Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
16:37 Yeah, let's quickly talk about it. I think most flotation equipment suppliers have nowadays got ultrafine flotation technology out there. And the reason it's out there is because it actually works. Now, the idea behind this, when when particles become really, really fine, which is our case, the challenge is basically threefold. You want your flotation process to be selective. So, you know, it's got to pick between a valuable particle and a non-valuable particle. I have to be able to get enough energy into these particles that they can actually go and attach to the bubble surface. And, you know, there's some surface forces that takes place there. And I don't want to entrain, so with the water that the particles become so small that I just pull barium material over the cell up. So these equipment, typically they've got really ultra fine bubbles. So that increases the likelihood of particle bubble contact.
17:32 It's got a dedicated bubble particle contact zone, which is designed so that you don't just cheer these ultrafine particles off the bubble surfaces. And then lastly, typically wash water. So there's quite a lot of water going through the circuit, washing the gangue material out of your frost structure. So yeah, sorry to get technical, but that's what all the fry and flotation gives you. No, appreciate it. I certainly invited you to be technical, so that's great. I have one more question for you, Vajdan. Can you give us a better understanding of the phased approach to detail engineering that you referred to in this last release? Yeah, look, I think most capital projects nowadays are executed on a stage gate type of approach.
18:18 The reasons for this is multiple, at Adiris projects fundamentally. So in our case, we would start off with what we call phase 1, which is the objective is we wanna absolutely put a stake in the ground on design criteria. The last thing you want to do is when you start doing basic engineering and even for the detail engineering, that you start changing design criteria because that's where it costs you a lot of money and you start shredding paper and that becomes expensive paper. So really phase 1 is about nailing down design criteria that includes these optimization opportunities that we spoke about have to be bettered up and the risks have to be addressed. We need to be sure that we can put that one to bed.
19:05 Once we earn that right, there's a stage gate that'll then get us into phase 2, which is basic engineering. The objective of that basic engineering is we'll come up with a control budget estimate that we can control the project against a definitive schedule, you'll have updated bill of quantities, you will have, you know, we can actually place orders on all of our long lead items. That's the idea. And then, you know, when that shows you that you still have a project that is financeable and that makes economic sense, you then pull the trigger on the execution decision, and you then do your detailed engineering all the way through into construction management. Awesome. I appreciate that. Bear, I'm going to jump to you for 1.
19:50 And this is actually reflected also by a question in the chat from Paul Zed. For the impatient among us, I was wondering if you could give a bit of color on why the state grant is taking just a bit longer than expected to get over the line. Sure, and yeah, listen, it's required a lot of patience. And truthfully, it's worth the wait. It's a grant for $50 million, a direct grant. So it's not an equity injection or a loan. It's a pure grant. So it's worth the time and the energy. To begin with, maybe I just reflect the progress that we have made. Of course, the NADC proposed it in January of this year, the Michigan Strategic Fund at a civil service level approved it in March. The House at the legislative level approved it in June. And now we're at the Senate level. And honestly, at every level, the questions have been just a little different, although I would say they've all focused in and around social license to operate, environmental impacts and community impacts. So at this stage, we're just continuing to work with the Senate, patiently as I think we should, helping them understand all of these things. So they, as the approvers before them, are fully comfortable with the decision.
20:54 We still remain comfortable with the process. We're trusting in that process and certainly believe our patience will pay off. No, great. And one other question on the grant actually, how does it affect project economics generally? Yeah, well, I mean, as it is a grant and arguably it would come in year 1 of construction, essentially as a reimbursement for infrastructure expenditure. So, you know, as we spend money bringing power to site, local road upgrades and so on and so forth, we see reimbursement and we get paid back dollar for dollar up to 50 million. And of course, that's right at the outset of the overall NPV period. So it's broadly speaking a dollar for dollar impact on the NPV. And that translates to about a 4 percentage change in IRR. So whereas the IRR today of the project is 18%, just in serving that grant brings the IRR to 22%.
21:44 So as I said, a really great prize, But importantly, it's an endorsement from the state of Michigan. And we know that the state of Michigan is doing a lot of work here. They particularly want to understand that we were welcome in the local communities and we provided to support our grant application, 22 letters to support, essentially representing all local townships, counties, municipalities, boards, et cetera, formal resolutions that are reflecting support, not to mention letters to support from the collective 13 unions in Michigan. So again, just an ongoing endorsement from the state that we look forward to. Great. Viner, one more question for you on copperwood actually. With your pedigree, not to make you blush, what drew you to the copperwood asset? Ooh.
22:31 Yeah, Romeo, the world needs mining. There's just no argument about it. If we want to do what we want to do from electrification and all of that, we have to mine. And frankly, The old saying goes, if it's not grown, it most likely it's been mined. But the reality is the industry, let's be honest, really didn't have a stellar track record out there. We've made some really decisions that we shouldn't be proud of as an industry. And yeah, I got stuck with this about 10 years ago in my life. And I had to decide, do I sit on the sidelines and keep on criticizing the industry, or do I actually become part of the solution and show that mining can be done right?
23:20 And I was really fortunate. I got recruited to be a project manager for a mine in South Africa. It was in a really environmentally sensitive area, but in an area that was also particularly impoverished and not a lot of opportunities for locals in that area. The commitment was all about how do we design this out? How do we design the project so that these environmental concerns are addressed, not as an afterthought, but embedded in the overall project. The project had to withstand the economic test with those design parameters included. Yeah, now I'm so happy to say that, that community now is a thriving community. There's opportunities for people, for kids in schools.
24:09 And those perceived risks did materialize, not because they were underestimated, because they were literally designed out. Yeah, I then got recruited to come across to the United States. I joined a fertilizer company and we did the same thing in projects in Brazil and projects in Guinea-Bissau. Then I was just super happy and excited to join the Highland team. I guess the nice part here is this is just personal for all of us. I think every single person in this team is just committed to the same thing, doing mining responsibly. And that's why I joined the team. Really great opportunity. That's great. Appreciate that. Barry, one more on Copperwood, and then I got a couple of questions on White Pine. Appreciate all the questions in the chat, we're just about to get to those. Barry, what's the estimated capital requirement to bring Copperwood to production? And If you don't mind answering now, how do you plan to structure the project financing?
25:04 Yeah, I think if you look at our feasibility study and it was done by G Mining, it's current, it's from 2023. It's approximately a 400 million capital expenditure for the overall project. So manageable for a company of our scale. Naturally, we see the first leg of the financing being the state grant of $50 million, and certainly we look forward to that materializing. Once that's in place, I think that kicks us off in terms of the traditional project financing. And we'll run a pretty robust process across private equities, banks that play in the natural resource space from a project financing perspective. We've certainly done our calculations and looking at the economics of the project, We think it has debt capacity for approximately $200 million. So that will be a focus in the immediate aftermath of the state grant.
25:54 There are other elements of debt, certainly asset financing, offtake finance that we'll consider. But naturally, there will also be an equity plug. And by the time we get to that point, thinking about an equity raise, which, as you know, will be the last capital in, a whole host of things will happen. We'll have certainty around the state grant, obviously, we'll have visibility to the project finance. We'll have a better view of our detailed engineering, certainly as we think about due diligence and support in that overall debt financing process. And naturally, we also think we'll have a stronger copper price. So all of those things will lead to a share price that would honestly be more palatable when we think about raising equity for the purposes of a project finance. Oh, that's great. We'll be some couple more copper questions just from the audience, but I wanted to ask a couple on White Pine just before we jump to those.
26:43 Aynan, the first one I'll shoot to you, if you could just help myself and the audience understand the nature of the engineering trade-offs that White Pine has to go through right now. Yeah, look, that White Pine team, I think they're doing a great job at this point in time. They're answering the fundamental questions that you want to get answered when you develop a mine. These are questions on the geological and the hydrogeological understanding of the ore body. What does it look like down there? How do we Then match our mining methods and the mine plan and get that working. The geotechnical conditions we need to understand, what can we build where? And then the metallurgy, what about, how do I optimise the grain versus recovery curve? How do I optimize recovery versus mass pull? You know, residence time, infiltration circuits, the reagent suite, the chemical conditions.
27:41 And then the last piece of work that they're busy with is just on tailings. You know, What's the deposition strategy? Overall, how do we do water this? And the like. So, yeah, they're doing a good job in going through all of those trade-offs at this point in time. Great. And What was the purpose of the 2 drill programs over the last year and what's next on those programs? Yes, so the first program was all about extracting metallurgical samples, which Barry alluded to. There were some geotech samples that came out of that, but that's getting samples so you can do all of these metallurgical tests for grind recovery curves and the second drill program was more infill drilling. So it was all about expanding resource.
28:30 But they also used the opportunity of extracting metallurgical sample, which is good. You're putting a drill hole in the ground and that's expensive, you might as well maximize the value that you get out of it. And did some down-hole surveying and getting some additional geotechnical data. So, those assays are currently being done. And then the next step is once that comes back, then it would be obviously updating the resource model accordingly. Great. Barry, I got one for you on White Pine, just asking you to zoom out a bit. I know you executed the transaction to JV White Pine over a year ago now. I'm curious, has it worked out as you hoped? Yeah, I mean, if you just look at the scale of work completed and the time, energy and focus put into White Pine over the last 15-months, I think you'll understand that it really has. As I mentioned, there would have been modest work that we would have been capable of doing over this period of time, whereas White Pine has both had the technical resources and of course the balance sheet to really press forward hard on drilling, environmental baselining and getting the project to where it is today. So, really it was that division of labour and capital with us managing Copperwood and Kinterra as the operator managing White Pine that has really played out as we have hoped and certainly happy with Kintera's technical strength. They brought in very strong people in the same way that I brought Vineland in. They brought very strong people in on the technical side, on the ground, also generating that license to operate.
30:01 The work that we do at Copwood, I also think has a massive read through to White Pine in terms of the credibility that we bring. We believe Kintera will do the same. So yeah, we just look very forward to both projects. They remain nicely sequenced and yeah, just advancing with methodical execution. Great. There's one question that came in from an investor over email. He's an investor who's wondering about synergies with Kintera at White Pine, I imagine he means for Copperwood, such as potential use of their existing processing plant and refinery to try and save some capital costs to Copperwood. Just curious your perspective on that and what the plan is. Yeah, sure. So just so you know, actually, just in advance of us selling our portion of White Pine to Kintyra, we did some, I would call it PEA level like work on that. And, you know, there's certainly an opportunity to look at that and arguably Kintaro, who are the operators will look at it at some point.
30:56 But also wasn't jumping off the page, you know, to send ore from Copperwood to White Pine obviously would require trucking or rail, which is a relatively expensive proposition. And the geology of the ore as it comes out is just slightly different. So, you know, not a perfect match in terms of processing technology. So I think it is something that we as partners can look at in the future. I can certainly say that whether or not the 2 sites share very specific infrastructure, there is incredible synergies from a management perspective. 2 projects are less than an hour away from each other. So when you think about management, procuring, design, engineering, you name it, these 2 projects have considerable synergies. And as I always say, I think there's a strong case to make that these projects, in whatever form it is, will come back together at some point.
31:48 That's great. Thank you. A couple of questions in the chat, some rapid fire ones on just timing. Derek from the chat asks, is there a projected timeframe to when the Copperwood mine plan design will be sent out for contractor proposals? So maybe Vynant, you can speak a little more so to the bidding process on the engineering piece. You know, if there's a read through the contractors, so be it. Obviously, that's not imminently in our work. But Vajna, I'll let you answer that one. Yeah, look, if I understand the question correctly, Romeo, we're talking contract mining piece, and that is our philosophy. We want to start off with contract mining. Obviously, we've got to get through basic engineering, get through our detailed engineering as well.
32:33 I would think somewhere early 26 is more or less the time that those inquiries will start appearing in the marketplace. We have done the physical inquiries on the engineering and the design work, but the physical engineering, sorry, contract mining work, that'll be still some time before that comes up. Great, thank you. Chuck has a question from the chat. He asks, when can we expect a ruling on the air permit, both in terms of how soon it can come, but also how long it might take? Thanks. Yeah, so there has been a request to postpone the public comment period, which we agree to. So it's been postponed to December the 3rd, if I remember correctly.
33:28 Typically, yeah, it just doesn't work or what. Eagle prefers not to issue any sort of permit over the Christmas and New Year period. So we're expecting the permit to arrive after January the 2nd. Given that we're still now in an open public comment period, I haven't seen the list of questions that's been asked and to take a judgment call on how long it will take for EGLE to actually collate all of those questions and then turn it around into answers before awarding the permit. That's incredibly difficult to put a timeline to. We're hopeful that somewhere January, February next year, we will definitely be awarded the amendment on the A permit.
34:21 Great, thanks. Spencer from the chat asks, are any royalty or streaming agreements in place for either of the 2 projects? Yeah, certainly there are. There's a collection of local landholders specific to Copperwood that have a sliding scale royalty on the project and at $4 plus it maxes at 4%. So if you look at our feasibility study, it has a 4% royalty related to that set of local landholders. Osisko also has a 1.5% royalty on the project. A similar thing at White Pine, I think to slightly lesser scale in terms of the total obligation, I think of more importance at White Pine is that there's actually a reasonable silver credit there and Osisko have rights to purchase that silver as the project progresses towards production. So that actually is another area where, you know, we've entrusted Kintyra to think about, think about that obligation. It's a pretty sizable stream in favor of Osisko, something that we think can arguably be restructured to facilitate a positive construction decision at one time.
35:28 Great, thanks. Paul Z, I think we've already tackled your question about the grant, but let me know in the chat if we didn't. Paul J wants us to look into a crystal ball here for a second and ask what potential barriers do you see could prevent moving forward at Copperwood? You know, When you take a look at a project, in particular, an early stage project that is at initial discovery, there's arguably 15 to 20 years that you work through in terms of defining your resource, your engineering, your permitting, so on and so forth. Quite honestly, we're the best part of 12 to 15 years down that path. So a lot of the things that really get in the way from a binary perspective of stopping a project, we're through. The resource is very well known. The engineering study is done by a reputable firm and of course, permits are in hand. That being said, we have to carry on. We have to get through our detailed engineering, we need to better understand the overall project, both from a risk perspective and an opportunities perspective. I think Vian gave a good view of a handful of key ones that we're working through on each of those sides. We certainly don't see any showstoppers there. But naturally, we want to make a responsible construction decision, meaning that the economics of the project at the price rating at that point in time are robust enough that we we as a junior mining company can get through construction. We look forward to that. Great. Thanks. One question that came in over email just a few seconds ago is from Jeff. He just wants you to go over, it's a good refresher for everybody,
36:58 what the details are of the JV at White Pine with Kinterra, Just the percentages I think would be great. Yeah, of course. Kinterra own 66% of the project. We executed that last year. We sold it for US$30M. That's the capital that we're now using to advance Copperwood. Just as an aside, then the joint venture combined agreed to a separate $30 million to advance Whitecoin, which we're working through at the moment. And positively for us, of that $30 million budget for the project, our 1 third or $10 million, we have access to a $10 million loan from Conterra. It's unsecure at a 10%, certainly better capital than we could get elsewhere. And we're taking advantage of that. So yeah, just a deal. Yeah, honestly, where I trust and hope both sides won.
37:45 Certainly good for the project. Great. Chuck asks as a follow up to a previous discussion. He's curious if there's any connection between the wait time for the grant and the waiting for the clean air permit. It's curious if those are related items. No, no, they're not related items. You know, that permit, you know, I won't go so far as to say it's procedural, but it's an engineering permit. The, all of, and you'll have seen already, obviously we have 2 of the 3 approvals that we need. All of those approving entities, be it the Michigan Strategic Fund or the House or certainly now the Senate, they have a very close tie to EGLE, the Permitting and Environmental Authority. And to be quite honest, EGLE, I think speak favorably on our behalf. They visit site regularly, they've inspected our work, or they've confirmed that the wetland project that we're doing right now is arguably the largest wetland creation project in the state.
38:41 They're very happy with our design and execution. And certainly as we work through the air permit update, it has been methodical in the way that we've always observed EGLE operating. They've been very communicative. At the public comment period that is going on, obviously there was a public comment meeting and there were no certainly challenging engineering questions posed. So really, we feel very comfortable both with that permit renewal, but also that it is not tied in any way to the state grant. Great, thanks. Hope that clears that up. One question from the chat. Is there any chance of a grant from the Federal Department of Energy for this project? Well, you know, it's interesting you ask, obviously, there's considerable capital available from both Department of Energy and the Department of Defense. And, you know, you know, arguably, as we go forward in the Trump administration, that continues.
39:38 So yeah, there are opportunities that we're looking at. We're looking at a the value of potential plans that we can get, but also the knock-on impacts of Federal review that we need to bear in mind. So, yeah, we're looking at that. There certainly is capacity there and we'll report back if we make progress. That's great. I know we're a bit over time, but Barry, I'd love to throw it to you if you have anything you'd like to close on today. Yeah, when I talk to mining investors, and listen, there are so many opportunities to invest in mining, very specifically on the Gold side, less so certainly in Copper. But when you look at juniors like us, you really need to look underneath the hood and we invite that scrutiny. And you'll see a project that truly does have the fundamental building blocks, obviously, in terms of scale of resource permits, we're now building the team. I think we're continuing to demonstrate execution as well, which is most important.
40:34 But there's just a nice opportunity at this point in time. You know, copper has oscillated a little bit in terms of price movements in the last 6 to 12 months. But there is no argument that the long term fundamentals and midterm fundamentals are set up very well. There's a shortage of supply globally, and it's even more pronounced if you look at the US, and demand is growing. So the long-term fundamentals are in place. And this is at a point in time when companies like ours haven't seen any significant movement from a valuation perspective. So you get a little bit of a free option to do your research on companies like ours. As I say, we invite that. We're certainly open to personal investor meetings to help people understand what's under the hood here and of course, how through execution we surface that value and we look forward to moving forward.
41:23 Awesome. Well, Barry, Biden, thank you so much for running through presentation and subjecting yourselves to grilling. I always appreciate that. And everybody in the chat, thanks for joining today. And obviously thanks for asking your questions. If you have any more, you
