Cactus Mine Project – Overview

The 100%-owned Cactus Mine Project ("Cactus Project" or “Project”) is a porphyry copper project located on private land, near the city of Casa Grande, Arizona, USA. The city of Phoenix and Sky Harbor International Airport are situated approximately 55 miles to the north and Tucson is approximately 75 miles to the southeast. The property location provides easy access to infrastructure and amenities such as power, water, rail, roads and a skilled workforce. The Cactus Project itself covers approximately 4,000 acres (with the remainder of the land package covering additional exploration properties).  

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, at Parks/Salyer and with the potential to leach the primary sulphides using new sulphide leaching technologies.

The Cactus Project, previously known as the Sacaton Mine, was owned and operated by ASARCO from 1972-1984.The mine was shut down due to economic conditions. The property has since undergone a $20 million reclamation program under the guidance of the ASARCO Trust and the Arizona Department of Environmental Quality. The program reclaimed the majority of the property, including the tailings storage facility and the former milling facilities.  

The core shack, return water impoundment and water wells, rail spur, power lines and roads are in good condition and have undergone some renovation since acquisition. The vent raise and shaft are still in place but have not been accessed since the initial shut down of Sacaton Mine. An environmental baseline study has been completed for the Cactus Project and work is steadily progressing through project permitting. Being situated on private land streamlines the permitting process to the State and County levels and has successfully obtained several permits required for the Cactus redevelopment.

Since completion of the acquisition from the ASARCO Trust in July 2020, significant technical studies have been conducted to assess the economic viability of the Project and support an overall approach of a phased development plan. These studies include:

  1. The Stockpile Project:  
    1. Stockpile assessment, including associated mineral resource estimation and metallurgical work for issuance of a Preliminary Economic Assessment  
    2. An updated Mineral Resource Estimate based on further infill drilling to support the Integrated Preliminary Economic Assessment combining the Stockpile Project and Cactus Project. 
  2. The Cactus Project
    1. Exploration drill programs of the Cactus West and East deposits including associated mineral resource estimation and metallurgical work for the issuance of an Integrated Preliminary Economic Assessment combining the Stockpile Project and Cactus Project. 
  3. The Parks/Salyer Project
    1. Ongoing exploration drilling of the Parks/Salyer project to support initial resource estimation work. Recent declaration of an exploration target was mentioned above. 

As of June 30, 2021, total of $35.9 million has been incurred in capitalized exploration expenditures in respect of the Project. This includes the technical work required for the integrated Preliminary Economic Assessment (“PEA”) which was completed in Q3, 2021, that ascertains initial project economics of all leachable ores including the Stockpile Project, Cactus West, and Cactus East. Further details of the PEA are provided below. The Company is currently advancing the Cactus Project to a Pre-Feasibility Study (“PFS”) and subsequently to a Definitive Feasibility Study (“DFS”) stage (subject to a positive outcome from the PFS).

The PEA redevelopment plan is underpinned by a multi-billion-pound mineral resource base. The report contemplates simple, heap leach of the oxides and enriched material and SXEW processing, resulting in robust economics. Cactus is expected to produce over 1 billion pounds of LME Grade A copper cathode, over an 18-year mine life by taking a layered development approach to operations. Ore will initially be generated from the existing Stockpile Project, followed by an open pit operation and an underground operation. Low initial construction capital of US$124 million is estimated for the project with an additional US$340 million required for sustaining capital. Future capital expenditures are expected to be funded from project cash flows.

Recent preliminary metallurgical work with Rio Tinto’s NutonTM Technology has demonstrated early signs of successful computational flow dynamic modelling at the Cactus and Parks/Salyer mineralized samples achieving the previously contemplated indicative metallurgical recoveries of at least 72% (copper recovery to cathode)/ Under the Investor Rights Agreement with Rio Tinto. 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. If successful, the NutonTM sulphide leaching technology unlocks the following: 

  • Current Cactus Project primary sulphide mineral resource:
    • Indicated Mineral Resource of 77.9M st @ 0.35% CuT
    • Inferred Mineral Resource of 111.2M st @ 0.35% CuT
  • Opportunity to extend the current Cactus West primary sulphide resource towards the basement fault
  • Parks/Salyer primary sulphide potential within the Exploration Target (FEB 10, 2022) has the potential to add between 8-35Mst @ 0.85-1.05% TCu

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.

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

The finalized Cactus PEA ascertains initial project economics of all leachable ores. The PEA includes Cactus East, Cactus West, and the Stockpile Project, with Cactus East potentially being considered for underground mining methods, Cactus West as an open pit, and the Stockpile Project as a surface rehandle deposit. All mineralized material movements will report to surface leach pads, with process solutions subsequently flowing to a solvent extraction electrowinning (“SX/EW”) circuit for the recovery of copper to LME Grade A cathode standards.

Preliminary Economic Assessment

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. The company has confirmed with a Jurisdictional Delineation survey that no Federal Waters of the United States flow through the Cactus Properties. Additionally, ASCU has received both the approval to draw water from the ADWR, and the Aquifer Protection Permit related to the Cactus PEA Mine Plan. 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 comprehensive metallurgical testing program for the Cactus Project leachable ores (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

 

Preliminary Column Tests (PEA)

Updated Column Tests

Resource Component

Net Copper Recovery  (% CuAS)

Net Copper Recovery  (% CuCN)

Gross Acid Consumption (lb/ton)

Net Acid Consumption (lb/ton)

Net Copper Recovery  (% CuAS)

Net Copper Recovery  (% CuCN)

Gross Acid Consumption (lb/ton)

Net Acid Consumption (lb/ton)

Stockpile

Oxide

90%

40%

22

18

90%

40%

22

16

(-)

Open Pit & Underground

Oxide

90%

72%

22

18

92%

(+)

73%

(+)

22

16

(-)

Enriched

90%

72%

22

 

1

92%

(+)

73%

(+)

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. 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 ore 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 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).