Excelsior Mining Files Technical Report for Updated Preliminary Economic Assessment on Johnson Camp Mine Incorporating Sulfide Leaching Technology
NEWS RELEASE
Excelsior Mining Files Technical Report for Updated Preliminary Economic Assessment
on Johnson Camp Mine Incorporating Sulfide Leaching Technology
February 28, 2023
Excelsior Mining Corp. (TSX: MIN) (FSE: 3XS) (OTCQB: EXMGF) ("Excelsior" or the “Company”)
is pleased to announce that it has filed a National Instrument (“NI”) 43-101 Technical Report dated
effective February 1, 2023 (the “Report”) on SEDAR at www.sedar.com. The Report is with respect to
the results of its Updated Preliminary Economic Assessment (“PEA”) on the Johnson Camp Mine Heap
Leach, located in Cochise County, southeastern Arizona that were originally announced in a February
22, 2023 news release. The PEA considers the results of the drill program completed in 2022 and the
implementation of sulfide leaching technology to improve recoveries. As part of the PEA, the Report also
includes a republishing of the Prefeasibility Study Update (“PFS”) on the North Star Deposit of the
Gunnison Copper Project. 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 conventional open pit and heap leach operation. Results of the PFS and PEA disclosed in this
press release are in United States dollars.
“The potential of sulfide leaching technology is transformational for Johnson Camp’s economics and total
mineable copper, which has prompted us to take a more holistic view of the development of the entire
mining camp, including oxides, sulfides and transition mineralization at all our assets.” Comments
Stephen Twyerould, President and CEO. “For Gunnison, we are awaiting the permit amendment for well
stimulation, which we hope to receive this quarter. Once all approvals are in-hand, we intend to start field
trials as soon as possible thereafter. Field trails are designed to test whether well stimulation is the
preferred method to reduce or eliminate the negative effects of gas bubbles on injection flow within the
wellfield.”
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).
Heap leaching of sulfide copper with accelerated pyrite oxidation is proposed in this PEA. The Project
plans include mining oxide, sulfide, and transition material from the Burro and Copper Chief pits for 20
years and heap leaching for an additional year to produce copper cathode at a capacity up to 25 million
pounds per annum (mppa).
To restart JCM for heap leaching, two developments need to take place simultaneously: pre-stripping
and mine development, and the construction of a new heap leach pad, Pad 5. Both are considered to
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require between six and nine months to complete before irrigation of the new leach pad could commence.
Piping of PLS and raffinate lines from Pad 5 to the JCM ponds also fits within this time frame. A PEA
has been completed by M3 with respect to this planned re-opening.
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 $3.75/lb.
Mine Life and post mining processing ~20 years
Heap Leach Material Mined 85.2 M ton
Total Copper Grade (CuT%) 0.37%
Average LOM Total Copper Recovery* 77%
Cu Produced 492 M lb
Total Tonnage Mined 196 M ton
Initial Mine Capital $58.9 million
Total Operating Cash Cost ($/lb Cu)** $2.24
After-Tax NPV/IRR (7.5% discount rate) $180.0M / 30.4%
*Total copper recovery includes a combination of oxide, transition and primary sulfide mineral recoveries.
** Includes all operating costs, site G&A, royalties, non-income taxes, salvage, reclamation and closure.
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 $3.00 $3.375 $3.75 $4.125 $4.50
IRR After-Tax 11.5% 20.9% 30.4% 39.9% 49.2%
NPV* After-Tax $32 $107 $180 $251 $321
*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.
Robert Winton, SVP and General manager states, “We are very encouraged by the much-improved
economics and low capex at Johnson Camp. We are aiming to complete all metallurgical testing this year
along with additional optimization and design studies. A feasibility study is targeted in the first half of
2024. Subject to a successful feasibility study and financing, we plan on commencing construction later
in 2024. The prospect of strong annual cashflow to fund the development of all our projects is very
exciting.”
Mineral Resources
The JCM Mineral Resources are provided in the table below.
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Johnson Camp Mineral Resources
(0.1% CuT cut-off)
Classification Tons % Cu lbs CuT
Measured 20,771,000 0.31 127,545,000
Indicated 87,166,000 0.32 550,118,000
M&I 107,932,000 0.32 677,663,000
Inferred 50,998,000 0.32 322,656,000
1. The Effective Date of the mineral resources is July 13, 2022.
2. The project mineral resources are comprised of all model blocks at a 0.1 % 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 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, and new drilling completed by Excelsior in
2022. 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 RESPEC Company LLC
(“RESPEC”) 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.
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Parameter Value Unit
Copper Price $3.75 $/lb Sold
Contract Mine Cost $2.30 $/ton Mined
Technical Services $0.25 $/ton Processed
Heap Management $0.30 $/ton Processed
Heap Capital Cost $0.80 $/ton Processed
Crushing/Agglomeration Cost $1.10 $/ton Processed
G&A Cost $0.05 $/lb Cu Produced
SX-EW Cost $0.25 $/lb Cu Produced
Recovery 95% Acid Soluble Cu
Recovery 95% Cyanide Soluble Cu
Recovery 70% Sulfide Cu
Royalty (incl. Stream) 17.90% NSR
Acid Cost $150 $/ ton
Acid Consumption and Costs by Formation
Formation
Acid
Cons.
lb/ton
Acid Cost
$/ton Processed
Pioneer Shale 20 $1.20
Bolsa Quartzite 25 $1.50
Diabase 30 $1.80
Middle Abrigo 55 $3.30
Upper Abrigo 45 $2.70
Lower Abrigo 40 $2.40
Martin 70 $4.20
The pit shells created using these optimization parameters were used to constrain the project resources
for comparison purposes. An exclusion line was used to limit the pit optimization on the west side of the
Burro Pit to prevent the pit optimizations from encroaching on the existing process plant and the historical
leach pad. The in-pit resources were further constrained by the application of a cut-off of 0.1% CuT to all
model blocks within the optimized pits.
Mr. Jeffrey Bickel, C.P.G., with the independent firm RESPEC 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. Mr. Bickel 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.
PEA Assumptions
The JCM plan has been developed based on a new mineral resource estimate for the Burro and Copper
Chief deposits. The mine plan targets the full resource at Johnson Camp over a 20-year period. A contract
miner will be executing the mining of the pits and delivering material to the primary crusher.
Mining of the deposit is expected to be accomplished with 100-ton haul trucks and front-end loaders.
Mining is planned on 20-ft bench heights. The pit configuration is double-benched with catch benches
every vertical 40 ft. An annual schedule was developed for the mine plan. Crushed and agglomerated
material will be processed by placement on the newly permitted leach pad. This tonnage production is
limited by the copper production capacity of the existing SX-EW plant of 25 million pounds of copper per
year.
The mining contractor is expected to be responsible for mine supervision, equipment operation,
equipment maintenance, and blast hole drilling and loading. The reference to specific equipment
manufacturers is to illustrate equipment size and is not to be considered a recommendation. Production
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drilling is expected to be accomplished with Epiroc DM45 class drills or similar. Loading is expected to
be accomplished with 14-yard CAT 992 class front-end loaders. Haul trucks are planned to be CAT 777
class 100-ton trucks.
The existing leach pads (Pads 1, 2 & 3) will not be used for future mining for new material extracted from
the Burro and Copper Chief pits. The new leach pad area, Pad 5, is to be located northeast of the existing
plant facility and is to be designed such that leach solutions flow by gravity into the new combined ILS-
PLS pond located down slope of the new leach pad. The PLS solution will be pumped back to the existing
JCM SX-EW plant. A storm water pond is also provided.
The Johnson Camp Mine is currently covered under Aquifer Protection Permit P-100514. Excelsior has
obtained a significant amendment to the existing APP to accommodate mining at JCM from the Burro Pit.
A new facility, Leach Pad 5, with associated impoundments has been added to the existing APP to
accommodate resumption of mining at JCM.
The full capital cost for restarting the JCM heap leaching operation including mining pre-production, first
fills/Owner’s costs, leach pad construction, new leach pad stacking system, crusher and agglomeration
refurbishment and haul road construction is approximately $58.9 million. Staffing for the JCM project is
mostly in place however several new hires will be needed to augment the existing staff.
JCM Opportunities
1. Additional infill and step-out drilling, including drilling focused on deeper sulfides, could yield
increased tonnage and/or grade in some areas within the mineral resource.
2. Detailed mine planning and scheduling may result in higher production rates and reduced mining
unit costs. Mine plan optimization could bring higher grade material closer to start for better initial
cash flow and could reduce waste tons.
3. Planned metallurgical test work on sulfides and transitional mineralization in 2023 could generate
higher recoveries or lower acid consumptions than presently estimated and demonstrate that less
crushing is required.
4. The estimated capital required for the JCM Project has been prepared to a PEA level. Additional
detailed engineering work may reduce this cost.
5. Relocating the existing waste rock stockpile could be performed with smaller, cheaper equipment
as well as timed later in the mine schedule to increase near-term revenue.
6. The copper price used for this study is $3.75/lb. Current copper spot copper prices are above this
price level and may continue to increase, given the continued emphasis by the US and other
governments towards renewable energy sources and electrification of transportation. Copper has
a large role to play in these “green” initiatives.
7. Expansion of the current SX-EW facility to a production capacity of 50 mlbs per annum could be
evaluated in a trade-off study to evaluate whether it would improve the project economics by
increasing the cash flow.
8. Demonstration of successful leaching of sulfide and transitional material could provide
opportunities for mining additional satellite deposits that are known to exist in the Johnson Camp
District, including the Strong and Harris and Gunnison deposits.
9. Integration of planning efforts for the Johnson Camp, Strong and Harris, and Gunnison deposits
could reveal synergies or development strategies for improving financial returns and increasing
the mine life.
JCM Risks
1. Metallurgical test work to be performed on sulfides and transitional mineralization in 2023 could
generate lower recoveries or higher acid consumptions that presently estimated.
2. This testing could also indicate that finer crushing is required to achieve high copper recoveries.
3. The acid price could remain high in the short term and could increase the operating cost of heap
leaching.
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4. Other reagent costs, principally diluent and extractant, could increase materially, increasing SX-
EW operating costs.
5. The current increased price of natural gas which is used by the local generating company could
impact the long-term cost of power needed for the Project.
6. The selected PEA copper price of $3.75/lb could be subject to volatility due to external factors.
7. More detailed engineering designs could result in higher costs.
8. Increased lead times for construction could materially delay the start of leaching and generation
of revenue.
9. The cost of financing capital for the JCM heap leach could become prohibitive.
10. Obtaining the necessary environmental permit amendments could take longer than anticipated.
11. Changes to the new Pad 5 permit may be required to optimize sulfide leaching which could delay
mine start-up.
Recommendations
Excelsior should complete the current metallurgical program and, if warranted, proceed to a feasibility
study and then detailed engineering for the leach pad and crusher refurbishment.
GUNNISON PROJECT PREFEASIBILITY STUDY
Highlights of the PFS (United States dollars)
Net Present Value (“NPV”) of $1,167 million after-tax
o at 7.5% discount rate using a life of mine (“LOM”) average copper price of $3.75/lb;
Internal Rate of Return (“IRR”) of 37.5% after-tax;
Pre-production capital costs of $47.6 million
o includes 15% contingency, EPCM, freight, mobile equipment, owner’s costs and capital
spares;
Payback period for pre-production capital of 6.7 years after-tax;
Average life of mine operating costs of $0.945/lb;
Total Operating Cash Cost (including royalties, non-income taxes, salvage, reclamation and
closure) of $1.225/lb
All-In Cost (LOM capital costs plus operating costs) of $1.727/lb;
Life of Mine: 2,154 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 is set out below under the heading “Financial Analysis”. In
addition, the risks and opportunities associated with the Gunnison Project are discussed below.
The PFS was completed by M3 Engineering & Technology Corporation (“M3”) of Tucson, AZ and is
effective as of February 1, 2023. The PFS was updated because of the need to update the JCM PEA,
which is contained in the same report.
Financial Analysis
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The PFS base case generates an after-tax NPV of approximately $1,166.5 million (at a cash flow discount
of 7.5%) and an IRR of 37.5%. This financial analysis is based on a number of assumptions which are
fully set out in the Report.
The base case uses the following parameters over the 24-years of production:
Copper selling price of $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
$150/ton and the price of sulfur of $130 per ton delivered after that:
Combined state and federal tax rate of 25.9%;
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 40.6% 37.5%
Pre-Production Capital Payback (years) 6.5 6.7
NPV (million $) @7.5% 1,434.8 1,166.5
COST METRICS
Cost/lb Copper
Direct Operating Costs 0.945
Royalties, Taxes, Recl. & Salvage 0.274
Total Cash Cost 1.225
Total initial (pre-breakthrough) capital expenditures (including 15% contingency, EPCM, capital spares,
owner’s costs, mobile equipment and freight) are estimated at $47.6 million for Stage 1 initial production
of copper cathode at approximately 25 million pounds per annum. Total sustaining capital costs over the
life of the mine are $1,080.8 million, which includes production wellfield expansion, SX-EW expansion,
acid plant construction and water treatment facilities. The average life of mine Direct Operating Cash
Cost is $0.945/lb and the average life of mine Total Operating Cash Cost (including royalties, non-income
taxes, salvage, reclamation, and closure) is $1.225/lb.
The Company has also evaluated an Alternate case without an Acid Plant. This case generated a pre-
tax [email protected]% of $1,177.8 million and an IRR of 41.0% (after-tax: [email protected]% of $975.5 million and IRR
of 38.1%). Total initial capital expenditures remain the same as the “Acid Plant” scenario. Total sustaining
capital costs over the life of the mine are $879.7 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 $1.35/lb for the “No-Acid Plant” option with an average life of mine Total Operating Cash
Cost of $1.63 per pound.
Sensitivity analysis is shown in the table below.
Base Case After – Tax Sensitivities ($millions)
Copper Price
NPV @ 7.5% ($M) IRR% Payback
Base Case $1,167 37.5% 6.7
20% $1,697 50.4% 4.3
10% $1,433 44.0% 6.2
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-10% $898 30.8% 7.3
-20% $627 24.2% 8.0
Operating Cost
NPV @ 7.5% ($M) IRR% Payback
Base Case $1,167 37.5% 6.7
20% $1,031 33.2% 7.1
10% $1,099 35.3% 6.9
-10% $1,233 39.7% 6.5
-20% $1,299 41.9% 6.3
Initial Capital
NPV @ 7.5% ($M) IRR% Payback
Base Case $1,167 37.5% 6.7
20% $1,160 36.1% 6.7
10% $1,163 36.8% 6.7
-10% $1,170 38.2% 6.7
-20% $1,173 39.0% 6.6
The Alternate Case economic after-tax sensitivities are shown in the table below.
Alternate Case After – Tax Sensitives ($millions)
Copper Price
NPV @ 7.5% ($M) IRR% Payback
Base Case $976 38.1% 6.0
20% $1,505 51.7% 4.3
10% $1,241 45.0% 4.8
-10% $706 30.8% 6.7
-20% $432 23.0% 7.5
Operating Cost
NPV @ 7.5% ($M) IRR% Payback
Base Case $976 38.1% 6.0
20% $790 32.7% 6.5
10% $883 35.4% 6.2
-10% $1,066 40.8% 5.4
-20% $1,157 43.4% 5.0
Initial Capital
NPV @ 7.5% ($M) IRR% Payback
Base Case $976 38.1% 6.04
20% $969 36.6% 6.08
10% $972 37.4% 6.06
-10% $979 38.9% 6.02
-20% $982 39.8% 6.00
Mineral Resources and Mineral Reserves
Mineral Resource Estimate
The 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