The Misconceptions of the Copperwood Project

0:07 Today I'm joined by Barry O'Shea, CEO of Highland Copper. The topic of discussion today is going to be around the Copperwood Project in Michigan. We're going to be looking at addressing some common misconceptions surrounding the project in the lead up to a near-term construction decision. So we're looking at crucial topics like water, environmental management, the effect on recreation tourism, and Highland Copper's commitment to responsible closure and reclamation. Sparry, thank you for joining me today. Thanks, Romeo. Awesome. I thought it might be best to just start before we get into the protein of today's discussion to give a brief overview of Highland Copper's 2 core assets. Yeah, of course. So thanks, Romeo, for hosting. We have 2 great assets in Michigan. We have the 100% owned Copperwood project, a reminder that it's fully permitted. It's really the asset that we're putting a lot of our time and effort behind because it's something that we think we can bring into construction in the near term,

1:02 supported by a $50 million grant that we're working on with the state of Michigan. But certainly of equal importance is our White Pine project. It's our JB that we've done with Kinterra. We own 34%. It's an asset that is really nicely sequenced behind Copperwood. It's something that Kintera as our partner is moving through feasibility and permitting over the next 2 years. And we really look forward to advancing as well. Awesome. So let's get it. So I got a couple of questions to start on water management, Copperwood. So first is, how does Highland Copper plan to ensure the protection of groundwater during operations?

1:41 Well, I think it's very important to look at it from a few elements, from baselining to treating to monitoring. You know, as a starting point through feasibility and really through early days, all baselining is complete. So we have a full understanding of the characteristics and quality of the water to ensure that whatever we do, we're returning it to those similar characteristics and qualities. The second is treatment. Obviously, any water that comes in contact with the mine is carefully contained within a system of ditches and pumping networks, put into a containment facility. Obviously, it's recycled as needed, but in the extent that it's going to be returned to the environment, it goes through an aggressive set of treatments to ensure that it is returned in a similar quality as intended.

2:29 And of course, the last is monitoring. And this is done in conjunction with the state of Michigan, particularly the EGLE authority, need to make sure that that water is

2:37 continually looked at both as in our system but also being delivered back into the natural environment to make sure it meets or exceeds the qualities expected of Michigan. Great, thanks. Just getting specific, what measures are being implemented to prevent any potential impact on Lake Superior's water quality resulting from mining activities? Sure, well, listen, water treatment is the most critical. We use reverse osmosis as the main treatment method. So this entails any contact water that comes in contact with the mine that we put through the water treatment plant filters through a membrane, obviously allowing clean water to flow through and anything like dissolved dirt or heavy metals or otherwise are contained in our system and disposed of appropriately.

3:23 Treated water is continuously monitored before it's put back into the natural system to make sure that it meets or exceeds the standards of the state of Michigan, and that's regulated by the permitting and environmental authority EGLE. I think importantly, I want to clear up 1 misconception, and that is that we will not draw water from Lake Superior. We certainly listened to community concerns in and around that, and we redesigned our engineering process for processed water during 2023, whereby we'll draw water from precipitation and local sources for use in our plant. And by doing so, we do not intend on drawing any water from Lake Superior. Now, for better or for worse, probably for worse, I live on the internet, and I have heard the mine referred to by certain opposition groups as a sulfide mine.

4:12 Can you talk about what that means and if it's applicable to copperwood?

4:17 So there is some sulfur in the copperwood ore, but I think what's really important is to look at if and how that sulfur reacts with the environment and the water when it comes in contact with it. And we've done a considerable amount of test work through feasibility and through engineering to truly confirm that when our ore comes in contact with the environment, it does not react and it does not create any acid. This is not just our work, it has been verified again by Eagle through the permitting process so We can safely say that this is not an acid-generating mine. Incidentally, a separate company from us in the 1950s mined on a test base of some ore from the Cockwood mine. It's actually still sitting at surface in the region, something that we obviously as owners now take responsibility for and monitor.

5:06 And we've seen that as that ore has sat on surface for many decades now, there has been no acid generation. So we're kind of confirming from multiple directions and feel very comfortable there. Great, thanks. I think that covers us for water management. I do want to talk about tailings management briefly. I have a couple of questions as well. Looking at first for just an overview of Highland's approach to managing the disposal of tailings at Copperwood. Yeah, so tailings are kind of the finely ground mineral residue that comes from the milling process. Again, they're contained and transported via pipes to the tailings facility. And then naturally, it is very important how those tailings are managed. I will acknowledge that for the most part, really, it's waste rock. And as I mentioned, this is non-acid generating waste rock.

5:53 But but that tailings as it sits in these tailings management facilities kind of goes through something of a natural decantation where the sediment sits to the ground and the water rises to the surface. Any of that excess water we attempt to recycle from a processing standpoint. If there is any water, that water that needs to be delivered back into the environment, naturally, it goes to the overall process of going through our water treatment plant. You know, the design of the facility has been gone over in great detail, certainly through the permitting process, and we'll continue to do that as we step into kind of further detailed engineering and construction phase. And once in operation, it's continually monitored, not just internally by us, but also externally by EGLE.

6:39 Certainly, it's a risk that we will manage very well and very safely. I appreciate that. One thing, given the facility's relative proximity to Lake Superior, just to be as clear as possible, what specific steps will be taken to ensure the stability and containment of the tailings disposal? Well, I think very, very specifically, there are a whole host of conditions and commitments that we need to match in terms of Eagle standards themselves. And I'd remind you that the state of Michigan has very rigorous standards across mining overall, but very specifically with regards to tailings. But beyond that, we're also committed to following the guidelines set forth in the global integrated standard of tailings management. So really, we're setting ourselves to the highest standard here, as we should in this beautiful environment.

7:29 Great, thanks. Switching gears a bit to local recreation and tourism, I'd love if you could just start by elaborating on your company's commitment to ensuring that the operations won't negatively affect recreational activities and tourism in the UP.

7:45 Well, listen, again, I'm going to acknowledge this is a pretty beautiful area and an area that does rely heavily on tourism also. But I think it's important to reflect that mining and industry generally can coexist as it has for decades in the UP. And That's how we intend on moving forward. I think there are a range of conditions in which mines like ours can and arguably should be built. If we intend on being great stewards of the environment and also the community, obviously in combination with our work with Eagle. I think that's critical if we're able to minimise our footprint and in certain instances offset and mitigate, which I'll be able to demonstrate that we can. And if you combine that with the fact that the metal that we're mining, copper, really is a critical material for the purposes of the clean energy transition.

8:38 All of those elements in combination kind of reflect to you this is an important metal to mine if done safely and with respect. And of course, the byproduct of a nice economic boost in the region is a nice to have beyond that. Sure. To get into the nitty gritty a little bit, I'm curious how Highland Copper plans to address concerns regarding noise and light pollution to kind of preserve the natural ambience of the area.

9:07 Yeah, so I guess I'd mainly reflect that almost all activity is either underground or indoors. So Mining happens between 300 and 900 feet below surface, so it's largely undetectable from both a sound and light perspective. When the ore is brought to surface, it will be brought to an enclosed building for processing, again, minimizing noise and light. For any light that naturally is at surface, and that's of course for the safety of employees, it'll be downward facing, it'll be shielded, and we'll look to manage and protect any noise and light emissions. Again, ensuring that our neighbors in the region really don't see and hear from us and continue to enjoy the area for its beauty.

9:55 Great.

9:56 Getting into the life of mine. So I know your feasibility study says that the life of mine is 10.7 years. Love if you could talk to us, just in layman's terms, about what that really means. Yeah, so you know, when you initially design a mine, you build it, I guess you drill out your initial set of mine life and you choose a certain drill density. Of course, drilling is expensive so you're not going to define your whole life. But for the most advanced component of your resource, you define it to what's called a measured and indicated status and that can be used in your Feasibility Study. We did so to define out the first 11-years of this mine. And that represents about 54Mt sitting in that category. There's a second category called Inferred and that has been drilled to some degree, not to the extent that measurement indicated it has, but that category has 79Mt and it takes some modest drilling from this point to move that into the inferred category and

10:55 then begin to increase that initial 11-year mine life. It is broadly practice in mining that That infill drilling gets done as you operate and you convert years from your initial into your extended mine life. We've seen that in other cases in mining in the region. We do believe that this project will mine past the initial 11-years that have been identified. We certainly have ore that we believe we can convert. And listen, it's an important piece. We want this mine to have a long lasting impact to the region that's assisted by putting jobs into the region for a longer period of time. But I would also note that we consider all taxes collected at a state and federal level through whatever the mine life is taxes that can be used well into the future for infrastructure and other spending for the local region.

11:48 Great. Looking well forward into the future, curious if you could provide insight into company strategy for mine closure and land reclamation once activities are completed at Copperwood. Yeah, and listen, that's really important. And I think modern mining contemplates closure right from the outset. And that's why you'll see if you go to our feasibility study that's publicly available, the closure plan is fully detailed and also reviewed with EGLE in advance of us disturbing land in any way. When you think to the practical closure of the mine, obviously we close access to the underground mine, we dismantle infrastructure, recycle elements or materials as needed, repurpose equipment.

12:35 And then we look to mitigate the overall area that's been disturbed. And that's done by regrading, placing topsoil and vegetating with native species. So you attempt to bring it back to what it looked like in the first place, acknowledging of course it can't be perfectly brought back. The tailings disposable facility goes through the same process. I mentioned earlier the decantation of sediment and water at the tail end of the mine life. That water is essentially drained over time, treated through the water treatment facility until there's essentially no more water. At that point, that surface is also covered with an impermeable layer, making sure that water can't re-enter or come in contact with the tailings. And again, that tailings disposal facility is revegetated with natural plants.

13:25 Again, to bring it back to its somewhat original appearance, provides stability. And then really importantly, it is monitored for 20 years post closure, and that is an obligation from our perspective. Financial assurances are placed with the state also to ensure that that monitoring happens over time. So, as I mentioned, that closure is really important. Obviously, we want to bring benefit to the region for as long as we can economically, we want to minimize our environmental footprint, and as and when the time comes, close the mine responsibly. Bert, Beyond what we've talked about already, I'm curious if there are any ways that Highland Copper is seeking to mitigate environmental impacts that perhaps we haven't already covered?

14:10 Yeah, yeah, sure. And I mean, as we've talked about, there are a whole host of ways that we're looking to minimize our environmental impact, but naturally there will be some. So we do look alongside with the state of Michigan at other ways that we can mitigate any impacts. There'll be some conservation easements on site where we're setting up some new wetland, but I think most particularly and of interest, we're setting up about a 717 acre wetland preservation area in perpetuity. So I think that'll be a wonderful asset for the state also. Great. Well, Barry, thank you for your time today. One last thing. If people watching this have had further questions or concerns about the project or about Highland Copper generally, what's the best way for them to get in touch with management? I think the best way is through our website. We have a query page where you can send messages that will be received and passed out appropriately internally here and we'll certainly attempt to get back to all individuals.

15:05 Awesome. Thanks so much. Thank you very much, Romain.