Gunnison Copper Announces Preliminary Economic Assessment of Open Pit Mining at its Flagship Gunnison Project in Arizona’s Copper Belt Webinar Scheduled for Friday November 15th at 12pm ET
NEWS RELEASE
Gunnison Copper Announces Preliminary Economic Assessment of Open Pit Mining at
its Flagship Gunnison Project in Arizona’s Copper Belt
Webinar Scheduled for Friday November 15th at 12pm ET
November 14, 2024
Gunnison Copper Corp. (TSX: GCU) (FSE: 3XS) (OTCQB: EXMGF) ("GCC" or the “Company”) is
pleased to announce the results of a Preliminary Economic Assessment (“PEA”) on its 100%-owned
Gunnison Project in the Cochise Mining District, Arizona. The Gunnison Project is presented as a
conventional open pit and heap leach operation which will produce finished copper cathode for domestic
U.S. consumption. All dollar amounts are in US dollars and “Tons” refer to U.S. short tons (1 short ton
equals approximately 0.91 metric tonnes).
The Company will present at a webinar hosted by Adelaide Capital on Friday November 15th at 12pm
ET. Questions can be submitted during the session or in advance to [email protected]. The webinar
will be livestreamed on the Adelaide Capital YouTube Channel, where a replay will be available after the
event: https://bit.ly/adcap-youtube. Register here: https://streamyard.com/watch/heaHcYsvWeCw.
Highlights of the PEA (United States Dollars)
The Gunnison Project, a fully vertically integrated operation producing finished copper cathode
on-site in Arizona for domestic U.S. supply chains, has an after-tax net present value (8%) of $1.3
billion and an internal rate of return (IRR) of 20.9% at a long-term copper price of $4.10/lb;
One of the most substantial open pit copper projects in the U.S. with total Measured and
Indicated (“M&I”) Mineral Resources in the open pit of 551 million tons at a total copper grade of
0.35%, capable of supplying 8% of recent annual U.S. domestic copper production1
Simplified and lower risk path to permitting; the Gunnison Project has current operating permits
and there is a more streamlined amendment process to State and Local permits to proceed with
open pit mining;
Significant benefits for the community and local economy through the payment of over $840
million in U.S. federal, state, and local taxes, partnerships with local institutions such as Cochise
College, and the creation of over 650 local jobs;
Average annual copper cathode production of 83,700 tons (167 million lbs) over the first 16
years and total production of 1,355,900 tons (2,712 million lbs) over the entire 18 year mine life
at an average Cash Cost (C1) of $1.42/lb and Sustaining Cash Cost2 of $1.94/lb of copper
produced;
Total initial capital cost of $1.3 billion and after-tax payback period for initial capital of 4.1 years;
Environmental advantages include lower water usage per pound of copper produced versus
copper concentrate producers, up to 10% reduced energy consumption due to on-site clean
energy production, and zero risk of environmental impacts from tailings dam failures as there
are no tailings produced.
1 U.S. Geological Survey, Mineral Commodity Summaries, January 2024
2 Sustaining Cash Cost = Cash Cost + Sustaining Capex + Deferred Stripping + Royalties
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Dr. Stephen Twyerould, CEO, commented: “The positive outlook for copper prices, combined with
advancement of sulfide leaching technologies, and the greater overall copper extraction afforded by
open pit mining and heap leaching, has prompted us to focus on an open pit alternative to ISR. We are
very excited by these results, which clearly demonstrate the project is substantial and highly
competitive amongst its peers.”
Craig Hallworth, CFO, commented: “Gunnison Copper, with its newly optimized Gunnison Project and
soon to be producing Johnson Camp Mine, presents an attractive opportunity for investors to gain
leverage to the copper price through a pure play vehicle. Given the portfolio’s location in the Arizona
Copper Belt, the fully permitted status of Johnson Camp and streamlined path to permitting for
Gunnison via permit amendments, we look forward to directly supplying critical U.S. supply chains in
the clean energy, defense, and manufacturing sectors in our expected macro environment of rising
copper prices and producer multiples.”
Roland Goodgame, SVP Business Development, commented: “The future of Gunnison has evolved to
a lower risk open pit option with great economics. The opportunities the Gunnison project presents will
benefit the local community and the greater Arizona economy. Significant direct jobs (over 650) and
indirect jobs will be created in addition to $842 million in revenues to local, state and federal tax. The
historical mining assets in the Cochise Mining District will be leveraged and fully developed to benefit
the local community.”
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.
The PEA was completed by M3 Engineering & Technology Corporation (“M3”) of Tucson, AZ and is
effective as of November 1, 2024. The Technical Report (the “Report”) summarizing the results of the
PEA and prepared in accordance with National Instrument (“NI”) 43-101, will be filed on SEDAR+ and
GCC’s website within 45 days of this news release. The prior technical report on the Gunnison Project
included the Johnson Camp Mine (“JCM”); however, with the new open pit development of the Gunnison
Project and the current construction and upcoming restart of production at JCM in 2025, the Company
will no longer develop the Gunnison Project and JCM using common infrastructure. As a result, an
updated technical report on JCM will be prepared and filed.
Preliminary Economic Assessment Summary
The Project is in Cochise County, Arizona, approximately 65 miles east of Tucson and is held or controlled
100% by GCC. The Gunnison deposit of the Gunnison Project was previously designed and developed
as an in-situ recovery (“ISR”) copper operation. The advancement of sulfide leaching technologies and
the greater copper extraction of open pit mining and heap leaching has prompted GCC to focus on the
open pit alternative to ISR. Nevertheless, the optionality on the fully permitted ISR operations and well
stimulation remains an asset to the Company and this optionality will be maintained. This includes
maintaining full compliance with all regulatory and permit requirements including maintaining hydraulic
control, pumping, monitoring and regulatory reporting.
The Gunnison Open Pit PEA plans to pre-strip alluvial overburden using leased owner-operated
equipment. The deposit is a single large body allowing for more cost effective haulage costs, versus
mining from numerous regional deposits. A primary gyratory crusher will be installed to crush to a P 80 of
6 inches for leaching predominately oxide mineralized materials on the leach pad. A rail spur from the
Union Pacific Southern Pacific (UPSP) will provide straightforward access and inexpensive transportation
for incoming sulfur and outgoing copper cathodes. The sulfuric acid plant will produce acid with a net cost
of approximately $36 a ton and 27 MW of clean energy.
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GCC has a successful track record of permitting and community relations. This, along with the fact that
the Gunnison open pit has no federal permitting nexus, on flat ground with no identified endangered or
threatened species or habitat, and no historical, archaeological, or Native American artefacts, indicates
the Company’s prior permitting track record can be maintained.
Table of Key Metrics
Notes:
1. Hard rock waste includes 85 million short tons of pure limestone, a highly marketable material.
2. Excludes recovery of sulfides from conventional leaching. Some sulfides are expected to leach and provide up-side to
recoveries and copper production.
3. Includes acid plant, leach pad, SX-EW, crushing facility, truck shop, mining pre-strip, highway move, owners’ costs and
other minor infrastructure.
4. Sustaining Capital includes $346 million in deferred stripping costs
5. Cash Cost includes mine operating, crushing and leaching, process plant operating, and general and administrative
costs (“G&A”).
6. Sustaining Cost includes Cash Cost, Sustaining Capex, Deferred Stripping, and Royalties.
7. EBITDA = Revenue – Cash Operating Expenses; Average annual of Y1 to Y16; Revenue includes sales of copper to
U.S. based customers at Spot Price and sales of copper to Triple Flag at Stream Fixed Price (25% of spot)
8. Free Cash Flow = Operating Cash Flow (After Tax) – Capital Expenditures; Average annual of Y1 to Y16
Financial Analysis
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The PEA base case generates an after-tax Net Present Value of approximately $1.3 billion (at a discount
rate of 8%) and an Internal Rate of Return (IRR) of 20.9%. This financial analysis is based on a non-
levered cash flow model, revenues and costs priced in 2024 real US dollars, mid period discounting, and
a valuation date set at the start of Project construction.
Key cash flow model parameters include:
Copper selling price of $4.10/lb;
Net copper premium of $0.02/lb (metal premium less freight out);
Stream deliveries at 25% of market price;
NSR royalties of 4.5% applies to all copper produced
State royalty of 5.5% applies to the mineralized material mined from State land (~10% of copper
produced)
Total copper recovery of approximately 69.5%;
LoM average of approximately 10.6 pounds of acid consumed for every pound of copper produced
(52 lbs per ton of mineralized material processed);
Electricity price of $0.079 per Kwh
Acid plant construction in year -1 with a price of sulfur of $110 per short ton delivered based on
long term price forecast of $75/ton CFR Tampa benchmark plus average direct rail freight in from
Mexican smelters of $35/ton. Including co-generation power credits, the realized price of acid
produced on site averages $36/ton;
Acid buying price of $150/ton if acid is required above the acid plant’s capacity, and an acid selling
price of $130/ton if excess acid is produced in any specific year;
Federal income tax rate of 21% and the State income tax rate of 4.9%. State income tax is
deductible for federal income purposes resulting in a combined income tax rate of 24.9%
Table of Capital Costs
The capital cost estimates for this PEA, shown in table below, were developed with a -25% to +30%
accuracy. The Company has used an overall contingency of 20% in accordance with Association of
the Advancement of Cost Engineering International (AACE) Class 5 estimate guidelines.
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Total initial (pre-breakthrough) capital expenditures (including 20% contingency, EPCM, capital spares,
owner’s costs, mobile equipment and freight) are estimated at $1,343 million for initial production of
copper cathode. Mine costs includes pre-stripping and capitalized pre-operating mobile fleet lease costs.
Total sustaining capital costs over the life of the mine are $876 million, which includes deferred stripping,
leach pad expansion and mining equipment.
Facilities at the mine site will include one open pit, two waste stockpiles, primary crushing plant and
conveying system, heap leach pad, Solvent Extraction-Electrowinning (SX-EW) process plant, sulfur
burning sulfuric acid plant with cogeneration capability, technical and operational support offices, mine
truck shop and maintenance buildings, refueling systems, electrical substation and distribution, water
supply and distribution, warehousing and Union Pacific rail spur.
Table of Operating Costs
Mining operating cost estimates, prepared by Independent Mining Consultants (IMC), are based on an
owner’s team managing mining activities, using an owner-operator model. Process operating cost
estimates and G&A cost estimates were prepared by M3, as summarized in the table above (note
numbers may not add due to rounding). Sequencing of operations and annual cash flows are detailed in
Exhibit 1 and 2, at the end of this news release.
The operating site includes numerous infrastructure and location advantages including:
Union Pacific rail line right next to the property with a 2 km rail spur envisioned.
High voltage power lines with clean power from SSVEC.
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Close to local and regional labor pools of Benson, Willcox, and Tucson.
Flat land conducive for development.
Deposit is within an enclosed basin; therefore no 404 permit is required.
No endangered flora or fauna on the property.
Table of Profitability Metrics
Table of Sensitivities
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Mine Plan and Production Profile
Figure 1 shows the stacked total mining profile of waste and process feed. Overall strip ratio is ~2:1,
however 67% of the waste is alluvium gravel which has the advantage of lower mining costs. The
equivalent striping ratio based on hard rock waste mining costs is approximately 1.57:1.
Figure 2 shows the LoM stacked annual copper production by conventional oxide leaching compared to
sulfide leaching. Sulfide leaching makes up only 14% of the total LoM copper production and does not
commence until year 8 of operations.
Mineral Resource Estimate
The mineral resource estimate for the Gunnison Deposit is based on results from 122 drill holes totalling
158,785 feet and is effective as of September 4 th, 2024. Gunnison deposit mineral resources are
classified in order of increasing geological confidence into Inferred, Indicated, and Measured categories
in accordance with the “CIM Definition Standards – For Mineral Resources and Mineral Reserves” and
therefore Canadian National Instrument 43-101. GCC 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.
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The Gunnison deposit mineral resources are reported within an optimized pit at cut-offs that are
reasonable given anticipated open-pit mining methods, processing costs, and economic conditions,
which fulfills regulatory requirements that a mineral resource exists in such form, grade or quality and
quantity that there are reasonable prospects for eventual economic extraction.
The pit-constrained mineral resources are tabulated using an internal cut-off grade of 0.05% TCu. No
mineral resources were estimated within overburden (Tertiary/Quaternary alluvium), and the reported
mineral resources are restricted to lands controlled by GCC.
Total Resources
Resource Class
Short
Tons
(millions)
Total
Cu (%)
Cu
Pounds
(millions)
Measured 191.3 0.37 1,420
Indicated 640.2 0.29 3,684
Measured +
Indicated 831.6 0.31 5,104
Inferred 79.6 0.20 325
Notes:
1. Mineral Resources that are not Mineral Reserves do not have demonstrated economic
viability.
2. Mineral Resources are reported at a 0.05% total copper cut-off grade within an optimized pit.
3. Rounding as required by reporting guidelines, may result in apparent discrepancies between
tons, grade, and contained metal content.
4. The Effective Date of the Mineral Resource estimate is September 4, 2024.
The Gunnison mineral resources were modeled to reflect the detailed lithologic, structural, and oxidation
modeling completed by GCC. Copper mineral domains guided by these geological controls, 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. Sequential copper assay ratios were used to
define three-dimensional surfaces separating the Oxide, Transitional, and Sulfide zones of the
mineralization.
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 (TCu) and Sequential Copper analyses, Acid Soluble Copper
(ASCU) and Cyanide Soluble Cu (CNCu). Skyline is accredited with international standard ISO/IEC
17025:2005 General Requirements for the Competence of Testing and Calibration Laboratories.
Analytical results for (TCu), (ASCu), and (CNCu) were reported. GCC 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 RESPEC Company LLC (“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