Highland Copper (TSXV:HI) - Locks In $50M as Copperwood Advances

Barry O'Shea (0:00)

Hi, my name is Barry O'Shea, and I'm the CEO of Highland Copper. I'm really pleased to be here off the back of some great news. In recent weeks, we've received a $50 million grant from the state of Michigan to progress our copper project.

An exciting time as we work towards an updated feasibility study and construction decision in 2027

Crux Investor (0:19)

Barry, good to see you here. We're at Beaver Creek, busy out there. I jumped downstairs to kind of go and grab you. I'm surprised at all these places that I recognize. It's wonderful.

Barry O'Shea (0:29)

It's always busy here. But obviously, markets from a mining perspective, from a metal perspective, are incredibly robust at the moment. And I think it's a good time for mining and seeing investment coming back in and more people. And that's great.

Crux Investor (0:43)

And copper.

Barry O'Shea (0:44)

Yeah, copper is in a great place.

Obviously, from a spot perspective, it's wonderful. Long-term consensus, generally speaking, hit $5 per pound. And just what I like about copper in recent years, in any case, is its predictability. Like it was identified some time ago, the scale of the fundamental issues around supply and demand. And those have just played out steadily. Copper price has moved nicely, not erratically. I think it creates a great base for developers.

Crux Investor (1:12)

Absolutely. Look, let's get stuck in to you, because obviously, like you say, there's some good news we want to talk about. But I've got to start with, sorry, back in April, you said to me you hoped to be able to make a construction decision in the second half of this year. That hasn't happened.

Barry O'Shea (1:28)

Why? Yeah, we've pushed it back for a couple of reasons. I think first and foremost, our ongoing engineering has identified some really nice opportunities that we think it's rightful for us to continue going on. Once you get your feasibility study, you want your project in its best shape. We made an announcement in the June time frame that we had some nice opportunities mainly on the mining side, looking at mine height optimization, looking at cutoff grade optimization as well. We think there's capacity to bring a significant amount of additional of our measurement indicated or into our mineable reserve.

Those are all added to, if you recall, tail end of last year. We determined that we could add about two percentage points of recovery to the process plan by using L-25 flotation technology, the Jameson cell. We did that alongside Glencore. For a number of reasons, we've just pushed our optimization work back. Also, like I mentioned, we've got this wonderful grant from the state of Michigan. Took a little longer than anticipated.

I'm certainly not going to complain about that. It's a wonderful prize, $50M in endorsement from the state of Michigan. But all in, that's pushed our decision, our construction decision into 2027

Crux Investor (2:36)

Okay, so it wasn't issue-led, it was opportunity-led.

Barry O'Shea (2:39)

I agree.

Crux Investor (2:40)

Okay, fine. Let's break this down a wee bit for everyone. Copper price was just set. It's up 6.9 this morning on futures, very helpful. But finance in a stack, that's number one for me, okay? Because you've got the extra money we've talked about, right? You said you will probably need to find yourself 100 million of equity somewhere, and you've got this 15 million from Michigan.

Tell me about this grant, how exactly is it formed? Do you get money upfront? I mean, what happens?

Barry O'Shea (3:09)

No, it's a reimbursable grant when you spend on what they call eligible expenditure, and that's regional infrastructure expenditure. So if you look at our overall 400 million CAPEX, it includes a pretty significant component of regional infrastructure on power upgrades, telecommunication and road improvements. What the state of Michigan said was on that group of expenditures, so regional infrastructure outside the gate of our mine, so beneficial to the region, they'll match us dollar for dollar on 50 million of expenditure. So as we spend the first 50 million on that eligible expenditure, they return it to us dollar for dollar on a quarterly basis. So as you think about it, think about it as a credit in year one from a cash perspective.

Crux Investor (3:51)

Just needs to spend 50 million, that's it. Is that a minimum number or a maximum number?

Barry O'Shea (3:55)

No, that is the amount that if you happen to spend less in that eligible expenditure, you will receive up to that amount.

Crux Investor (4:00)

What is the planned amount?

Barry O'Shea (4:02)

The planned amount of eligible.

Crux Investor (4:03)