Highland Copper Announces Updated Feasibility Study Results FOR Its Fully Permitted Copperwood Project IN Michigan, USA
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March 6, 2023 TSX.V : HI OTCQB: HDRSF
HIGHLAND COPPER ANNOUNCES UPDATED FEASIBILITY STUDY RESULTS FOR ITS
FULLY PERMITTED COPPERWOOD PROJECT IN MICHIGAN, USA
Longueuil, Canada, March 6, 2023. Highland Copper Company Inc. (TSXV: HI; OTCQB: HDRSF) (“Highland”
or the “ Company”) is pleased to announce the results of an updated feasibility study (the “ Feasibility
Study”) for its 100% -owned Copperwood project located in the Western Upper Peninsula of Michigan,
U.S.A. (the “Copperwood Project” or the “Project”).
Key Highlights
• Copperwood provides significant leverage to copper price. The updated Copperwood Feasibility
Study, done in the high-cost environment of 2022, still has a robust 17.6% IRR at a copper price of
$4.02 per pound. The average yearly production of approximately 30,000 tonnes of copper provides
good exposure to copper price increases.
• The Copperwood Project is now fully permitted. The Copperwood Project holds all key Michigan
State p ermits required to proceed with site construction and operat ion. The detailed design for
stream and wetland mitigation work as per permit conditions has been completed. Importantly, an
alternative process water solution incorporated in the Feasibility Study Update eliminates the need
for the Section 10 Water Intake permit.
• Measured & Indicated tonnes increased by 10% and Inferred tonnes increased by 54% . With
updated metal price assumptions and a modified reporting cut-off, a significant increase in resource
tonnes has been reflected in the 2023 mineral resource estimate relative to the 2018 mineral
resource (Copperwood Feasibility Study dated effective June 14, 2018, posted to SEDAR on July 31,
2018).
• Considerable opportunities remain to improve the project’s economic return. The applicability
of ore sorting to remove waste and low-grade material has been tested with positive results . The
potential economic impact will be assessed and incorporated in the detailed engineering phase or
in subsequent studies. Additional metallurgical test work will also be performed to determine the
potential to reduce reagent consumption.
• Early works and site preparation are planned at Copperwood for 2023 . Some site preparation
work will need to be completed to meet permit obligations. Advancing towards site readiness and
starting the initial phase of detailed engineering will help support a construction decision. A portion
of these expenditures will net against the initial capital estimate.
“We are happy to introduce Copperwood as one of very few fully permitted copper projects in the US. The
economic return at spot copper price is robust and the project is highly sensitive to copper price changes. It
will be exciting to start site works during 2023 as we advance discussions on funding of our Copperwood
project.” said Denis Miville-Deschênes, President and CEO of Highland Copper.
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(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.)
Highlights of the Copperwood Project Feasibility Study
• After-tax internal rate of return (“IRR”) of 17.6%.
• Initial capital expenditures of $391 million, net of pre-production revenue of $34 million.
• Life-of-mine (“LOM”) operating costs of $1.83/lb, and $1.55/lb (including royalties) in the first five
years of production.
• Proven and Probable Reserves of 25.7 million tonnes (“M t”) @ 1.45% Cu and 3.91 g/t Ag, containing
820 million pounds (“M lb”) of copper and 3.2 million ounces of silver.
• Additional Mineral Resources of 79.1 Mt @ 1.09 % Cu and 3. 6 g/t Ag in the Inferred category,
containing 1.9 billion pounds (“B lb”) of copper and 9.0 million ounces (“M oz”) of silver using a 0.9%
Cu cut-off.
• Average annual LOM payable copper production of 64.6 M lb and 106,966 ounces of silver.
• Net Present Value (8% Discount Rate) of $222 million before taxes and $168 million after taxes.
The Feasibility Study update was co mpleted by, and under the supervision of, G Mining Services Inc.
(“GMSI”) in collaboration with Foth Infrastructure and Environment. The study provides a comprehensive
overview of the Copperwood Project and defines an economically feasible, technically and environmentally
sound project.
Key Sensitivities
The Copperwood Project is highly sensitive to copper price as shown in the following table .
Table 1 - Metal Price Sensitivities - After-Tax Results
Copperwood Next Steps
The following key steps will be taken to facilitate a construction decision at Copperwood:
• Early Site Works: certain early site work must be completed to meet permit obligations under the
Wetlands and Stream s Permit. The Project will complete permitted impacts , which include site
clearing and grubbing, during the summer of 2023 .
Cu Price NPV 0% NPV 8% IRR Payback
($/lb) ($M) ($M) (%) (years)
5.00 1,013 507 33.4 2.0
4.50 729 333 25.6 2.5
4.25 587 246 21.4 2.9
4.00 456 168 17.6 3.5
3.75 308 75 12.4 4.4
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• Environmental Mitigation: work will begin on environmental mitigation commitments under the
Wetland and Streams Permit which must be completed within one year of on-site impact. The
impact and mitigation costs are included in the Feasibility Study.
• Detailed Engineering: detailed engineering will be initiated, particularly for long -lead items and
any aspects of the project being included in early site works.
• Construction Finance Plan: capital markets will continue to be assessed and Highland will develop
a broad financing plan for the construction of the Copperwood Project.
Updated Copperwood Feasibility Study
Copperwood Project
The Copperwood Project propert y is located in the western Upper Peninsula of M ichigan, approximately
22.5 km to the north of Wakefield by road. The project area is at the south edge of the Keweenaw Copper
province and underlain by clastic sediments of the Oronto Group, including the Co pper Harbor, Nonesuch
and Freda Formations.
Both the Copperwood and satellite deposits are hosted by the limbs of the northwest dipping Presque Isle
Syncline within the Nonesuch Formation. The Nonesuch Formation contains two mineralized sequences,
one located at the base, the Lower Copper Bearing Sequence (“ LCBS”) and a stratigraphically higher one,
the Upper Copper Bearing Sequence (“ UCBS”), separated by poorly mineralized sediments with a variable
thickness of 0.5 m to 6.0 m.
Chalcocite is the only copper sulfide bearing mineral, occurring principally as disseminations within shale
and siltstone. Individual disseminated grains of chalcocite are most commonly very fine grain, approximately
5 to 50 microns in diameter. The Copperwood deposit is relatively subhorizontal with a thickness that varies
from 1.6 m to 3.7 m.
Mineral Resources
The Mineral Resource estimate for the Copperwood Project disclosed in this press release is based on the
same technical data disclosed in the 2018 feasibility study, wit h updated metal price assumptions and a
modified reporting cut-off. No additional drilling has been completed at the Copperwood Project since the
2018 feasibility study. The resource estimate was prepared in accordance with CIM Definition 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 un dertaken with strict adherence to CIM Definition
Standards on Mineral Resources and Reserves.
The mineral estimate was prepared under the supervision of James Purchase, P. Geo. of GMSI, an
independent Qualified Person as defined in NI 43-101.
The Copperwood deposit’s total Measured and Indicated ( “M&I”) Mineral Resources are estimated at
54.2 Mt grading an average 1.49% Cu and 3.6 g/t Ag containing 1.78 B lb Cu and 6.3 M oz Ag using a lower
cut-off grade of 0.9% Cu for the LCBS and UCBS combined.
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The Deposit’s Inferred Mineral Resources are reported at 7 9.1 M t grading 1.09% Cu and 3. 5 g/t Ag
containing 1.9 B lb of copper and 9.0 Moz of silver using a lower cut-off grade of 0.9% Cu for the LCBS and
UCBS combined.
Table 2 - Mineral Resource Estimate
Notes on Mineral Resources:
1) Mineral Resources are reported using a copper price of $4.00/lb and a silver price of $25/oz.
2) A payable rate of 96.5% for copper and 90% for silver was assumed.
3) The Copperwood Feasibility Study reported metallurgical testing with recovery of 86% for copper and 73.5% for silver.
4) Cut-off grade of 0.9% copper was used, based on an underground “room and pillar” mining scenario.
5) Operating costs are based on a processing plant located at the Copperwood site.
6) Assuming a long-term copper price of $4.00/lb, a sliding scale 5.5% Net Smelter Return (“NSR”) royalty on the Copperwood
Project is payable to leaseholders.
7) Measured, Indicated and Inferred Mineral Resources have a drill hole spacing of 175 m, 250 m and 350 m, respectively.
8) A minimum mining thickness of 2m was applied. No additional unplanned mining dilution and mining loss were considered
for the Mineral Resources.
9) Rock bulk densities are based on rock types.
10) Classification of Mineral Resources conforms to CIM Definition Standards (2014).
11) The Qualified Person for the estimate is Mr. James Purchase, P.Geo.,of GMSI. The estimate has an effective date of
February 28, 2022.
12) LCBS: Lower Copper Bearing Sequence.
13) UCBS: Upper Copper Bearing Sequence.
14) The quantity and grade of reported Inferred Resources in this estimation are uncertain in nature and there has been
insufficient exploration to define these Inferred Resources as Indicated or Measured Mineral Resources.
The responsible Qualified Person is not aware of any environmental, permitting, legal, title, taxation, socio-
economic, marketing, political, or other relevant factors that could materially affect the Copperwood Mineral
Resource Estimate.
Mineral Reserves
The Mineral Reserves estimate was prepared by Carl Michaud, P. Eng. of GMSI, in accordance with the CIM
Standards on Mineral Resources and Mineral Reserves. Mineral Reserves are based on Measured and
Indicated Mineral Resources dated May 25, 2022, and do not include Inferred Mineral Resources. Measured
and Indicated Mineral Resources are inclusive of Proven and Probable Reserves.
The Proven and Probable Reserves stated below were estimated based on these unconstrained Measured
and Indicated Resources, noted above and the work carried out for the Feasibility Study.
Tonnage Copper Grade Silver Grade Copper Contained Silver Contained
(Mt) (%) (g/t) (M lb) (M oz)
Measured 27.9 1.7 4.5 1,023.0 4.1
Indicated 16.1 1.4 2.4 504.0 1.2
M + I 44.0 1.6 3.7 1,527.0 5.3
Inferred 2.3 1.1 1.2 56.0 0.1
Measured 0.1 1.0 4.6 2.0 -
Indicated 10.1 1.1 3.1 253.0 1.0
M + I 10.2 1.1 3.1 255.0 1.0
Inferred - - - - -
Satellite LCBS Inferred 49.7 1.1 2.5 1,210.0 3.9
Satellite UCBS Inferred 27.1 1.1 5.7 630.0 5.0
Resource
Category
Deposits
LCBS
UCBS
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Table 3 - Mineral Reserve Estimate
Notes on Mineral Reserve Estimates
1) The Mineral Reserves were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Estimation of
Mineral Resources & Mineral Reserves Best Practice Guidelines (Nov 29, 2019) and CIM Definition Standards for Mineral
Resources and Reserves, (May 10, 2014).
2) Mineral Reserves are estimated at a cut-off grade of 1% Cu. The cut-off will vary depending on the economic context and the
operating parameters.
3) Mineral Reserves are estimated using a long-term copper price of $4.00/lb and a silver price of $25.00/oz.
4) Assuming a long-term copper price $4.00/lb, a sliding scale 4.0% NSR royalty on the Copperwood Project is payable to
leaseholders. A 1.5% NSR royalty on the Copperwood Project payable to Osisko Gold Royalties Ltd. This also includes an
additional 11.5% silver mineral royalty payable to Osisko Stream Royalties.
5) Mineral Reserves are estimated using an ore loss of 3%, a dilution of 0.1 m for the floor and a 0.25 m for the back of the
stope and the development.
6) The economic viability of the mineral reserve has been demonstrated.
7) A minimum mining height of 2.1 m was used.
8) The copper recovery was estimated at 86%.
9) The Qualified Person for the estimate is Carl Michaud, P. Eng., Underground Engineering Manager for GMSI. The estimate has
an effective date of May 25, 2022
10) The numbers may not sum due to rounding; rounding followed the recommendations in NI 43-101.
11) The geotechnical parameters of the previous technical report from June 2018 were used in this Feasibility Study update.
Mine Operations and Services
It is proposed to mine the deposit using a room-and-pillar mining method. Based on the orebody thickness,
two highly mechanized methods, conventional drill and blast and continuous mining will be used. The drill
and blast approach is used whenever the orebody thickness is below 3.5 m whereas the continuous miner
approach will be used in the areas where the orebody thickness is 3.5 m or greater. The method consists of
the extraction of a series of entries and crosscuts in the ore, leaving pillars in place to support the back. The
entries, crosscuts and pillars have been sized using geotechnical analysi s of the local host rocks, and
experience from other mines sharing similar ground conditions.
The mine will be accessed via a covered box-cut to establish a portal at the mine entrance from the surface,
located at the central-west part of the deposit. The mine consists of two mining sectors: West and East. The
western part, being higher grade with a thicker mineralized zone, will be mined in priority.
Life-of-Mine Metal Production
The LOM production for the Copperwood Project is shown below. Payable copper production is estimated
at 300,232 tonnes (662 million pounds) with an annual average of 29,291 tonnes (64.6 million pounds) over
the 10.3-year mine life which excludes commissioning and ramp -up period. The average payable rate is
96.5% which includes a 0.2% concentrate loss. Payable silver production over the LOM is 1.1 million ounces
with an annual average of 107 thousand ounces of silver.
Tonnes Cu Grade Ag Grade Cu Contained Ag Contained
(M t) (%) (g/t) (M lb) (M oz)
Proven 18.2 1.49 4.47 597 2.6
Probable 7.5 1.34 2.56 222 0.6
Proven & Probable 25.7 1.45 3.91 820 3.2
Reserve by Category
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Table 4 - Life of Mine Copperwood Production
Processing and Metallurgy
The process plant design for the project is based on a metallurgical flowsheet designed to produce copper
concentrate with a nominal throughput of 6,600 tonnes per day (“ tpd”) with a planned availability of 92%
for the first three years and 6,800 tpd with an availability of 95% in the subsequent years. The flowsheet
consists of semi -autogenous grinding in closed circuit with a ball mill targeting a primary grind of
40 microns, rougher flotation with concentrate regrind, cleaner flotation using three s tages of cleaning,
concentrate thickening, filtration and tailings disposal.
The average copper recovery is 86% with a weighted average copper concentrate grade of 24.7%. Studies
show that copper recovery might be further increased by concentrate grade and reagents optimization.
Environment and Permitting
Extensive environmental studies were undertaken to obtain the original Mining Permit issued in 2012, with
additional studies commissioned for the Mining Permit Amendment application of 2018. In accordance with
Michigan’s governing regulation Natural Resources and Environmental Protection Act ( “NREPA”) Part 632
Nonferrous Mining, detailed studies describing baseline conditions and potential environmental impacts
were conducted and documented in the 2018 Feasibility Study.
Since filing for amendments and renewals in 2018, all major permits required to develop the Copperwood
Project have been received. The active environmental permits are listed here:
• Part 632 Non-Ferrous Metallic Mining Permit
• Part 31 National Pollutant Discharge Elimination System Permit
• Part 55 Air Permit to Install
• Part 301 Inland Lakes and Streams Permit
• Part 303 Wetland Permit
• Part 315 Dam Safety Permit
• Part 325 Great Lakes Submerged Lands Permit
The 2018 feasibility study included a water intake station on Lake Superior to supply water for operations.
This solution required a Section 10 Permit issued by the US Army Corps of Engineers. In 2022 and 2023,
significant efforts were put into optimizing the project. Aiming to minimize impacts to the local site, an
alternative solution to the water intake was developed, and the Section 10 permit is no longer required. As
such, the Copperwood Project is fully permitted for construction and operation.
Engagement with the Michigan Department of Environment, Great Lakes and Energy (“EGLE”) will continue
throughout the detailed engineering efforts on the tailings facility to transfer the Part 315 Dam Safety Permit
from permit in concept to a permit to construct.
Pre-Production Production Total
Concentrate (k of dmt) 24.9 1,266.8 1,291.7
Cu con. Grade (% Cu) 24.7 24.7 24.7
Cu metal production (M lb) 13.6 691.2 704.8
Ag metal production (k oz) 58.4 2,314.6 2,373.0
Cu payable metal (M lb) 13.0 661.9 674.9
Ag payable metal (k oz) 34.4 1,096.4 1,130.8
Production Physicals
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Power and Surface Infrastructure
The Company is considering a 40 km 115 kV powerline to be built by a well-implemented energy provider,
in the Upper Peninsula . The average cost per kilowatt -hour delivered to site will be 7.7 cents over life of
mine. County Road 519 will be upgraded to allow year-round heavy haul traffic.
Capital Costs Summary
The initial capital costs, including all direct and indirect costs, are estimated at $425 .1 million, including a
contingency of $37.6 million. Pre -production revenue of $ 34.0 million ( after deduction of the
pre-production operating costs) reduces the capital expenditure to $391.2 million.
Table 5 - Initial Capital Expenditure Summary
1) Some capital cost estimates included in the update date go back to April 2022, with other adjustments made between August and
December 2022.
General 1.1
Infrastructure 31.8
Power & Electrical 42.5
Water & TDF Management 46.2
Mobile Equipment 24.9
Mine Infrastructure 51.2
Process Plant 105.5
Construction Indirects 51.0
General Services & Owner's Costs 25.4
First Fill and Commissioning 7.9
Sub-Total Before Contingency 387.5
Contingency 37.6
Total Incl. Contingency 425.1
Less: Pre-Production Revenue (incl. Pre-Prod Opex & Royalties) (34.0)
Total Incl. Contingency & Pre-Prod. Revenue 391.2
($M) Initial CAPEX1
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The total sustaining capital over the life of the mine is estimated at $269.9 million.
Table 6 - Sustaining Capital Expenditure Summary
Operating Costs Summary
Operating costs include mining, processing, G&A services, concentrate transportation, concentrate
treatment and refining charges. The NSR for the Project during operations is estimated at $2,417 million,
which excludes $49.8 million of NSR generated during pre -production. The average NSR over the LOM is
$3.65 per pound of payable copper. The average o perating cost over the LOM is $48.05 per tonne of ore ,
or $1.83 per pound of payable copper, with mining representing 50.0% of the cost or $24.02 per tonne.
Table 7 - Operating Costs
2) Excluding commissioning period.
LOM
($M)
Tailings Disposal Facility Expansion 54.8
Water Treatment Plant 17.1
Mine Equipment Purchases 141.6
Mine Development Expenditures 33.1
Infrastructure Expenditures 23.4
Total Sustaining Capital 269.9
Sustaining Capital
LOM
($M)
Cu Revenue 2,656 105.25 4.01
Ag Credits 27 1.09 0.04
Revenue 2,683 106.34 4.05
Concentrate Transportation Costs 140 5.56 0.21
Treatment & Refining Charges 126 4.99 0.19
Net Smelter Return 2,417 95.79 3.65
Royalties 136 5.37 0.20
Mining Costs 606 24.02 0.92
Processing Costs 369 14.63 0.56
G&A Costs 102 4.03 0.15
Total OPEX (incl. Royalties) 1,212 48.05 1.83
Operating Cash Flow 1,203 47.68 1.82
$/t ore $/lb Cu Payable
Operating Cash Flow2