Highland Signs Binding Offer From Kinterra To Sell Interest In White Pine

0:04 Good afternoon or good evening, depending on where in the world you're tuning in from today. For the Americans in the room, particularly, happy early Thanksgiving. Thanks for joining us close to the holidays. Really, really appreciate it. I'm joined today by Barry O'Shea, CEO of Highland Copper, following their big news from this morning. So I'm going to start right off by saying, obviously, congratulations on the successful divestment of Highland Steak and White Pine North. I'd love if you could give the investors in the room and me just a sense of the structure of that transaction.

0:28 Well, yeah, I guess what I'd say as a starting point is, you know, it's a pretty simple deal and with a pretty simple rationale. You know, nicely, you'll see through the news release that we're going to be forgiven the $12 million debt. That's a very important piece. We obviously want to clean up our capital structure. There's cash consideration of just over $18 million, a really significant amount. And maybe just as a headline number, that gives total consideration of $30 million for 34% of the project. And just bear in mind, 2 and a half years ago, we sold 2 thirds of the project for that same 30 million. So a really nice movement in value acknowledging of course there's been some investment in the interim, but really a nice headline number, really fantastic from a cash standpoint and a transaction that we're very happy with.

1:14 Awesome. And I know you characterized in the PR as a pivotal moment for Highland Copper. What kind of specific factors converged to make now really the optimal time to make an exit from White Pine?

1:26 Sure. You know, if you look at our balance sheet as of today, There's actually slightly more debt than there is cash. And of course, there are 2 assets to fund. Something doesn't quite add up there. So this really simplifies the structure and of course, strengthens our balance sheet. If you look at our company on a pro forma basis, there's no debt. There's about 25 million US from a treasury perspective and simply Copperwood to focus on. You know, what informed this decision also was in part related to investor and shareholder feedback. Our goal is to get to production in the near term. And our pathway to that is through the near dated and fully permitted Copperwood project. Naturally, there may be and I trust will be for Kintera a long term value in white pine, but it is a little longer dated.

2:13 I'd say we're also impacted by the fact that for us as a 34% stakeholder, it's a non-controlling interest and sitting inside a mining company, that non-controlling interest arguably

2:23 gets a little less value from a market cap standpoint. Another piece that informed our decision making at this point in time is that there's some relatively near-term dilution. I think investors will understand that we've been given a loan from Kintera. That loan is now about to cap out. So going into next year, we've received cash calls that naturally will be difficult to finance, acknowledging all of our capital is going into Popwood. So we'd start to see some dilution. And of course, if we still held on to the loan that we have, we'd be back in Q3 and that's a pretty significant dilution as well. So we just thought this was an opportune time while we still own 34% of the project. And maybe the last piece I just say is it's just this real strategic value in the cash consideration.

3:09 18 million coming in fully funds us with runway to a construction decision. Great. I appreciate that. I'd love you could walk us through the debt structure with Kintera. And I know you've already touched on it, but how eliminating this obligation changes Highlands flexibility going forward? What are you able to do?

3:26 Yeah, so listen, it was a pretty standard fund or dilute model. We've been funding our obligation over the last 2-years through taking on this debt from Kintera, but naturally that becomes due back. You know as well for a junior mining company that debt, generally speaking, is challenging. So the first step before you step into a broader project financing, as we expect to in 2026, we really want a clean capital structure. So eliminating our debt, putting cash on the balance sheet to give us a runway, what runway through that process. And when you put that in combination with the fact that we dealt with the overhang from the Greenstone block, which we traded out to a host of really strong institutions. It's created a really nice path to both the debt and equity financing. So yeah, very excited about what it's done for our company.

4:12 Awesome. And as reflected in a question from the chat and also something came in an email I was gonna ask you what's the expected timeline to close?

4:20 You know the way we look at it both parties are really quite equally motivated here obviously we want to get the transaction over the line and the capital in the door. Nocantara are also executing on their US rollup from a Copper perspective. So I think we're commercially aligned. And what that tells you is, with limited other hurdles, that we think it's going to be quite a quick close in the 30 to 60 day range. Okay, great. And SF Davies from the chat asks, and I'm gonna ask it as well, With the kind of non-dilutive funding secured, what's the critical path to getting to that construction decision at Copperwood? Well, the first thing, you know, you mentioned non-dilutive, and I think that is important. Obviously, we've diluted at the asset level, but When you think about it at a corporate level, and if you think for a moment about, you know, we've raised $18 million in cash here.

5:06 If you were to do that through an equity financing, that's some pretty significant broad dilution of both Copperwood and White Pine, if we still held it, acknowledging our market cap today is about 70 million. And of course, if you layer any warrants on there, really you're issuing a whole host of new shares. So we're happy that we've done this in an alternative way. In terms of next steps, I think we've outlined this well in the market, but I'll run you quickly through it. The next step right away is looking at what we call our integrated mine plan. You saw maybe a month or so ago, we had some real success redefining our process flow sheet. That's what we're now doing on the mining side. And that will contemplate also looking at drifting fill in place of room and pillar. We're not sure that that's going to be the viable path. If it is, it arguably is a really strong economic boost for the project because it increases mine recovery. So we'll learn that in Q1

5:54 of next year. And with this capital, we'll carry on with our detailed engineering with a focus in the second half of 2026. We have 40% engineered. The relevance of that number is that it gives us sufficient information both from a schedule and cost perspective to make a responsible construction decision, but also defend ourselves in a project financing. The capitals allowed us to do a couple of other things, really advance on our power engineering, something that we've held off momentarily. And of course, as you know, project financing in and of itself is an expensive step. So again, it unlocks us there. And as we continue also to look at state and federal funding available. And really, it all culminates into the second half of next year when we're looking to make a construction decision, certainly the biggest catalyst as we look to the near term.

6:41 I know you've emphasised and said before that Highland is going to be the next domestic US Copper producer. Given the permitting advantages of Copperwood and this new improved financial position, how does your timeline compare to other advanced-stage Copper projects in North America? I honestly think we're as near-dated as they come. Even if you look at a host of peers that we do compare ourselves to, there are very few that are both at Feasibility Studies, certainly stepped into Detailed Engineering and with permits in hand. I think we do stand apart. That's the impact of time, the near-dated nature of Copperwood. If we look to make a construction decision in 2026, arguably initiate construction then in early 2027, and you could be in a position to be producing Copper in 2029.

7:27 Against the backdrop of a 20-year cycle from first drill hole to production in the US, we're feeling very comfortable place to drive value in the near term. And those near-dated projects are also the ones that the US federally are really prioritizing. So we're seeing access to capital from that perspective as a result. Great. And I know you mentioned that it de-risks the near-term timeline. But beyond the obvious financial aspects we've already discussed, are there any operational or strategic risks that exiting White Pine eliminates for Highland Copper? Does it simplify decision making as you advance Copperwood? And I'm looking for your perspective on that. Certainly the biggest is de-risking funding to a final investment decision. And I would say also maintaining runway. We want to keep that option to copper price as long as we can.

8:16 But internally, capital allocation is important. And even as investors and prospective shareholders look at our company, there can be some concern around where capital is going. 1 shareholder might consider it most important to go to Copperwood. In some instances, shareholders like White Pine, this eliminates any ambiguity around where capital is going. We are a fully focused Copperwood company that now we're driving to production in the next 2 to 3 years. And so capital allocation, quite candidly, is no longer in the conversations just about how we use our capital from a Copperwood context. Great. Now I want, if we could, I know there's a lot of great questions in the chat, so I do want to get to those in a second, but I want you to just zoom out for a second. I know with debt eliminated and streamlined corporate structure, everything we just talked about focused solely on fully permanent 100% on Copper project. How

9:04 should investors reassess Highland Copper's risk profile and valuation relative to yesterday afternoon, prior to the transaction? You know, it all comes down to an investor's belief that we can actually execute and build this product. There's really strong underlying asset value at the Copperwood level, specifically when you're looking at $4.55, even $6 and beyond from a Copper price perspective. So it becomes a matter of, can you surface that value through execution?

9:31 And that might've been challenging as at yesterday, You know, if you've got debt, modest capital, and 2 assets, it's challenging for an investor to see how that path gets unlocked. So this focus is really allowing us to look at the underlying value. And we look at it from 2 perspectives. First of all, project execution. So that's site work as we've done, detailed engineering. And we also look at it from a financing perspective. And again, we think both of these are now unlocking. When you look at some of the progress that we've made, in advance of today's announcement, I think they're all serving to help drive an investor understanding that we can build this project in the near term. Quite recently, we announced a $250M letter of interest for project financing from the US Ex-Im Bank. And to be clear, we're active at a host of agencies. You're seeing new news every day, both from Ex-Im, the Department of Defence and others in terms of available capital.

10:23 Recently, we also redesigned our process plant. We increased copper recoveries and we lowered our operating costs. Again, a view from an operational execution standpoint. We've included our phase 1 engineering in and around design criteria. And we also concluded our reclamation work, our concurrent reclamation work at site. So you're seeing really strong movement there, even then for corporate development perspective, of course, this transaction, as I mentioned, you know, trading the greenstone block and kind of simplifying the shareholder structure, trusting that we've demonstrated over these last 6 months of a whole host of improvements and advancements, corporate development, operations and financing. And you really begin to get visibility through 2026. Assuming we continue to execute, we can look at a construction decision at the tail end

11:12 of the year. And you really begin to surface value there. I mean, I think you'll know that, you know, Explorer developers, you know, experience quite challenging price to net asset value discounts. But as you step, as you de-risk, step towards development, and of course, step towards production, the cash flow multiples and the valuation metrics that companies like ours are looked at are considerably different. Awesome. And I know you have already touched on it, but the top comment right at the beginning of the hour from Jay Redberg was how has the Greenstone transaction impacted Highland Copper? So if you get into just a couple more details about the transaction, I think that'd be great. You know, so Greenstone, and I'll refresh for any investors that weren't aware of this, Greenstone owned 16% of our company and they were liquidating their fund broadly. So I want to be clear about that. It wasn't that they were trying to liquidate to our position. They're closing down their fund and they've been doing so over the last certainly 6 to 12 months. And the closure of that fund was getting increasingly short dated into early 2026.

12:12 So you see this real overhang if an investor understands that a large shareholder will need at some point to put their shares into the market. So, we orchestrated a very orderly exit where we start to reduce shareholder concentration. So we took that 1 16% block out and we put in a strong handful, 5 to 10 of institutions who have done recent diligence, are happy to invest and are really just fresh investment. I think it speaks well to the project. So eliminating the overhang, reducing shareholder concentration and then of course opening up some additional float as we look to trade in the upcoming period here. Great and Michael from the chat says congratulations on the sale of White Pine. He notes your investor presentation says you need $391M

12:59 upfront investment before production begins. He wants to know if that figure is reduced at all by the results from the phase 1 engineering or if that figure has been updated after that. It hasn't been fully updated. So phase 1 engineering will have identified certain positives. I think we talked about the metallurgical work and there's a capacity to reduce some of the initial capital. We've scaled down the size of the plant. But quite candidly, if you look at the release we put out about phase 1 and as we're stepping now into phase 2, phase 2 is the point at which we're really updating our broad capital and operating costs. When we look at that call it approximate 400M number, we do know that there are some areas where I think the initial capital costs were relatively high. That quote was done at the tail end of COVID. Steel costs were high, re-aging costs were high.

13:45 So I think we'll see some positives there. Naturally, of course, we're also going to see some escalation and say, particularly in the labor. But yeah, we'll work through that. And, you know, to be candid, I expect we'll see some form of increase from that 391 million. Certainly be looking to minimize that through our

14:01 optimizations. Great. Now, I know we've already asked it, but a big block of 12 people came in the room a bit late, so might as well reiterate from the chat. SFDavies wants to know when you think you'll have a construction decision and our prospects for a project financing. Yeah, so I will refresh on those timelines there. Our goal, of course, is to make a construction decision in the second half of 2026, depending on the timing of that decision and access, let's say, to site from a construction window perspective. In all likelihood, in that example, it would be an early 2027 construction start. And it's about a 2 to 2 and a half year construction window. In terms of visibility to finance, you know, I mentioned earlier that the federal government is incredibly incentivized as they think about bringing critical mineral projects, specifically near-dated critical mineral projects, to production. We've seen that, of course, through our letter of interest from USXM for US$250M.

14:55 When you think about that number against the context of the overall capital in the US$400M, that's 60% of it. So if we think we can get the debt underwritten by the federal government, arguably at better terms than we might get on the private markets, it's an incredible boost. And as I say that there are other sources of capital, equity, debt, and of course, in some instances, grants that we continue to drive towards. And as you think about the next, call it 6 months, as we finalize on some of those pieces of debt in particular, of course, we execute from an engineering perspective. That's what then creates visibility to, of course, the equity component that we would need at the tail end of the financing. But we're certainly feeling increasingly comfortable with this transaction now.

15:40 Awesome. One question came in over email. When do you figure foundations for the mining buildings for Copperwood will be built? What's the timeline on that? Well, again, if we do early construction, it would be, call it in the spring of 2027. Setting those foundations is important so that you can enclose the building. And then of course, from there on, you can continue to build and construct indoors as you pass into the winter of 2027. So that will be a goal. Great. One question from the chat. Can you talk about just the time horizon for a decision from Exum just so people can have a sense of when that might pop out? So Yeah, we think it's in the call it 8 to 12 month range. And there's a few factors, of course, that can play into that, as we think about making a construction decision in the second half of next year, and wanting to have visibility to our financing and events that of course, that broadly lines up. And I'm hoping that some of those estimates are somewhat conservative. We're obviously going to be hard at it with Ex-Im to get through that process.

16:41 Yeah, appreciate it. And Andrew from the chat asks, I know we've talked about other forms of government funding on this short webinar already. He wants to know if any grants from Michigan are still possible. You know, I think they are possible. I think everybody will know that we've been, you know, working hard for the last couple of years on grants from the state of Michigan. It has, you know, from a very positive perspective shown all the support that we have locally from the UP delegation of representatives and senators, and through to the state level itself, Michigan Economic Development Corporation and Governor Whitmer. But nonetheless, you know, getting it over the line, I think everyone will understand has been challenging. It is a political decision in the end. So it is not done, but we kind of continue to work patiently on it. Certainly as I look at our company, I don't see that there's any value from a market cap perspective considered in that brand coming across the line. So I think it'll be a nice surprise if we're fortunate to get that done. Great.

17:37 And sorry, just one more popped in. Mike from the chat asks, he just doesn't see a comp table in corporate presentation where he usually does. He wants to know if there's any comparable companies that you get compared to, presumably some of the early Copper development names with US-based assets. Where should people be thinking of you guys as a peer group? Yeah, I know somewhat bigger from a production perspective, but Arizona Sonoran, I would say is a good example. They're relatively near dated, advancing through engineering, looking towards feasibility study in the near term. And they're a US domestic corporate developer. I think that they're a nice comparison. They've actually done it done very well from valuation perspective. I would hope it would demonstrate the path that we can take also. Great, and I'll throw one more at you and that's really, what are you most excited about given this news for 2026?

18:23 What's now on your mind? What's changed that keeps you up with the excitement for the company? Well, it's just our capacity to move at speed. You know, when your capital is depleting and then to be honest, we weren't necessarily at risk, but I think we just reported our cash balance yesterday, US$7.5M, so that's okay. But as your cash balance pushes down towards the US$5M, you have to be careful in terms of the speed at which you spend. And speed of spending impacts the speed at which you can get to your construction decision. That really is now unlocked from our perspective. I think we're also able to put capital into other areas that will advance the project at speed that we may not otherwise have been considering to do so. So, yeah, it's just really that unlocking that drives us forward into 2026. I'm very excited about that. Awesome. Well, Barry, thanks for letting me grill you and for everybody in the room. Not a single person left during the audio issues. I'm proud of you guys.

19:15 Thank you all for bearing with us for a couple of seconds at the beginning. And I got to, I think, every question except one that I'm going to shoot to you just over email as somebody wants to connect you with some mining communities in the area. But otherwise, thanks so much. And I hope everybody had a great time. Enjoy the rest of Monday.