Highland Copper Phase 1 Engineering Update

0:03 I'm thrilled to have with me today Highland Copper's Copperwood project director Dr. Vajnand Vandyke to discuss the completion of phase 1 engineering which has been completed at the project. Dr. Vajnand, how are you today? Doing really well, Thank you, Romeo, and always a pleasure being here. Awesome. Now, here's how today's going to work. He's going to run through a presentation. Then I'm going to ask a few select questions. We're going to get really into the technical details today. If you have any follow-up questions, as this will be a recording that you're watching, please do reach out and I'll make sure that the Highland Copper team gets them. I'll get back to you as soon as possible. Without further ado, Dr. Viden, I'll pass it on to you. Yeah, Romy,

0:38 as stated, thank you so much for the opportunity. Appreciate it as always. Great just being in a position of reporting on the phase 1 engineering and what's been done so far. Little bit just setting the context. You know, we dove into this phase 1 in January, 2025. That was announced and yeah, we had 2 main goals. First of all, we wanted to make sure that we finalised design criteria before we get going in all earnest. Then the second piece is actually assessing opportunities of just improving the project. I have to acknowledge the team of people that worked with us. This certainly wasn't done in isolation. We had DRA Americas looking after the mine and the process plant engineering work.

1:28 Foath looked after the overall water balance and we had Tetra Tech looking after the tailings disposal facility for us. And I'm very happy to announce that in essence, phase 1 engineering for us is complete. So what are we going to talk to you about today? The objective of this webinar is we wanna just discuss briefly the recap on the process plant, talk about some of the work done on the mine engineering and the tailings dam, give you some guidance on the pathway forward, and then certainly use the opportunity to just give the listeners an update on where we are from a site perspective in the work that's been done there. So let's talk about the process plant. First of all, good news is we've done the webinar, I think it was about 6 weeks ago.

2:21 We got really technical about the process plant, so we're not going to go into that level of technical detail today. But I do want to just touch on the work that was done for those that's missed it and try and summarize all of that. Recapping what we had in 2023 in the feasibility study, this circuit was done on test work done by SJS, a single milling circuit, sag mill and bore mill, milling down to about 45 microns. 8 conventional roughers that concentrate fed a regrind mill. From that regrind mill we had a quite a complex cleaning circuit. There were 25 conventional trough cells in various configurations. All of that conk went into a concentrate thickening filter, and there was no tailings thickener in this process.

3:08 What we have today is a much simpler circuit. So we've replaced those double feed bins with a single silo, double the capacity. And the idea behind that is, you know, we just reduce operational risk. We've split the circuit, the milling circuit now into what's called the MF2 circuit. So we still got a sag mill and bore mill right up front, but those are smaller. We are milling down to 80 microns on the front end rather than 45 microns. Primary rougher in the scalper circuit, we then de-slime and have got a secondary mill. Now from a flow perspective, about 25% of your material goes into the rougher conch circuit. About 25% of the material goes over the, from a de-sliming perspective. That means only about 50% of the material is seen in the secondary mill. So we can mill down to 38 micron. So we've got a smaller mill up front, smaller secondary mill, re-grind mill going down to about 10 micron.

4:09 We've replaced all of those complex float circuits with Jameson float cells, so there's 6 of them, which reduces the entire footprint of the plant dramatically. We've installed a tailings thickener, or just decided on using a tail thickener, and what that gives us is that we can, in essence, recycle our water immediately back into the plant, and the thickened tails go to the tailings dam facility. What all of this gives us at the end of the day, certainly higher recoveries and a lower cost. Previously the baseline for the project was 86% recovery, we're now down to or up to almost 88. Optimize the reagent scheme that saves about a dollar a ton on OPEX. There's also further OPEX savings in that we, it's about 1 and a half megawatts of power that we will not draw, not just install, we won't draw that power And that gives you some additional power savings there.

5:06 We've got a much smaller and certainly a much smaller flotation plant. The good news is there, we've reduced and cut out a lot of the complexity. And then lastly, the other operational improvements like the silo, pump redundancy, having a PLC scatter control system, all of that will just improve the reliability and align with what we've got currently in the area to work with. So pretty happy from a metallurgical perspective, you know, I think we are ready to step into the detailed design from that perspective. Let's talk about the mine engineering side. Now, on the mine engineering side, DRA looked at several optimisation efforts for us. The first one was trading off on Rumen Pillar versus Drift and Fall from a mining perspective.

5:56 The 2023 Feasibility Study had Rumen Pillar mining in. It's the current base case. It is a proven method. Certainly nothing wrong with it. It was used historically at White Pine, so certainly for us, we do think it's a valid mining method for the ore body. And this is a little bit of a very simplified graphic of what it looks like. So you kind of mine these drifts in a square pattern that creates these rooms and there's some pillars that you leave behind. The drawback of room and pillar mining, especially if you're not ripping the pillars, is that your overall mine recovery is, call it high 60s, maybe touching 70 percent.

6:43 So DRA therefore evaluated drift and fill mining for us. Now in drift and fill we're now mining these much longer drifts. Once you've finished mining a drift, you come back and you pump it full of paste and that paste is made out of your tails with a, call it cementaceous binder. Once that is settled and you have the structural strength of the paste, you can then come back and now you can mine the area between these paste-filled areas, which is solid. So your paste becomes kind of the roof support, again, of a simplified version of what happens. What this gives you, as you can imagine, it takes your mine recovery from, call it the 70% to the mid-90s. You use some of your tailings now underground, So that improves your tailings footprint and makes that smaller. It certainly reduces a lot of your geotechnical risk because your strength of keeping the roof up now comes from these drifts that's full of paste backfill.

7:45 However, you will need a paste backfill plant. In all of the work that was done by DRA, certainly it looks like a hybrid approach where in these western panels, we'll be using drift and fill. These ones marked in green and then all the other panels will stay with the room and pillar mining method. And certainly that gives us, could enhance the project economics. We are very encouraged by this, but it is dependent on whether we can make a paste of sufficient strength. So that's something that we'll do very early now in phase 2, do the paste on paste test work and make sure that we can actually keep the roof up using this paste. And then once we have those results, we'll consider all of the merits and then including environmental and permitting before we actually make the decision to make this change.

8:36 Other piece of work that DRA did for us is, they reviewed the excavation method or the mining equipment. 2023 feasibility study used road headers where we had the mine height above 3m and conventional drill and blast using these two-boom jumbos and mining height below 3m. The 3m number is purely because of the size of this piece of equipment. So what they reviewed is productivity assumptions associated with these road headers. Keep in mind, these are big machines, they're not overly maneuverable. How do you sequence that with the roof bolters coming in and the overall impact on the cycle time? Where we are today, we'll continue to assess the technical and financial merits of using these road headers.

9:23 Frankly, we'll look at the optionality of a phased introduction rather than going the whole hog right up front. And the whole idea behind this is just managing risk. What you don't want is having a plant that's commissioned, ready to run, but you cannot feed the plant. So that's certainly the optionality that we are looking at at this point in time. From a tailings and water management perspective, 2023 feasibility study, as we said, mentioned previously, just pumped the unthickened tailings to the tailings dam, or the tailings disposal facility. What we are doing now is we're looking at putting in a tail thickener, so your percent solids goes up to around about 50%, immediately that reduces the size of the footprint. The other advantage is it allows us to recycle our water immediately back into the process plant. You're not pumping the water all the way to the tailings dam where it can evaporate and then try and recover it from the tailings dam and back to the plant.

10:21 So that cuts some water handling cost. And certainly because we're no longer using the tailings dam to store the contact water, that reduces instability risk substantially. Because you have a smaller footprint that creates some space and that space will use to then construct a permanent return water dam, which is or rainwater retention dam. That's this blue area in this graphical representation, the concept. I want to stress that this is just a concept because it all depends on how much tailings you're going to store underground.

10:57 But we've updated the water balance. We ran various climatic scenarios from extreme wet to extreme dry to make sure that we have enough space and we can actually keep the plant fed from a water perspective and then we can manage the risk. So as part of phase 2, once we understand the volume of the tailings, then we can now look at, you know, optimizing the embankment designs. And obviously from a closure perspective, if you've got a smaller tailing footprint, optimize how do we close the facility down. One last piece of work that the DRA looked at for us is the option of just using the underground void as a storage facility for some of our tailings. This is slightly different from the paste backfill. We don't have a – it's still a paste thickened, but we don't have a binder.

11:46 So in this case, we'll construct these, call it Brattis walls in the mined-out areas, and then just take that paste and actually just pump it into the void.

11:56 The study indicates that we can store almost 8M cubic metres of thickened tailings underground. That reduces your tailings DDF footprint by about 40%. That's real value for us. Again, this has to determine the ability, can we form a paste and is that a reliable way of operating the plant? And that we'll test now early in phase 2. And once we have clarity on that, we will assess that in the phase 2 engineering. So talking about phase 2 engineering and the pathway forward, just give you a brief glimpse of the current thinking and where we are. So as mentioned, metallurgically, we're pretty happy with what we have from a design criteria perspective.

12:48 But while we wanted to be in the same place for on the mining method, certainly the work that's done to date suggests that we need a little bit more work. There's 2 key inputs. First of all is this paste network that I previously referred to. And that's going to take us about 3 months to do. And the only reason why we're starting now is, you know, the metallurgical test work is pretty much wrapping up. So we've actually got the tailings, the actual process tailings and the water that we can use to actually do this paste test work. And the second piece is, you know, labour cost. Just do an update on our labour cost. All of that while we're waiting, we want to use the opportunity to actually do a review of the entire mine plan.

13:34 Starting with ground support, mining height, mining equipment, you know, clearly, if you commit doing a mechanical cutting of the ore versus drill and blast, you have less shock onto the roof and ground support. So use this time that we have while we're waiting for the results

13:51 of the of the paste test work to actually do an integrated review of the entire mine plan. And then depending on the final design criteria, then we have to make the call on whether, what about permits and permit amendments. So if we need to do permit amendments, then obviously we will have to adjust the schedule accordingly, but we remain very encouraged. Recently we have successfully amended some permits on a timely basis. So we do believe that we can manage that risk. Once all of this work is done early in the new year, we will proceed into the phase 2 detail engineering and then in parallel with permanent amendments if needed. And certainly, you know, then be in the back end of 2026,

14:39 support a construction decision and project financing. Lastly, let's talk briefly about the site update. Great pleasure to report that all the construction work is done. You know, our site team keeps on delivering. So all of the construction work that we had to do is behind us, done on schedule, on budget. We're busy with the paperwork, literally, on Asbill drawings. The concurrent reclamation work has also done a huge amount of effort there. We finished all our seeding and tree planting work, and we're actually now in survival warranty analysis. And these 2 photographs just at the top shows you what's happened to the site. You know, this is where, what it looked like in May on the Gypsy wetlands had been built. That same wetland in August, the plant growth has now started and this is exactly what we want to see pretty happy with that.

15:35 Lastly, in terms of Bluff Creek, that's the work that we were doing off-site where we replaced these undersized culverts with a clear span bridge. That work is also done, all the in-stream work is done and we're busy with the asphalt drawings. So we're now moving from the site work into the monitoring program. And yeah, pretty happy with where that stands. So yeah. So thank you for the time. And yeah, happy to take some questions as well. Awesome, appreciate it. I do have a couple of questions that I was hoping to run through. As you said, we did that detailed webinar on the metallurgical circuit about 6 weeks ago. And I know that you mentioned you're doing that variability test work. I'm curious, John,

16:19 what you shared already, is there anything you can talk about on the results of that test work today? Yeah, good question. We didn't talk about it just from a timing perspective. Happy to say that most of the variability test work is now done and the results certainly looks good. Gives us, gave us the same level of performance than what we had. We've even run lock cycle tests on that variability test work and we fall on the same great recovery curve. So that gives us a lot of confidence, you know, on the metallurgical design. And that's why we're saying we're comfortable stepping into detailed design once metallurgical, you know, once we get the go ahead, but let's finish the work on the mining side before we step into the detailed design on the metallurgy side. Okay. Makes sense.

17:07 Another potential shift from room and pillar to that hybrid approach that incorporates drift and fill mining could increase recovery from 69% to 94%. So that's a really substantial difference. I know earlier studies must have looked at drift and fill. So what's changed now that you're viewing it as truly optional for the project? Yeah, you're quite right. Earlier studies did look at drift and fill. What's changed, frankly? Copper price. Yeah, you've got to have, If you want to go drift and fall, it means you need a pace backfill plant, which is going to introduce additional CapEx. You also need sometimes a substantial amount of binder and or some form of aggregate or slag that you use to give you additional structural strength. And all of that introduces additional OPEX.

17:58 So you've got to be in a position where the revenue can offset this additional revenue that you get can be offset by, and certainly pay for this, the CapEx and the OpEx. And what we've been seeing, the copper price has been hovering around the $5 mark. Certainly it's been stable from that perspective. And at a 450, it starts opening up the window of opportunity where drift and fall can be seriously evaluated. So that's what's changed. I appreciate it. That's a great answer. I know you're taking an integrated systems approach to mine design. So that's linking, ground support, excavation method, back height, tailings disposal. Can you just explain to the folks watching why this holistic view is important and what it means, kind of practically speaking, for optimization of the project?

18:47 Yeah, if you look at systems theory, you cannot optimize a integrated system by optimizing the subsystems. You always end up with a suboptimal design. And unfortunately, in large degree, we've locked very much into the subsystems and tried and driven the optimum approach there, but you have to look at this integrated. There's no argument about it. So what we're trying to achieve here is actually looking at, just to take a rethink. We have got the time, we're doing this PACE test work. It's gonna take us 2, 3 months to get that done. Use the opportunity of actually take a overall review and look at this from a integrated system. Does what we wanna do, does it all make sense? As you quite rightly say, all these building blocks are interrelated.

19:44 So we wanna be sure that we're not having little local Optima, but that we have a global Optima. That approach and that way of thinking certainly returned the results on the metallurgical side of things. That was exactly what we did then. We're hoping to replicate the same thing when we get to the mining side. Great. Now, I know that you previously said that you want to progress the tailings disposal facility design to about 85%. Is that still the plan? And what's the progress towards that so far? Yeah, that's certainly still the plan. Remember, we got to, although our tailings dam is permitted, our drawings has to be signed off as part of our dam safety permit. So, from a de-risking the critical path, we absolutely want to get as far as we can with the detailed design of the tailings dam. However, we've got to have clarity on how much tailings are actually now going to be stored on the tailings dam. If we're going to use a paste-backfill facility, or if we're storing tailings underground, or it's paste from a drift and fill, that influences the amount of material that's gonna go onto the tailings dam. So we've paused the detailed design, all the design parameters as much as we can is done on the paste or on the tailings dam. But once we have the quantity numbers, then you can pull the trigger on, you know, running with the design on the tailings dam. So certainly still the plan, but once we finalize quantities, then we'll pull

21:14 the trigger and go to that 85%. Great. And what I'm gonna throw on at you that kind of sums up, I think a lot, and that's given you got 30 years of experience in metallurgical design, construction, operations. So asking you pretty straight, what aspects of the Copperwood project make you really confident in its potential to become a successful operating domestic copper mine? I think one of the key strengths of Copperwood is just the amount of technical data that's out there. You know, This project has been going for a while. There's been a lot of engineering work, a lot of test work done. And I'm just, I like data-driven decision-making. You don't make these decisions based on emotions. You've got to have hard facts that backs you up.

22:02 That for me is maybe strength number 1, is just the amount of information that we have on making the decision from a design perspective. I think the second side of it is just integrating a risk-based approach from the word go. Yeah, the design team certainly look at all the, call it the elitist, you know, the operability, the maintainability, the constructability, all of those things we try and incorporate from the word go to make sure that you have, you know, this is not just about delivering a project and that's on time and, you know, hit the budget and we, you know, all celebrate and walk away. And then from an operational perspective, we can't get this project commissioned.

22:50 So, driving the team right up front to considering that, I think it's a strength. Using the time wisely, being very pedantic in the way that we step through from design criteria. And I think all of that is just good statements about managing the risk associated with the project. Awesome. Well, Dr. Feynman, thank you so much for running through both the presentation, but also letting me grill you on the technicals. I always appreciate your time. I think this was really helpful for viewers. Romeo, as always, just appreciate the opportunity and great spending time with you