Cactus Mine Project – Overview

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.

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.

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:

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 

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, 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.

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 program is ongoing, with updated results in February 2022, providing additional clarity and confidence towards future copper oxide and enriched leaching opportunities. The results further de-risk the technical assumptions used in the Cactus PEA. Metallurgical programs have been put into place 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.

Average copper recovery and acid consumption estimates are presented in the table below, showing the PEA results in grey and the updated results in green.

TABLE 1: Updated Metallurgical Recoveries and Net Acid Consumption

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. The PEA has an effective date of August 31, 2021 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.

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.

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).