HI.V · 2023-07-24 12:00:00

Highland Copper Announces Preliminary Economic Assessment Results FOR Its White Pine North Project and Joint Venture Transaction with Kinterra

Economic Studies Mergers & Acquisitions Partnerships & JV

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July 24, 2023 TSX.V : HI OTCQB: HDRSF

HIGHLAND COPPER ANNOUNCES PRELIMINARY ECONOMIC ASSESSMENT

RESULTS FOR ITS WHITE PINE NORTH PROJECT AND JOINT VENTURE

TRANSACTION WITH KINTERRA

Vancouver, Canada, July 24, 2023. Highland Copper Company Inc. (TSXV: HI; OTCQB: HDRSF) (“ Highland”

or the “Company”) is pleased to announce the results of the Preliminary Economic Assessment (“PEA”) and

mineral resource estimate for the White Pine North project (“White Pine North ”) in Michigan, USA . The

PEA demonstrates the robust economic strength of this long-lived project.

Simultaneously, Highland is pleased to introduce Kinterra Copper USA LLC (“Kinterra”) as a joint venture

(“JV”) partner on the project. Kinterra will bring additional financial and technical strength required to

progress the project through to development. Kinterra has made a cash payment of $30 million to Highland

for a 66% stake in the White Pine North project. Additionally, the joint venture has agreed to spend a

further $30 million to advance the project through permitting, infill drilling and feasibility study.

Highland continues to make great progress in 2023. Combined, these announcements markedly improve

Highland’s prospects of advancing its larger White Pine North project while focusing on moving its

Copperwood project to construction and operation . Highland believes this is positive for all stakeholders ,

particularly the State of Michigan where Highland’s project development is aligned with the State vision of

electrification and regional support for local communities.

Key highlights of the PEA and joint venture transaction include (all figures in $USD):

• Robust PEA Results Set Path for White Pine North Advancement: With a significant increase in

resource base, an after-tax net present value (“ NPV”) 8% of $821 million and an after-tax internal

rate of return (“IRR”) of 20.8%, the project provides strong cash flow and leverage to copper price.

• Kinterra Invests $30 Million for 66% of White Pine North, Funds Available for Copperwood :

The initial $30 million proceeds from the joint venture arrangement allow Highland to initiate early

site works at the fully-permitted Copperwood project, where Highland is focused on advancing to

development and production.

• Additional $30 Million Commitment to Advance White Pine North Permitting and Feasibility

Study: Kinterra and Highland, as JV partners, have agreed on a further $30 million investment in

the project to be funded by Kinterra. This consists of $20 million representing Kinterra’s 66% pro

rata expenditure, as well as a $10 million unsecured loan to fund Highland’s pro rata expenditure.

• Highland Set to Advance Key Michigan Assets: With key assets 100% owned Copperwood, 34%

owned White Pine North, a consolidated multi-billion pound resource base, and an additional $30

million in liquidity, Highland looks forward to contributing to critically needed US domestic copper

supply through production growth with these advanced-stage projects.

“Today’s announcements are transformational for Highland Copper. While we continue to maintain our focus

on the fully-permitted Copperwood project, we have a viable path to simultaneously advance the White Pine

North project, keeping our focus on near-term value creation by creating a new US copper producer . As

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significant capital is required to develop both projects, the joint venture arrangement allows us to move

forward without having to issue any shares, and unlocks tremendous value for our shareholders. Kinterra

recognizes the quality of our asset base and i s committed to working with Highland to advance White Pine

North. We look forward to working with Kinterra as partners to progress this great asset.

We are pleased that all stakeholders, including the various Michigan communities and our shareholders , will

benefit as we surface the significant asset value at both projects. We look forward to updating the market as

we advance.” stated Denis Miville-Deschênes, President and CEO of Highland Copper.

Key Preliminary Economic Assessment Highlights1,2

The PEA provides a base case assessment of mining the mineral resources of the White Pine North Project.

The PEA considers White Pine North as a stand-alone project, where potential synergies with Copperwood

are not considered. The Project is the extension of the historical White Pine mine which operated from 1953

to 1995. The results of the White Pine North PEA demonstrate the long -lived nature of the project with

strong economics and cash flows. Key highlights include the following , with all figures being shown for

100% of the asset:

• Strong Economic Returns with Leverage to Copper Price Changes

o After-tax NPV8% of $821 million (at $4.00/pound copper price)3

o 20.8% after-tax IRR

o At $4.50/pound copper price, after tax NPV8% of $1.2 billion and IRR of 25.4%

• Improved NPV to Initial Capital Expenditure Ratio

o Initial capital expenditures of $615 million, net of pre-production revenue of $265 million

o NPV to initial capital expenditure ratio of 1.33

• Significantly Increased Resource Base

o Indicated mineral resource containing 3.5 billion pounds of copper (150.7 million tonnes at

1.05% Cu) and 65.5 million ounces of silver (13.5 g/t Ag)

o Inferred mineral resource containing 2.2 billion pounds of copper (96.4 million tonnes at

1.03% Cu) and 27.8 million ounces of silver (9.0 g/t Ag)

o From the above resource, m ineralized material included in the mine plan of 115.8 million

tonnes at 0.97% Cu and 11.09 g/t Ag, containing 2.47 billion pounds of copper and 41.3

million ounces of silver

• Long-lived Asset with Strong Cash Flows

o Mine life of 21.8 years, including 21 months of ramp-up, with average annual LOM payable

copper production of 93.5 million pounds and 1.2 million ounces of silver

o Life-of-mine (“LOM”) average C1 cash costs of $1.58/lb, net of by-product

o Undiscounted average annual operating cash flow of approximately $210 million and

annual free cash flow of approximately $160 million (excluding initial capital)

“The White Pine North project was able to operate successfully for 50 years until the mid -1990s. The results

of the PEA indicate that the project could have another 22 or more years of mining in the Upper Peninsula .

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We look forward to continuing our work with the state of Michigan , making Copperwood and White Pine

North key economic contributors in the region , becoming an important part of domestic copper supply and

aiding in the on-going goals of electrification in Michigan and the US” said Denis Miville-Deschênes, President

and CEO of Highland Copper.

1) The reader is advised that a PEA is preliminary in nature and is intended to provide only an initial, high-level review of the Project

potential and design options. The PEA mine plan and economic model include numerous assumptions and the use of Inferred

resources. Inferred resources are too speculative geologically to have the economic considerations applied to them that would

enable them to be categorized as mineral reserves and to be used in an economic analysis except as allowed for in PEA studies.

There is no guarantee that Inferred resources can be converted to Indicated or Measured resources, and as such, there is no

guarantee the Project economics described herein will be achieved.

2) Readers are cautioned that the PEA is an economic analysis of mineral resources. Mineral resources are not mineral reserves and

do not have demonstrated economic viability.

3) White Pine North NPV includes revenue related to 88% of the unexercised Osisko Gold Royalties Ltd (“ Osisko”) silver option.

Osisko has the right to pay an additional $23 million in order to secure the rights to the balance 88% of the silver stream. If this

option was exercised, the adjusted NPV8% of White Pine North would be $634 million.

4) Included within mineralized material within the conceptual mine plan area are approximately 7 million tonnes of mineralized

material on lands that White Pine Copper LLC’s mineral title has not been confirmed.

Key Joint Venture Agreement Highlights

The joint operating agreement among Kinterra Copper USA LLC and, Highland’s wholly owned subsidiary

Upper Peninsula Copper Holdings Inc. (“UPCH”) provides financial capacity to proactively advance both key

Michigan projects. The following are the key terms of the investment by Kinterra and the joint operating

agreement:

• Initial Investment of $30 million for 66% of White Pine North Project: The initial investment reflects

Kinterra’s endorsement of the underlying asset value of White Pine North. The cash is unrestricted and

can be used at Highland’s discretion. Highland intends on assigning a portion of the proceeds to

advancing the fully -permitted Copperwood project to a construction decision in 2024. The purchase

and sale of the interest in White Pine Copper LLC has been completed and is fully funded.

• Budget of Additional $30 million to Advance White Pine North: In addition to its $30 million initial

investment, Kinterra has agreed to fund, subject to certain conditions, a further $30 million in

expenditures to advance the White Pine North project. The commitment will consist of $20 million

representing Kinterra’s 66% pro rata expenditure, as well as a $10 million unsecured loan to fund

Highland’s pro rata expenditure. This loan will be available to Highland to satisfy cash calls. The

investment will allow the joint venture project to progress quickly into permitti ng, infill drilling and a

feasibility study.

• Unsecured $10 million Loan from Kinterra: The $10 million unsecured loan to cover cash calls will be

available to Highland Copper at coupon of 10% and will mature in July 2026. A second unsecured loan

(on the same terms) will become available to Highland after this $30 million has been spent on White

Pine North, assuming any initial loan has been repaid. The second loan will have a maturity of July 2028.

The joint operating agreement contemplates that White Pine LLC will be governed by a management

committee, which will consist of three representatives appointed by Kinterra, and two by Highland.

Highland expects to continue to be involved in the development of the White Pine North project. The

management committee will propose programs and budgets for future expenditures. Highland will have

the option to elect to participate in future work programs.

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In a challenging capital markets environment, Highland is pleased to have secured funding, without issuing

any shares, to support our strategic goals at both Copperwood and White Pine North.

“The structure of the funding package, in addition to the strength of Kinterra’s balance sheet, provides critical

financial flexibility to advance Highland’s projects. The initial investment allows Highland to progress to early

site works at Copperwood and move towards construction in 2024. The additional capital of $30 million at

White Pine North ensures no contributions will be required by Highland in the near-term expenditure period.

Looking forward, the White Pine North p roject will benefit from Kinterr a’s financial strength, particularly

through funding 66% of the initial capital, should we jointly elect to construct White Pine North in the future”

said Barry O’Shea, CFO of Highland Copper.

Highland Copper Strategic Next Steps

Highland will continue towards its goal of becoming a US domestic copper producer in the near-term with

the development of the Copperwood project. Highland will then look to production and cash flow growth

from White Pine North through its joint venture partnership with Kinterra.

• Advance Copperwood to wards Construction in 2024: Key steps as the Highland progresses to

development include:

o Early works at site: With the available liquidity, Highland will initiate early works at

Copperwood for required site impacts and environmental mitigations . The majority of the

early works are considered in the initial capital as outlined in the recently published

Copperwood Feasibility Study. Importantly, this expenditure will net against initial capital.

o Feasibility Study Optimizations: Through the period leading up to a construction decision,

Highland will consider additional value creation opportunities relative to the Copperwood

Feasibility Study, particularly infill drilling and potential life of mine extensions. A significant

opportunity exists to convert inferred resources into measured and indicated resources.

• Advance White Pine North to Permitting and Feasibility Study : With the committed additional

investment from Kinterra, the joint venture partnership will proactively work toward permitting and

Feasibility Study, also advancing the White Pine North project toward development. Highland’s 34%

stake in the White Pine North project remains highly significant to Highland’s overall asset value:

o After-tax NPV8% of $279 million1 for Highland’s 34% interest in the project , ensuring it

remains a valuable component of Highland’s asset value under the joint venture partnership.

o Copper resource of 1.2 billion pounds indicated and 0.7 billion pounds inferred for

Highland’s 34% interest (indicated 51.2 million tonnes at 1.05% Cu) (inferred 32.8 million

tonnes at 1.03% Cu)

• Continue to Develop Relationship with Key Stakeholder in State of Michigan : Highland looks

forward to being a key contributor to the economy of the State of Michigan. This requires us to work

collaboratively with all key community, government, corporate and other stakeholders . Highland

understands a mutually beneficial relationship with all stakeholders is critical to success.

We look forward to updating the market as we advance towards our key strategic goals and surface the

considerable underlying asset value of Copperwood and White Pine North.

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1) NPV excludes the potential impact of Osisko exercising its silver option.

Advisors

With respect to the Kinterra joint venture transaction, the Company’s financial advisor is BMO Capital

Markets and the Company’s legal counsel is McMillan LLP.

Kinterra’s legal counsel with respect to the joint venture transaction is Bennett Jones LLP.

Preliminary Economic Assessment Detail

All amounts in this news release are in US dollars, unless otherwise indicated. Due to rounding, numbers presented

throughout this release may not add up precisely to the totals provided. Readers are cautioned that the PEA is an economic

analysis of mineral resources. Mineral resources are not mineral reserves and do not have demonstrated economic

viability.

The PEA and mineral resource estimate have been prepared by G Mining Services Inc. (“GMSI”).

White Pine North Project Geology

The White Pine deposit is located in the Ontonagon County, Michigan State. The base of the

Nonesuch Formation hosts the bulk of the copper mineralization at White Pine, which consists of

cupriferous siltstone, black shale and fine -grained sandstone beds, and low -grade siltstone,

sandstone and red shale beds.

The copper mineralization in the area of the former White Pine mine occurs in the bottom 6 m

(20 ft) of the Nonesuch Formation at the contact with the Copper Harbor conglomerate. Beds

within the lower 21 m (70 ft) of the Nonesuch Formation are laterally persistent and can be

correlated across the mine. The shale and siltstone in the lower part of the Nonesuch Formation

are divided into two sedimentary sequences, the lower “Parting Shale” and the upper “Upper

Shale”, separated by the Upper Sandstone.

Copper mineralization at the White Pine deposit occurs as two distinct styles -- very fine-grained

sulfide (chalcocite) and as native copper. Sulfide mineralization is estimated to account for 85 -

90% of the copper in the deposit, but both modes of copper are intimately associated throughout

the deposit.

Mineral Resources

GMSI prepared a Mineral Resource estimate for the White Pine Project based on data provided

up to and including September 28, 2022. The resource estimate was prepared in accordance with

CIM Standards on Mineral Resources and Reserves (adopted May 10, 2014) and is reported in

accordance with National Instrument 43 -101 (“NI 43-101”) Standards of Disclosure for Mineral

Projects. Classification, or assigning a level of confidence to Mineral Resources, has been

undertaken with strict adherence to CIM Standards o n Mineral Resources and Reserves. In the

opinion of GMSI, the resource evaluation reported herein is a reasonable representation of the

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global Mineral Resources found at the White Pine Project at the current level and spacing of

sampling.

The mineral estimate was prepared under the supervision of Réjean Sirois, P. Eng. consultant for

GMSI, and Christian Beaulieu, P. Geo. consultant for GMSI, both independent “qualified persons”

as defined in NI 43-101. Geovia GEMS™ and Leapfrog Geo™ software were used to facilitate the

resource estimation process.

The modelling of the copper mineralization horizons was based on the footwall and hanging wall

of the three selected “columns” (sedimentary sequences), namely the Parting Shale, and the Full

Column. The Parting Shale was modelled with a minimum thickness o f 2 m and the Full Column

with a minimum thickness of 3 m. In instances where the Parting Shale column was less than 2 m,

dilution was applied in the footwall to ensure that the 2 m thickness was honored. The Mineral

Resources are reported within the Full Column or the Parting Shale, based on mine engineering

considerations.

Copper and silver assays were composited to the full thickness of the column. Grade distributions

were reviewed and assay capping was not deemed necessary. Grade estimation was undertaken

using Ordinary Kriging (OK) for copper grades and Inverse Distance Squared (ID2) for silver grades

into a percentage block model based on the wireframes of the two columns. A three -pass

estimation approach was adopted, with increasing search ellipses and relaxed estimation

parameters. A 300 m buffer zone around existing workings was excised from the Mineral

Resources.

The block model was validated both visually and statistically and was found to be a good

representation of the composites. Mineral Resource classification was based primarily on

estimation passes, and other considerations such as drill spacing, quality of historical data and

confidence in grade continuity.

The White Pine North deposit’s total Indicated Mineral Resources are reported at 150.7 Mt

grading an average 1.05% Cu and 13.5 g/t Ag containing 3.50 Blbs Cu and 65.5 Moz Ag using a

lower cut-off grade of 0.90% Cu for the Parting Shale and Full Column combined. Inferred Mineral

Resources are reported at 96.4 Mt grading an average 1.03% Cu and 9.0 g/t Ag containing

2.18 Blbs Cu and 27.8 Moz Ag using a lower cut-off grade of 0.90% Cu (Parting Shale only).

Mineral Resource Estimate - White Pine Project - 0.9% Cu cut-off Grade – June 12, 2023

Ore

Column

Resource