Arizona Sonoran Copper Co., Inc.
Arizona Sonoran Copper — Technical Presentation (August 2024)
49 slides from Arizona Sonoran Copper's technical presentation, Aug 7, 2024
Slide 1: Cactus Project Preliminary Economic Assessment
ASCU:TSX ASCUF:OTCQX Cactus Project Preliminary Economic Assessment Developing the Cactus Open Pit Copper Project in Arizona Invest in Sustainability | August 2024
Slide 2: Cautionary Information
2 Cautionary Information Non-IFRS Financial Performance Measures This presentation contains certain non-IFRS measures, including sustaining capital, sustaining costs, EBITDA, C1 cash costs and AISC. The Company believes that these measures, together with measures determined in accordance with IFRS,
Slide 3: Cautionary Language
3 Cautionary Language Forward-Looking Statements This presentation contains “forward-looking statements” and/or “forward-looking information” (collectively, “forward-looking statements”) within the meaning of applicable securities legislation. All statements, other than statements of historical fact
Slide 4: Capital Structure & Ownership
4 Capital Structure & Ownership CAPITAL STRUCTURE OWNERSHIP Market Capitalization C$186M 7% Nuton (Rio) Shares Outstanding (M) 109.5 25% Tembo Warrants (M) 0.2 Insitutional Options (M) 7.6 31% Management RSU’s (M)(1) 0.9 Retail 5% DSU’s (M) 0.8 Fully Diluted Share Capital (M) 118.9 Including: Beedie
Slide 5: Strong Organic Growth
5 Strong Organic Growth Growth since 2021 MainSpring Inferred Mineral Resource: 352% M&I 245 Mst @ 0.39% CuT PEA* 86kstpa 94% Inferred 31 year LOM Pounds of Copper (millions) PFS: * 3,839 Updated MRE:* 55k stpa Updated MRE: * Infill 21 year LOM Parks/Salyer Discovery 2,208 2,208 PEA for IPO:* 28k st
Slide 6: Organic Growth Places Cactus as Significant Copper Developer
6 Organic Growth Places Cactus as Significant Copper Developer Peer Benchmarking – Average Annual production(1)(2) Average Annual production (CuEq Mlbs) | Bubble Size Based on Total Resources (CuEq Mlbs) FS / Construction PFS PEA / Resource 480 Updated PEA transforms Cactus into scalable Josemaria p
Slide 7: Open Pit Evolution Improves Executability at Cactus
7 Open Pit Evolution Improves Executability at Cactus $3.90/lb $4.50/lb NPV8 $2,032B $2,927B Material Source PEA IRR 24% 30% Payback Period 4.9 yrs 4.5 yrs 94% $2.00 /lb Open Pit AISC* NPV:CAPEX 3.0x 4.4x LOM FCF $7,295 $9,777 U/G and Stockpile Open pit Cumulative Stacked Recovered Copper (lbs) 6,00
Slide 8: Compelling Copper Price Sensitivities
8 Compelling Copper Price Sensitivities Change to open-pit operation improves cost profile Project Metric COPPER PRICE BASE CASE $3.50/lb $3.90/lb $4.00/lb $4.50/lb $5.00/lb $5.50/lb $6.00/lb NPV Pre-Tax $ millions $2,017 $2,769 $2,957 $3,898 $4,839 $5,780 $6,721 (8% disc) NPV Post Tax $ millions $1
Slide 9: What is the Cactus Mine Project?
9 What is the Cactus Mine Project? • SXEW / Heap Leach Operation on private land in Arizona • Open pit mining for 94% of mine plan • Parks/Salyer (OP) – 2,211 million short tons moved (Years -1-22) with average annual production of 96 million short tons per active year • Cactus West (OP) – 605 milli
Slide 10: What Changed – 172 million pounds per annum over 31 years
10 What Changed – 172 million pounds per annum over 31 years - Mineralized material impacts – average of 172 million pounds of copper cathodes produced annually o LoM tonnage processed of 889 million short tons (“st”) ▪ 659 million st of oxides and enriched material ▪ Parks/Salyer: 69% ▪ Including n
Slide 11: Conventional Heap Leach and SXEW Operation over 31 years
11 Conventional Heap Leach and SXEW Operation over 31 years Strip ratio overall 2.3:1 Parks/Salyer: 3.2:1 Cactus West: 1.0:1 Total Copper (%) LOM inventory 889.0 Mtons material LOM Grade 0.41% Cu TSol LOM recoveries 73% Overall 92% Oxide 85% Enriched 25% Primary 5,720 ACRES LOM cathode produced 2.7
Slide 12: Open Pit Production Schedule
12 Open Pit Production Schedule Cactus Production Schedule PEA Production Profile 180,000 20-year Annual Average: 116 kstpa / 232 Mlbs 300 • 5,339 Mlbs over 31 yrs • Key change relates to the 160,000 250 inclusion of MainSpring and 140,000 rescoping of Parks/Salyer as an Recovered Cathodes (kst) ope
Slide 13: LOM Free Cash Flows and Cumulative Cash Flows
13 LOM – Free Cash Flows and Cumulative Cash Flows @ $3.90 / lb Cu Cumulative Free Cash Flow $2,500.00 $8,500 Cumulative Free Cash Flow (US$000’s) $2,000.00 $6,500 $1,500.00 $4,500 US$ (000’s) $1,000.00 $2,500 $500.00 $500 $- -2 -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Slide 14: Cost Breakdown – First Quartile Capital Intensity
14 Cost Breakdown – First Quartile Capital Intensity Initial Capital Sustaining Capital TABLE 3: LoM OPERATING AND PRODUCTION COSTS LoM (US$) Cost Elements Total Cost $ / st $ / lb ($M) Processed Copper $668M $1.2B Mine Operating Cost $7,252 $8.16 $1.36 Process Plant Operating Cost $2,039 $2.29 $0.3
Slide 15: Proven and Streamlined Permitting Schedule
15 Proven and Streamlined Permitting Schedule Permit Office Approved Amendment Amendment Air Quality Dust Permit Pinal County Complete – 2021 PEA Annual reapplication Arizona Pollution Discharge Elimination Complete ADEQ System (402) (SWPPP) Water Rights ADWR Complete – 3,800 acre ft/yr Major Permit
Slide 16: A Meaningful Potential Contributor to the USA's Copper Production
16 Cactus: A Meaningful Potential Contributor to the USA’s Copper Production Mine County and State Owner Operation Freeport (72%) 1 Morenci Greenlee, Arizona Open Pit Sumitomo (28%) Bingham Long Hole Stoping, 2 Salt Lake, Utah Rio Tinto Canyon Open Pit, SL Stoping 3 Safford Graham, Arizona Freeport-
Slide 17: Clear Next Steps at the Cactus Project
17 CLEAR NEXT STEPS AT THE CACTUS PROJECT Near Term Copper Cathode Production Decision 2024 2025 2026 2027/2028 Mineral Resource Estimate 1H25 Complete Prefeasibility Construction First Cathode Update Study Decision* Production 3Q24 Preliminary Economic Assessment Early Works Program Project Financi
Slide 18: Valuation Metrics
Valuation Metrics
Slide 19: Benchmarking ASCU to Copper Developers
19 Benchmarking ASCU to Copper Developers – Compelling in Every Metric Arizona Assets Other Relevant Assets Market Capitalization (US$M) $123 $1,224 $119 $3,210(1) $1,129 $998(2) $315 P/NAV Multiple 0.3x 0.6x 0.3x 0.8x(1) 0.8x n/a 0.4x Cactus Santa Cruz Copper Creek Filo del Sol McIlvenna Bay Los Az
Slide 20: Future Opportunities
Future Opportunities
Slide 21: Future PFS Opportunities
21 Future PFS Opportunities • In pit crushing and conveying • Moving Parks/Salyer open pit centroid north • Primary sulphides • Nuton • Exploration drilling • Cactus West expansion • Gap Zone • NE Extension ASCU:TSX | ASCUF:OTCQX ARIZONASONORAN.COM
Slide 22: Nuton Potential Ownership and Timeline
22 Nuton Potential Ownership and Timeline Fits in ASCU Timeline 2026- 2024 2025 2028 • Work program with Nuton • PFS to include MainSpring and • Completion of Nuton BFS and final • Infill drilling at Cactus West Nuton investment decision • Phase 2 metallurgical program • Potential exercise of option
Slide 23: Lower Risk Development Asset in Top Location
23 Lower Risk Development Asset in Top Location N Brownfield Project, c.$30 million infrastructure savings • Flat land at low altitude • Water (onsite permitted access to non- potable water source) • Access to labour (no camp required) • Power (affordable Palo Verde Nuclear Power Plant nearby with p
Slide 24: Next Level Production Decision in the Near Term
24 Next Level Production Decision in the Near Term GENERATIONAL MINE QUALITY • 86 kstpa Copper Cathodes LOW RISK 172 Mlbspa Large Copper Porphyry Project 31 years LOM production Brownfield (Low Capital) Management Open Pit • NPV8 $2,032 million Tier 1 Location Permitting Future Opportunities • IRR 2
Slide 25: Questions
Questions
Slide 26: Investor Relations and CEO Contacts
Alison Dwoskin, CPIR George Ogilvie, P.Eng Director, Investor Relations President, CEO & Director adwoskin@arizonasonoran.com gogilvie@arizonasonoran.com +1 (647) 233-4348 (cell) +1 (416) 723-0458 (cell) www.arizonasonoran.com | www.cactusmine.com
Slide 27: Appendix
Appendix
Slide 28: Open Pit Cactus Mine Highlights
Open Pit Cactus Mine Highlights $2B NPV8 and 24% IRR Lowered Execution Risk
Slide 29: Annual Revenue, EBITDA and LOM Cash Flow
29 Tons Annual Revenue, EBITDA and LOM Cash Flow at $3.90 /lb Cu $670 million Annual Revenue, EBITDA and Tons Moved Average Annual Revenue 180 $2,500.00 160 $20.8 billion LoM Revenue $2,000.00 140 $7.3 billion Tons Moved (millions) 120 $1,500.00 LoM Free Cash Flow US$ (000’s) 100 80 $1,000.00 60 40
Slide 30: PEA Key Metrics
30 PEA Key Metrics 2024 PEA Valuation Metrics (Unlevered) Unit $3.90/lb Cu Net Present Value @ 8% (pre-tax) $ millions 2,769 Net Present Value @ 8% (after-tax) $ millions 2,032 Internal Rate of Return (after-tax) % 24.0 Payback Period (after-tax) # years 4.9 Project Metrics (Imperial) Unit Construct
Slide 31: Finance Discussions
31 Finance Discussions • Favourable economics supportive of debt financing for initial capital • Industry leading NPV:CAPEX: 3.0x • Strong IRR: 24% • Robust Cash Flows After Tax (Years 1-10)-$2.0B • Long life asset of 30+ years with LOM cash flows After Tax-$7.3B • PEA economics provide strong platf
Slide 32: Location Advantage
Location Advantage Arizona copper operation infrastructure is world class Brownfield property, 100% owned
Slide 33: Management Team with Track Record of Execution
33 Management Team with Track Record of Execution STRONG SPONSOR SUPPORT • Global leading diversified George Ogilvie, P.Eng. Bernie Loyer Nick Nikolakakis, BASc, MBA Rita Adiani, LLB Hons PRESIDENT, CEO & DIRECTOR SVP Projects VP FINANCE AND CFO SVP STRATEGY & CORPORATE metals and mining company +30
Slide 34: Traditional Heap Leach and SXEW Flowsheet
34 Traditional Heap Leach and SXEW Flowsheet ASCU:TSX | ASCUF:OTCQX ARIZONASONORAN.COM
Slide 35: General Plan Arrangement of Heap Leach and SX/EW Operation
35 General Plan Arrangement of Heap Leach and SX/EW Operation ASCU:TSX | ASCUF:OTCQX ARIZONASONORAN.COM
Slide 36: 94% Open Pit Mining Operation – Low Execution Risk in Arizona
36 94% Open Pit Mining Operation – Low Execution Risk in Arizona Ore Processing Chart 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Parks/Salyer Cactus West Stockpile Open Pit Rehandle - Tons Cactus East (UG) ASCU:T
Slide 37: Enterprise Value to M&I Resource
37 Enterprise Value to M&I Resource Peer Benchmarking – Enterprise Value / M&I Copper Equivalent Resources(1) (US$/lb) (2) $0.508 Updated MRE lowers ASCU execution risk $0.406 Total Mineral Resource: M&I 7,295 Mlbs $0.185 Inf 3,840 Mlbs Avg. EV / M&I CuEq: $0.0950 $0.127 $0.053 $0.045 $0.043 $0.026
Slide 38: Few Developers Filling the Copper Supply Gap
38 Few Developers Filling the Copper Supply Gap Peer Benchmarking – P/NAV & Estimated Start Date Ratio | Estimated Production Date FS / Construction PFS PEA / Resource 2034 2026 2029 2034 2029 2028 2026 2030 2027 2030 2028 2028 2027 n.a. (1) FS / Construction P/NAV Avg.: 0.43x 0.8x 0.8x PFS P/NAV Av
Slide 39: Junior Copper Producer Benchmarking
39 Junior Copper Producer Benchmarking (Enterprise Value and Production) 510 $7,000 $6,227 2024 PEA 180 $6,000 150 Annual Production (Mlbs CuEq) $5,000 $4,010 120 $4,000 EV (US$M) 90 $3,000 $2,000 60 $992 $1,000 30 $613 $487 $213 $106 $0 0 Capstone Copper Hudbay Minerals Taseko Mines Atalaya Mining
Slide 40: Lower Capital Intensity Provides a Lower Risk Path to Copper Production
40 Lower Capital Intensity Provides a Lower Risk Path to Copper Production Peer Benchmarking – Capital Intensity (Based on Average Annual Copper Equivalent Production)(1) Capital Intensity (US$/t) | Bubble Size Based on Annual Production Milling Avg. Annual Capital Intensity: $13,378/t SX/EW Avg. An
Slide 41: First Quartile Capital Intensity
First Quartile Capital Intensity 41 Brownfield Benefit: Lower Capital Intensity and Short Window to Production Peer Benchmarking – Mine Life vs Capital Intensity (Based on Average Annual Copper Equivalent Production)(1) Years | Avg. Annual Capital Intensity | Bubble Size Based on Annual Production M
Slide 42: First Quartile NPV:CAPEX
42 First Quartile NPV:CAPEX Peer Benchmarking – After-Tax NPV8% / Initial Capex Ratio | Initial Capex (US$M) | Bubble Size Based on Annual Production Milling SX/EW SX/EW & Milling Cactus ASCU 3.0x 2.5x Marimaca Marimaca 2.0x Santa Cruz Marathon Los Azules Cascabel Ivanhoe Electric 1.5x SolGold Gener
Slide 43: Journey Towards Net Zero - Partnership with Minviro
43 Journey Towards Net Zero - Partnership with Minviro PFS / FS PRODUCTION AND REPORTING Construction • Design parameters used to scope impact • Establishing reporting KPIs • Investment in low carbon technologies and minimizing • GHG inventory assessment (Scope 1, 2 • Reporting to international dire
Slide 44: ESG – Setting the Pace for Net Zero Carbon Emissions
44 ESG – Setting the Pace for Net Zero Carbon Emissions ASCU is actively exploring use of renewable energy for its operations with the goal of becoming a “Net Zero Carbon Emissions” copper producer Ability to also reduce carbon footprint by Arizona Public Service’s transition to renewable resources
Slide 45: Copper Consensus Forecast
45 Copper Consensus Forecast Copper (US$/lb) Date Firm 2024 2025 2026 2027 LT 27-Jul-24 BofA $4.32 - - - $3.86 25-Jul-24 Morgan Stanley $4.48 - - - - 23-Jul-24 Canaccord $4.40 $5.00 $5.50 $5.50 $4.50 22-Jul-24 Raymond James $4.19 $4.25 - - - 22-Jul-24 BMO $4.13 $4.08 $4.20 $4.42 $4.16 2024 2025 2026
Slide 46: Parks/Salyer Open Pit
46 Parks/Salyer Open Pit Parks/Salyer PH-1 and PH-2 Completed Parks/Salyer PH-3 and PH-4 Completed Parks/Salyer PH-5 and PH-6 Completed Parks/Salyer PH-7 Completed ASCU:TSX | ASCUF:OTCQX ARIZONASONORAN.COM
Slide 47: Cactus West Open Pit
47 Cactus West Open Pit Cactus West PH-1, PH-2 and PH3 Completed ASCU:TSX | ASCUF:OTCQX ARIZONASONORAN.COM
Slide 48: Cactus Project Mineral Resource Estimate
48 Cactus Project Mineral Resource Estimate Material Tons Grade Grade Contained Contained Type kt CuT % Cu Tsol % Total Cu (k lbs) Cu Tsol (k lbs) Measured Total Leachable 55,200 0.94 0.79 1,032,200 873,800 Total Primary 12,300 0.51 0.05 124,400 13,400 Total Measured 67,500 0.86 0.66 1,156,500 887,2
Slide 49: Notes to the Mineral Resource Estimate
49 Notes to the Mineral Resource Estimate NOTES: 1. Total soluble copper grades (Cu TSol) are reported using sequential assaying to calculate the soluble copper grade. Tons are reported as short tons. 2. Stockpile resource estimates have an effective date of 1st March, 2022, Cactus mineral resource
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