources
The JCM Mineral Resources are provided in the table below.
1. The Effective Date of the mineral resources is February 21, 2022.
2. The project mineral resources are comprised of all model blocks at a 0.2 % CuT cut-off that
lie within optimized resource pits.
3. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
4. The estimate of mineral resources may be materially affected by geology, environmental,
permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
5. Rounding as required by reporting guidelines may result in apparent discrepancies between
tons, grade, and contained metal content.
The estimate is classified as an inferred mineral resource, consistent with the CIM definitions referred to
in National Instrument 43-101. The Johnson Camp Mine mineral resources are entirely classified as
Inferred. This classification is based on the confidence in the underlying data which are largely historical.
Excelsior’s sampling programs in 2016 and 2017 verified the historical data sufficiently to warrant the
Inferred classification, but additional drilling and sampling, as well as more detailed geological modeling,
would be required to allow for higher classification of the project resources.
The JCM copper resources were modeled and estimated using information provided by Excelsior under
Mr. Bickel’s supervision. The information is derived from historical core holes drilled by Cyprus Mining,
Arimetco, Summo USA Corp., and Nord Resources Corp. The drill hole database also includes analyses
performed by Excelsior on the historical core. These data, as well as digital topography of the project
area, were provided to MDA by Excelsior.
Total copper grades, as well as soluble copper ratios, were interpolated using inverse distance, ordinary
kriging, and nearest-neighbor methods. The mineral resources reported herein were estimated by
inverse distance interpolation as this method led to results that most appropriately reflected the drill data
and geology of the deposit. This is particularly true with respect to the estimation of the lowest-grade
areas in the model, where potential over-estimation of volumes could materially impact the resource
estimation at grades close to potential open-pit mining cut-offs. The nearest-neighbor estimation was
completed for the purposes of statistical checking of the various estimation iterations.
The JCM mineral resources have been estimated to reflect potential open-pit extraction and potential
processing by heap leaching. To meet the requirement of the resources having reasonable prospects for
eventual economic extraction, a pit optimization was completed using the parameters summarized in the
table below.
Classification Tons % CuT % CuAs lbs CuT lbs CuAs
Inferred 61,529,000 0.38 0.18 472,167,000 220,189,000