Cactus Mine Project – Overview

The Cactus Project is a brownfields project located 40  miles (64 km) southeast of the Phoenix metropolitan area, on private land in Pinal County, Arizona. The Cactus Project sits at the intersection of Arizona's three major copper porphyry belts, which are host to large scale regional copper mines and processing facilities within the state. The Project benefits significant infrastructure including onsite power and water from prior operations and ready access to additional infrastructure and skilled labour and a streamlined permitting process due to location on private land. The Company, including its executives, employees and contractors, ensure each decision is made based on Our Core Values and Good Governance practices in support of the project, the community and the environment.

Arizona is the USA's leading copper-producing state which accounted for 68% of domestic output of copper in 2019 (source). It is also an established and attractive mining jurisdiction, which ranked No. 2 for the year 2020 in Fraser Institute's Investment Attractiveness Index.

The PEA contemplates a simple processing flowsheet comprising of a heap-leach operation followed by electrowinning through a SXEW process. Ore will originate from three sources: the existing Stockpile Project, an open pit operation and an underground operation. Low initial construction capital of US$124million is estimated for the project with an additional US$340 million required for sustaining capital. Based on the layered development approach, future capital expenditures are expected to be funded from project cash flows.

Project Highlights

  • Private land package and 100% ownership in Tier 1 jurisdiction 
  • Brownfield, scalable development project, with simple heap-leach and SXEW mine planned
  • Low risk development with State-and-County led permitting framework 
  • Indicated Mineral Resource: 151.8 million tons at 0.531% total copper 
    • Containing 1.61 billion pounds of copper
  • Inferred Mineral Resource: 228.9 million tons at 0.384% total copper 
    • Containing 1.76 billion pounds of copper
  • Stockpile Inferred Mineral Resource: 77.4 million tons at 0.169% total copper 
    • Containing 223.5 million pounds of copper
  • Robust Project economics 
    • 18 year mine life with aggregate of 1 billion pounds of copper, or ~56Mlbs (28 ktpa) produced per year 
    • NPV8 of $312 M (Post-Tax) and IRR of 33% (@ $3.35/lb Cu)
    • NPV8 of $525 M (Post-Tax) and IRR of 46% (@ $4.05/lb Cu)
    • Low capital intensity of US$2.20 per pound of copper produced
  • Significant scalability and growth opportunity both in-pit and near pit  

NI 43-101 Cactus Project, Arizona, USA – Preliminary Economic Assessment

Preliminary Economic Assessment

Mineral Resource Estimate

The mineral resource estimate was calculated using a total of approximately 230,000 ft (70,000 m) of drilling from 175 drill holes completed by ASCU and ASARCO, the former operator.

To qualify the historic data, a rigorous QA/QC program was completed, which resulted in a correlation coefficient of 0.991:1.0, giving comfort to the QP’s.

The total leachable material in the table below was used to compile the Preliminary Economic Assessment, effective August 31, 2021. The Primary material was removed entirely, and processing techniques will be considered for future studies.

Mineral Resource Category and Type(2)

Tons
(kt)

CuT
(%)

Tsol
(%)

Tsol_lb
(klbs)

Indicated Resource

Oxide

31,400

0.559

349,700

Enriched

42,500

0.844

715,500

Total Leachable

73,900

0.723

1,065,200

Primary

77,900

0.350

545,500

Cactus –
Total Indicated Resource

151,800

0.531

1,610,700

Inferred Resource

Oxide

62,500

0.346

430,500

Enriched

55,100

0.498

548,800

Total Leachable

117,600

0.417

979,300

Primary

111,300

0.349

776,000

Cactus –
Total Inferred Resource

228,900

0.384

1,755,300

Stockpile –
Total Inferred Resource

77,400

0.169

0.144

223,500

Notes:

  1. Whittle resources are inside the pit generated by Whittle and below present topography.
  2. CuT means total copper and TSol means total soluble copper as the addition of sequential acid soluble and sequential cyanide soluble copper assays. Tons are reported as short tons.
  3. Technical and economic parameters defining resource pit shell: copper price US$3.15/lb, mining cost US$2.45/t; G&A US$0.55/t, and 44°-46° pit slope angle.
  4. Technical and economic parameters defining underground resource outside pit shell: copper price US$3.15/lb, mining cost US$28.93/t, and G&A representing 7% of direct costs.
  5. Technical and economic parameters defining processing: Heap leach (HL) processing cost including selling US$1.77/t; HL recovery 83% of CuT; mill processing cost US$8.50/t.
  6. Variable cutoff grades were reported depending on material type, potential mining method, and potential processing method. Oxide material within resource pit shell = 0.096% TSol; enriched material within resource pit shell = 0.098% TSol; primary material within resource pit shell = 0.205% CuT; oxide material outside resource pit shell = 0.56% TSol; enriched material outside resource pit shell = 0.70% TSol; primary material outside resource pit shell = 0.70% CuT.
  7. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, sociopolitical, marketing, or other relevant factors.
  8. The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there is insufficient exploration to define these inferred mineral resources as an indicated or measured mineral resource; it is uncertain if further exploration will result in upgrading them to an indicated or measured classification.
  9. Total may not add up due to rounding.

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 ore body, production shaft to 1,800 ft (549 m) level. Additionally, ASCU benefits from open pit access to near surface remnant ore, water wells and a water pond, access roads, rail spur, power substation, administration buildings and the TruStone building which is planned for future use in operations. The prior core shack has been modernized with power and AC.

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, there is no federal nexus and therefore no federal approvals required for development, construction or production.  Permit approvals 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 already received several major permits to proceed with the proposed work program and development process, including the approval to draw water for the duration of the mine from the ADWR, and the Aquifer Protection Permit related to the Stockpile Project. An amendment is expected to be received in 2022 providing full project coverage. Additionally, the Company has received the Dust Permit and Storm Water Pollution Prevention Plan. The Company continues to make good progress with it’s permits and is supported by regulators and the community in its development plans.

Metallurgy

A metallurgical testing program for the Cactus Project leachable ores (oxides and enriched) has been underway since early 2020. The program is ongoing, with preliminary testing completed in some areas. Bottle roll and column testing data have been used along with typical recovery expectations for similar types of mineralization and run of mine leaching operations and sequential assaying methodologies for mineralization variability. Recoveries employed are within typical values reported in industry.

Results obtained to June 2021 have been used in this PEA as the basis for the metallurgical performance estimates. Average copper recovery and acid consumption estimates are presented in the table below.

Resource 
Component
Source 
Information

Net Copper 
Recovery

(%- CuAs)

Net Copper 
Recovery

(% - CuCN)

Gross 
Acid Consumption

(lb/ton)

Net Acid 
Consumption

(lb/ton)

Stockpile
Oxide Preliminary
Column Tests
90% 40% 22 18
Open Pit and Underground
Oxide Preliminary
Column Tests
90%   72% 22 18
Enriched Preliminary
Column Tests
90% 72% 22 1

A 5% net recovery reduction adjustment has been included in the recovery estimates over the column extraction results to account for scale up and operational performance. Oxide materials demonstrate a relatively rapid copper extraction potential, with copper extractions within two months achieved in column tests completed to date. A 3-month leach cycle has been considered for these materials. A one-year distribution of the recovery values used has been employed to account for heap inefficiencies, stacking planning and solution management activities. This will be refined with kinetic testing of the Stockpile Project and Cactus Project open pit materials.

Sulfide leaching completed to date indicates longer leaching cycles will be required. The materials will also be placed in a separate leach pad area that can be managed for bioleaching kinetics and the longer cycle times required. A two-year distribution of the recovery values used has been employed to account for heap inefficiencies, stacking planning and solution management activities. This will be refined with kinetic testing of the Cactus Project open pit materials.

The initial sulfide columns are presently net acid producing due to the sulfide content and higher copper grades. This may be an advantageous feature once sulfide material is mined. For resource evaluations an experienced based long-term net acid consumption of approximately 1 pound per ton is considered as a conservative value for use in current economic evaluations until the column testing programs are completed.

Emerging technologies for improved leaching of sulfide copper mineralized material are being developed (with some technologies already in operation), in particular a proprietary catalytic bio-heap leaching technology that may provide an alternative approach to improving the leach performance of primary sulfide content in the leach materials considered in the PEA and the primary sulfides presently not considered economically suitable for commercial heap leaching operation. This option is being further analyzed during the upcoming work programs and represents major project upside.
 

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 ore, 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).