Cactus Mine Project – Overview

The Cactus Project is comprised of three deposits and one waste dump within a 4 km mine trend, including the past producing Sacaton Mine, the deposits now known as Cactus East and Cactus West. Immediately southwest of the Cactus deposits is the Parks/Salyer deposit, 1.3 mi (2 km) SW along the mine trend. Parks/Salyer demonstrates the same geological characteristics as Cactus. 

Project Highlights

  • Private land package and 100% ownership in Tier 1 jurisdiction 
  • Brownfield, scalable development project, envisaging a simple heap-leach and SXEW operation 
  • Permitting framework is simple and streamlined with the state
  • Project of size in Arizona
  • Step up PFS expected in Q1 2024

The Company completed a PEA in Q3/2021, ascertaining initial project economics of all leachable ores including the Stockpile Project, Cactus West, and Cactus East. The PEA outlined a 28kpta operation extending over 18 years and peaking at 45ktpa. The Company is currently advancing the Cactus Project with a step up PFS targeting 45kpta, an uplift resulting from Parks/Salyer’s integration, which should also offer significant economies of scale from the two deposits. Subject to a positive outcome from the PFS, the Company plans to subsequently complete a DFS in late 2024.

Within the pending Pre-Feasibility Study targeting a 45ktpa heap leach and SX/EW operation expected in Q1 2024, the Company’s global mineral resource (as of Aug 31, 23) is as follows:

Material Type

Tons (kt)

CuT %

TSol %

Contained Cu (k lbs)

Total Resources
MEASURED
Total Leachable 9,100   0.230 41,900
Total Primary 1,300 0.315   8,000
Total Measured 10,400 0.241 49,800
INDICATED
Total Leachable 348,500   0.629 4,387,200
Total Primary 86,800 0.425   737,000
Total Indicated 435,300 0.589 5,124,200
M&I
Total Leachable 357,600   0.619 4,429,000
Total Primary 88,000 0.423   745,000
Total M&I 445,700 0.580 5,174,000
INFERRED
Total Leachable 107,700   0.607 1,307,900
Total Primary 126,200 0.357   900,000
Total Inferred 233,800 0.472 2,207,900

(see notes here)

As of June 30, 2023, the Company has completed the Cactus PFS infill to indicated drilling program. The PFS infill drilling program tightened the drill spacing to a 250 ft (75 m) spacing, with the intent of upgrading the Inferred mineral resources to an Indicated category within the Parks/Salyer and integrated PFS mine plan area. As a result of tighter drill spacing, data shows an improved resolution of lithological, structural, and mineral zonation controls. Additionally, drilling to support further metallurgical and geotechnical test work was undertaken.

Drilling improved the definition of various host lithologies that potentially affect acid consumption in the heap leaching process. The majority of mineralization is hosted in granite which to date has indicated low acid consumption characteristics within the oxides and acid generating characteristics within the enriched material (secondary sulphides), with a minority of mineralization in monzonite porphyry, which has higher acid consumption characteristics. Infill drilling was performed with the expectation of no significant changes to the global interpretations which support the previously reported resource model. 

Parks/Salyer
The Parks/Salyer Project is an exploration stage asset with a Mineral Resource Estimate (“MRE”) as noted below. In total, 31 drill holes over 66,507 ft (20,271 m) were used to define the P/S target for its maiden inferred MRE. The Company released its maiden inferred MRE on the project on September 28, 2022 consisting of 143.6 million tons at 1.015% Cu containing 2.92 billion pounds Cu. 

Parks/Salyer Mineral Resource Estimate (inclusive in above)

 

Tons

(kt)

CuT

(%)

Cu TSol

(%)

Contained

Cu (k lbs)

INDICATED        
Oxide 10,000   0.921 183,700
Enriched 120,200   1.037 2,493,000
Total Leachable 130,200   1.028 2,676,600
Primary 13,800 0.833   229,400
Total Indicated 143,900 1.009 2,906,100
INFERRED        
Oxide 8,700   0.925 161,700
Enriched 35,700   0.996 711,500
Total Leachable 44,500   0.982 873,200
Primary 3,900 0.797   62,900
Total Inferred 48,400 0.967 936,100

Management estimates that the high-grade nature of Parks/Salyer’s mineral resources offer significant potential to increase the scale within an integrated operation at conservative copper price estimates. The Company will continue advancing work study programs, specifically, engineering, metallurgical and geotechnical test work, hydrology, permitting, infill drilling and associated projects to advance the combined Cactus and P/S Project through the technical study phases.

The MRE was prepared by Stantec in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definition Standards and National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). Due to the proximity of Parks/Salyer to the Cactus Project, and associated future shared infrastructure, the Parks/Salyer MRE is stated as an inferred mineral resource in a new technical report in conjunction with the Cactus MRE effective August 31, 2021. The Cactus Project economics are as of the date as contained in the technical report titled "Arizona Sonoran Copper Company, Inc. Cactus Project, Arizona, USA Preliminary Economic Assessment" with an effective date of August 31, 2021 (the "2021 Technical Report"). The new technical report covering the Cactus Project and Parks/Salyer, was filed on November 10, 2022.

Primary Sulphide Leaching Potential
Recent preliminary metallurgical work with Rio Tinto’s NutonTM technologies has demonstrated through column leach testing, encouraging copper extraction rates with a targeted rate of 80% over the life of mine. Nuton will continue to test the application of its copper heap-leach related technologies to the primary sulphide component of the Cactus Mine and Parks/Salyer Projects through column leaching and scoping out capital and operating costs and design parameters within a heap leach and SX/EW flowsheet. If successful, the NutonTM sulphide leaching technology unlocks the following: 

  • Current Cactus Project primary sulphide mineral resource:
    • Measured Mineral Resource of 1.3M st @ 0.315% CuT ("total copper")
    • Indicated Mineral Resource of 73.0M st @ 0.35% CuT 
    • Inferred Mineral Resource of 122.3M st @ 0.34% CuT
  • Potential to extend the current Cactus West primary sulphide resource to the basement fault
  • Parks/Salyer primary sulphide mineral resource: 
    • Indicated Mineral Resource of 13.8M st @ 0.83% CuT 
    • Inferred Mineral Resource of 3.9M st @ 0.80% CuT

Mineral Resource Estimate

The Cactus Project resource updates are based upon updated drilling data and interpretations. The Cactus Mineral Resource model was developed in Vulcan. The database used to generate the Mineral Resources comprised 305 drill holes, 309,418.5 ft (94,310.8 m) for Cactus; 77 drillholes, 172,166.3 ft (52,476.3 m) for Parks/Salyer; 518 drillholes, 44,728.2 ft (13,633.2 m) for the stockpile. Drilling data is supported by industry standard quality assurance and quality control programs, with quality control sampling comprising preparation blanks, certified reference materials, and field and pulp duplicate analyses. Review of the QA/QC data indicates it is of a quality suitable for use in resource estimation.

The mineralized domains are consistent with domaining for porphyry copper systems. Mineralized domains represent combinations of rock type and copper mineral zonation associated with secondary copper enrichment weathering processes. The main mineral zones being leached, oxide, enriched, and primary. Mineral zones are determined by logging and the assay attributes of sequential copper analyses.

Physical density measurements have been undertaken across the deposits, both historically by ASARCO, and more recently by ASCU. Density measurements on in ground deposits use the wet / dry weight method and comprise 3,372 samples for Cactus and 147 samples for Parks/Salyer. Due to the unconsolidated nature of the stockpile material, physical bulk density measurements were attained by weight and volume calculations. Four test holes were excavated from which the material removed was dried and weight and the volume of each hole calculated.

Copper grades were estimated using Ordinary Kriging, using 10 ft (3 m) composites and top cutting determined by log normal probability plots on a per domain basis. Grade estimates were validated using visual and statistical methods including statistical distribution comparisons, visual comparison against the drilling data on sections, swath plots comparing block grades trends against de-clustered composites, and by smoothing checks using change of support.
 

Cactus Mine Project NI 43-101 Technical Report and Pre-feasibility Study Arizona, United States of America

The finalized Cactus PFS details a 55ktpa heap leach and solvent extraction and electrowinning operation over 21 years for the onsite recovery of copper to LME Grade A cathode standards. The PFS integrates ore from four sources; Parks/Salyer, Cactus West, Cactus East, and the Stockpile Project. 

Pre-Feasibility Study

PEA Summary

The PEA contemplates a simple heap leach and SXEW operation over an 18 year mine life, producing an average of 28 ktpa (~56 mlbs annually) LME Grade A copper cathode. 

The Oxide and Enriched leach pads will be fed by three material sources; the Stockpile Project, Cactus West pit layback, and the Cactus East underground. Years 1-4 will focus on initial Stockpile mining, concurrent with Cactus West open pit stripping and early production before steady state in year 5. Once the pit reaches a suitable depth, development and early production of Cactus East via a Transverse Longhole Stoping (TLS) method commences in year 6 and achieves steady state production by year 8. 

The total inventory of 1.27 billion pounds of copper within a total leachable resource of 2 billion pounds provides significant upside opportunities for in-pit expansion. The Project benefits from the ability to de-risk and grow the mineral resource base in the shorter term through in-fill drilling to achieve robust conversion rates. 

Cactus PEA Summary:

Assumption / Outcome

Value / Results(1)

Copper Price

US$3.35/lb

Total Mineralized Material Moved

179 Mt

Annual Average Processing Rate Over LOM 

10 Mtpa

Average Recovery Rates Over LOM 

Stockpile Project: CuAS: 90%, CuCN: 40%
OP / UG: CuAS: 90%, CuCN: 72%

Average Production Over LOM

28 kpta(2)/ 56Mlbs

Operating Costs (Per Ton Processed)

US$9.06/t

Average Cash Cost (C1) 

US$1.55/lb

Average All-In Sustaining Cost (C1 Cost + Sustaining CAPEX)

US$1.88/lb

Initial Construction CAPEX

US$124M

Sustaining CAPEX Over LOM (Including OP and UG, SXEW and Leach Pad Expansion)

US$340M

LOM Free Cash Flow (FCF) (Post Tax Undiscounted) 

US$960M

Post Tax NPV8%

US$312M

Post Tax IRR

33%

Notes: Integrated Cactus PEA (1) The Integrated Cactus PEA is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic assessment will be realized (2) Tonnage is denoted in short tons.

NPV and IRR Sensitivities(1)(2)

Sources/Notes: (1) Integrated Cactus PEA, Table 1-6, 1-7 (2) ) The Integrated Cactus PEA is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to the them that would enable them to be categorised as mineral reserves and there is no certainty that the preliminary economic assessment will be realised 

Infrastructure

The Project exists in relatively flat to slightly undulating ranching and mining locale. The Project is surrounded by other, current and past-producing, copper mines and processing facilities. The Greater Phoenix area is a major population center (approximately 4.5 million persons) with a major airport and transportation hub and well-developed infrastructure and services that support the mining industry. The cities of Casa Grande and Maricopa are nearby and, combined with Phoenix, can supply sufficient skilled labor for the Project.

Onsite infrastructure from the prior ASARCO operation includes historic data and maps, core shack, vent raise, underground development towards Cactus East deposit, production shaft to 1,800 ft (549 m) level. Additionally, ASCU benefits from open pit access to near surface remnant mineralized material, permitted water wells and a water pond, access roads, rail access to the Union Pacific Railway, power substation and administration buildings. The TruStone building, a former onsite factory, has been refurbished and is now the site of ASCU's metallurgical testing, a core storage facility and a sample preparation lab. The former core shack has been modernized with power and A/C.

Electric power is available from Arizona Public Service’s (APS) 115 kV transmission line which passes on the south side of the site and connects to an existing substation at the mine site and is owned by APS.

Ecologically, the site is within the Sonoran Desert Section of the Basin and Range Lowlands Province of Arizona in the lower Santa Cruz Basin. The area is characterized by broad, level valley plains, gently sloping pediments, and widely separated mountain ranges. Elevations at the mine vary from approximately 1,360 ft amsl to 1,460 ft amsl. Soils have very low levels of available plant nutrients and vegetation typical of the Sonoran Desert and includes bunchgrasses, yucca, mesquite, and cacti.

Permitting and Social License

ASCU is dedicated to operating a responsible and carbon conscious mine site. It is the Company’s policy to ensure the community engagement and partnership outreach is developed and maintained with the support of the local communities.

As the Cactus Project is on private land, the permitting process is streamlined with no federal nexus, see below for required permits. The Company has confirmed with a Jurisdictional Delineation survey that no Federal Waters of the United States flow through the Cactus Properties. Permit approvals therefore, are limited to state and county regulatory bodies which have pre-determined approval processes and timelines. The Company aims to meet applicable requirements under the Clean Water Act (CWA), Clean Air Act (CAA) and all other applicable federal rules and regulations. 

The Company has advanced the Cactus Project to the shovel-ready stage, receiving all major permits required as per the 2021 PEA. ASCU has received both the approval to draw water from the ADWR, and the Aquifer Protection Permit related to the Cactus PEA Mine Plan, the Dust Permit and Storm Water Pollution Prevention Plan, Mined Land Reclamation Plan and its Industrial Air Permit. Based on the Prefeasibility Study, certain amendments will be required as outlined below. The Company continues to make good progress with it’s permits and is supported by regulators and the community in its development plans.

The Cactus Project will require the following major permits and certifications:
1.    Arizona Department of Water Resources (“ADWR”)’s Withdrawal of Ground Water for Mineral Extraction & Mineral Processing Permit: This permit is required for ground water withdrawal for mining operations. This permit was obtained in April 2021 and extends for 50 years, which is beyond the life of the project.
2.    The ADEQ’s Aquifer Protection Permit (“APP”): This permit is required for owners or operators of facilities that could discharge a pollutant directly to an aquifer or to a land surface or vadose zone where there is a reasonable probability that the pollutant will reach an aquifer. The permit is valid for the life of the facility. This permit was obtained by ASCU for the Stockpile Project in July 2021 and becomes effective upon demonstration of financial capability submitted along with an amendment application in respect of the full project. Following development of the PEA mine plan in 2021, an amendment for full project coverage including expanded leach facilities, waste dumps and both open pit and underground infrastructure was obtained on March 28, 2022. Upon completion of the PFS in Q1/2024, the Company will require a second amendment based on the re-scoped operations.
3.    Pinal County’s Air Quality Dust Control Permit: This permit is required for operations that have the potential to generate fugitive dust. This permit was obtained by the Company in January 2020 and is renewed yearly based on operational need.
4.    ADEQ’s Arizona Pollutant Discharge Elimination System (“AZPDES”) Permits (construction and Multi‐Sector General Permit): This permit is for stormwater discharges that enter Arizona surface waters or a Municipal Separate Storm Sewer System. This permit was obtained for both the mine facility and the nearby TruStone facility which is situated on Company property. 
5.    Pinal County’s Industrial Air Quality Control Permit: This permit is required for operations that have the potential to generate particulate matter PM10 and/or PM2.5 that can affect air quality. This permit is renewed yearly and was received in May 2023, based on the Cactus PEA mine plan. Pending the PFS mine plan, an amendment will be required. 
6.    Arizona State Mine Inspector, Mined Lands Reclamation Permit: This permit relates to all metalliferous mining units and exploration operations with surface disturbances on private lands greater than five acres and has been received by the Company. Based on the pending PFS mine plan, an amendment may be required. The Company received this permit in March 2023. 

In addition, the United State Army Corp. Of Engineers (“USACE”) Jurisdictional Determination 404 was received in February 2022. This is a determination as to whether Waters of the U.S. (“WOTUS”) are onsite or if the water on site contributes to a WOTUS waterway. ASCU received a determination that the Cactus project does not impact WOTUS, and therefore no Federal Permitting will be required.

Metallurgy

A comprehensive metallurgical testing program for the Cactus Project leachable material (oxides and enriched) has been underway since early 2020 consisting of sequential assaying, bottle roll testing and column leach testing for the mineral resources. The two year column testing program is ongoing at the Cactus Project collecting critical leaching information for both oxidized and secondary enriched ores with different rock types, ore grades, and mineralogy from both the Cactus and Parks/Salyer deposits. Results are demonstrating typical values reported in industry.

Testing programs for the PFS and DFS level studies is being completed in the TruStone Facility within 12 columns at a time, each  measuring 20 ft (6 m) in height and composed of material from Parks/Salyer, Cactus deposits and the Stockpile, separated into different rock types, copper grades and mineralogy. Based on QP requirements, the columns may be increased to 30 ft (10 m) in height within the same facility.

Average copper recovery and acid consumption estimates are presented in the table below, based on the May 2023 update.

TABLE 1: Updated Metallurgical Recoveries and Net Acid Consumption

Met Program

(updated May 2023)

Leach Cycle

Recoveries

Gross Acid Consumption (lb/ton)

Net Acid Consumption

(lb/ton)

Stockpile

(Oxide – 05/23)

After 60 days

90%

22

16

Cactus

(Oxide)

90 day leach cycle

92%

22

16

Cactus

(Enriched)

200-220 day leach cycle

73%

21

0

Parks/Salyer (enriched – 05/23)

Preliminary Results at 160 days

80%

22

0

A copper heap leach column testing program to delineate the metallurgical performance characteristics of the existing stockpile and remaining unmined copper resources at the Cactus mine has been ongoing since 2020. Results have been progressively reported in PEA, commensurate with Canadian National Instrument NI 43-101 reporting requirements. Since moving the 12 column metallurgical program to the TruStone Facility onsite, the program is QP'd by Jim Sorenson and managed by ASCU Projects Director, Dan Johnson and Cheif Metallurgist, Steve Dixon. The updated PEA has an effective date of August 31, 2022 and is authored by Stantec Consulting Services (“Stantec”).

Copper recovery is estimated for acid soluble copper (“CuAS”) and cyanide soluble copper (“CuCN”) content as determined by a standard sequential copper assaying methodology developed at the Skyline Laboratory facility in Tucson, Arizona. The CuCN assay fraction is classified as enriched secondary copper sulfide mineralization (e.g. chalcocite, covellite, digenite). The combined CuAS + CuCN content of the materials represents potentially soluble copper that is recoverable using heap leaching techniques (“CuSol”). Projected copper recovery estimates previously reported have been derived based on this leachable copper content and continues to be validated in the ongoing Prefeasibility Study (“PFS”) testing program.

Primary copper in mineralization that is not readily acid or cyanide copper soluble per the assay methods (e.g. native copper, chalcopyrite, bornite) reports in the total copper assay (“CuT”). Copper assayed that does not report in the soluble copper assay methodologies is not expected to provide meaningful recoverable copper contributions with the commercial methodologies anticipated.

The Company is assessing the leachability of its primary sulphide materials with third party companies. In June 2022, an exclusivity agreement with Rio Tinto was triggered by by successfully modelling the Cactus and Parks/Salyer samples and achieving the previously contemplated preliminary indicative metallurgical recoveries of at least 72% (copper recovery to cathode), under the Investor Rights Agreement. Nuton will continue to test the application of its copper heap-leach related technology to the primary sulphide component of the Cactus Mine and Parks/Salyer Projects through column leaching and scoping out capital and operating costs and design parameters.

Geology and Deposit Type

Ecologically the site is within the Sonoran Desert Section of the Basin and Range Lowlands Province of Arizona in the lower Santa Cruz Basin.  Major host rocks are Precambrian Oracle Granite and Laramide monzonite porphyry and quartz monzonite porphyry. The porphyries intruded the older rocks to form mixed breccias; monolithic breccias and occur as large masses, poorly defined dike-like masses; and thin well-defined but discontinuous dikes.  The deposit is structurally complex with intense fracturing, faulting, and both pre-mineral and post-mineral brecciation. It is bounded on the east and west sides by normal faults.

Chalcocite and covellite are the only supergene sulfides recognized. The chalcocite blanket in the mineralized zone is irregular in thickness, grade, and continuity. The thickness of leached capping varies from less than 100 ft (30 m) to over 650 ft (198 m), with the thicker intercepts on the north side. Substantial quantities of oxidized copper minerals are found erratically distributed through the capping. Chrysocolla, brochantite, and malachite are the most common oxidized copper minerals. In upper portions of the capping, chrysocolla predominates, while brochantite and malachite predominate in the lower portions. 

The dominant hypogene alteration assemblages in the deposit are phyllic and potassic. The major hypogene sulfide minerals in the deposit are pyrite, chalcopyrite, and molybdenite. Hypogene sulfides occur as disseminated grains, veins, and vug fillings. 

The Cactus deposit is a portion of a large porphyry copper system that has been dismembered and displaced by Tertiary extensional faulting. Porphyry copper deposits form in areas of shallow magmatism within subduction-related tectonic environments (Berger et al., 2008). Cactus has typical characteristics of a porphyry copper deposit which Berger et al. (2008) define as follows.

  • One wherein copper-bearing sulfides are localized in a network of fracture-controlled stockwork veinlets and as disseminated grains in the adjacent altered rock matrix.
  • Alteration and mineralization at 1 km to 4 km depth are genetically related to magma reservoirs emplaced into the shallow crust (6 km to over 8 km), predominantly intermediate to silicic in composition, in magmatic arcs above subduction zones.
  • Intrusive rock complexes that are emplaced immediately before porphyry deposit formation and that host the deposits are predominantly in the form of upright-vertical cylindrical stocks and/or complexes of dikes.
  • Zones of phyllic-argillic and marginal propylitic alteration overlap or surround a potassic alteration assemblage.
  • Copper may also be introduced during overprinting phyllic-argillic alteration events.

History of the Sacaton Mine

The American Smelting and Refining Company (ASARCO) geologists first discovered the Sacaton mineral deposit in the early 1960’s while examining an outcrop of leached capping composed of granite cut by several thin monzonite porphyry dikes. The nature of this original find indicated the likely presence of porphyry copper-type mineralization. Following this lead, ASARCO initiated a drilling program which defined copper mineralization zones, targeting the sulfide ores, despite significant oxide zones at shallow depths. The west deposit contained an ore body which was ultimately accessed through the open pit. The deeper east deposit was the target of potential mining by underground methods, and today contributes significantly to the project economics.

ASARCO operated the mine from 1974-1984 with approximately 400 direct mine jobs created locally during the peak of operations, and numerous indirect positions also created to service the mine. During the course of operations, ASARCO processed 32 million tons of `, producing 400 million pounds of copper in addition to silver and gold from the West ore body through an onsite flotation mill. In 1982, construction began on two production shafts to 1,800 ft (549 m) depth and a headframe to the southwest of the pit to access the higher-grade East zone via underground mining methods; however, development was suspended due to market conditions and in 1984 and the mine shut down. 

Whilst operating, the Sacaton mine site included crushing facilities, coarse ore stockpiles, a flotation mill, maintenance and administration buildings, core shack, a 390-acre tailings storage facility (TSF), a return water impoundment, an approximately 80-acre Alluvium Soil Storage Area, and a 500-acre stockpile of oxides and enriched material, at the time considered waste. All concentrates were shipped via rail to ASARCO’s smelter in Texas for processing into cathodes.

It is important to understand that while 16% of the worlds copper was produced in an SXEW plant in 2019 (see figure below), in the 1970’s, the process was still being refined and tested. ASARCO therefore planned the extraction of the Sacaton sulfide ore operations with a flotation mill, leaving behind a sizeable waste rock dump consisting of oxides and low-grade enriched ore and a significant in ground ore body. Today, ASCU can benefit from the refined SXEW process and will also be exploring the potential for primary ore leaching.

Following the 2020 ASARCO-funded mine site reclamation, the core shack, rail spur, power lines, waste rock and tailings facility remain in good condition. The vent raise and shaft are still in place; however, have had minimal assessment since the initial shut down of Cactus. 

No un-remediated liabilities were transferred to ASCU during the purchase. The reclamation provided the company with a baseline environmental study approved by the Arizona Department of Environmental Quality (ADEQ).