Pre-tax NPV $US798.6M and IRR of 48.4%; Post-tax NPV $US644.7M and IRR of 43.4% Copper Fox Metals Inc. through its wholly owned subsidiary Desert Fox Copper Inc., is pleased to announce robust results from an external, independent Preliminary Economic Assessment prepared in accordance with National Instrument 43-101 for its 100% owned Van Dyke In-Situ Copper Recovery project located in Miami, Arizona. The PEA was ...

Pre-tax NPV $US798.6M and IRR of 48.4%; Post-tax NPV $US644.7M and IRR of 43.4%

Copper Fox Metals Inc. (TSXV: CUU) (OTC Pink: CPFXF) ('Copper Fox' or the 'Company'), through its wholly owned subsidiary Desert Fox Copper Inc., ("Desert Fox") is pleased to announce robust results from an external, independent Preliminary Economic Assessment ("PEA") prepared in accordance with National Instrument 43-101 ("NI 43-101") for its 100% owned Van Dyke In-Situ Copper Recovery ("ISCR") project located in Miami, Arizona. The PEA was prepared under the direction of Moose Mountain Technical Services with an effective date of December 30, 2020. All dollar amounts are expressed in US dollars, unless otherwise noted.

PEA Highlights: (Based on $US3.15/lb copper)

  • Base case pre-tax Net Present Value7.5% ("NPV") of $US798.6 million ("M"), Internal Rate of Return ("IRR") of 48.4%, and payback period of 2.0 years.
  • Base case post-tax NPV7.5% of $US644.7M, an IRR of 43.4%, and payback period of 2.1 years.
  • Life of mine ("LOM") copper production of 1.1 billion pounds ("lbs") with peak production of 85Mlbs annually in years 2-12 inclusive, declining thereafter.
  • Initial capital expenditure of $US290.5M, including a 30% contingency.
  • LOM direct operating cost of $US0.71/lb and sustaining costs of $US0.07/lb.
  • Cumulative net free cash flow of $US1.757 billion pre-tax and $US1.436 billion post-tax.
  • Mine life 17 years.
  • C1 cost per pound copper is $US0.98, AISC per pound copper is $US1.14.

* C1 and AISC are Non-GAAP and IFRS measures, see Note 1 in Life of Mine Comparison table

The results of the PEA are preliminary in nature. The PEA includes a combination of indicated and inferred mineral resources which are considered too speculative geologically to have the economic considerations applied that would enable them to be categorized as mineral reserves. There is no certainty that the PEA forecasts will be realized or that any of the resources will ever be upgraded to reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Mr. Elmer Stewart, President and CEO, said, "The significant increase in valuation over that obtained in the 2015 PEA is a function of the 2020 resource estimate, a better understanding of metallurgical and geological characteristics of the deposit and adopting a phased approach to project development. These results combined with the exploration potential suggests that, with positive results from additional drilling and engineering studies, Van Dyke has the potential to become a significant project in the mid-size copper development space. Achieving this milestone is a significant value add to Copper Fox, and is expected to complement the results of the PEA which is currently in progress at Schaft Creek, in determining the strategy to maximize shareholder value."

Summary of Base Case Economic Results:

Results of the 2020 PEA are summarized below, along with a comparison to the Company's PEA conducted with respect to the Van Dyke project in 2015 (see News Releases dated November 25, 2015 and December 24, 2015) (the "2015 PEA"):

Life of Mine Comparison between 2015 and 2020 PEAs



Base Case
Production and Cost Summary Units 2015 PEA 2020 PEA
Life of Mine (LOM) years 11 17
Copper Cathode Sold Million lbs. 456.9 1,101.0
Copper Price $US/lb 3.00 3.15
Gross Revenue M$US 1,370.0 3,468.3
Royalties M$US 31.5 82.5
Total Cash Costs M$US 550.2 1,075.8
Total Cash Costs ($/lb recovered copper) $US/lb copper 1.20 0.98
C1 Cash Costs ($/lb recovered copper)* $US/lb copper 1.08 0.86
Sustaining Costs ($/lb recovered copper) $US/lb copper 0.15 0.07
All In Sustaining Cost (AISC)** $US/lb copper 1.36 1.14
Initial Capital Costs (includes contingency) M$US 204.4 290.5
Taxes M$US 110.9 321.0
Cashflow Parameters and Outputs


Discount Rate % 8.0% 7.5%
Pre-tax Net Free Cash Flow M$US 453.1 1,757.3
Pre-tax NPV M$US 213.1 798.6
Pre-tax IRR % 35.5% 48.4%
Pre-tax Payback years 2.3 2.0
Post-tax Net Free Cash Flow M$US 342.2 1,436.3
Post-tax NPV M$US 149.5 644.7
Post-tax IRR % 27.9% 43.4%
Post-tax Payback years 2.9 2.1

 

* includes Mining, Processing, Site Services, G&A, Transportation, and Royalty Costs
** includes Total Cash Cost, Sustaining Capital, Royalty Costs, Severance Taxes

lbs=pounds, M$US=million United States dollars, numbers are rounded

  1. C1 and AISC costs are non-GAAP financial measures which do not have standardized meanings prescribed by International Financial Reporting Standards (IFRS). These measures are meant to provide further information to investors and should not be considered in isolation or used as a substitute for other measures of performance prepared in accordance with IFRS.

Mineral Resources:

The effective date of the mineral resource used in the PEA is January 9, 2020 (see News Release dated May 5, 2020). The Base Case indicated and inferred mineral resources at a 0.025% recoverable copper ("RecCu") cut-off are reported within both a 0.025% RecCu grade shell and a "reasonable prospects for eventual economic extraction" shape which includes internal dilution or all "must take" material within the confining shape (see News Release dated March 25, 2020). Because ISCR is a non-selective mining method, grade bins (different cut-off grades) are not considered applicable for the Van Dyke deposit and have not been applied. The Base Case used cut-off is considered appropriate for the extraction of copper by in-situ leaching. There are no known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other factors that could materially affect the resource estimate used in the cash flow analysis.

Mineral Resource Estimate within Potentially Economic Confining Shape (Sue Bird, P.Eng.)

Category Tonnes (000) TCu(%) ASCu(%) CNCu(%) Rec(%) Rec.Cu(%) TCu(Mlbs) Rec.Cu(Mlbs)
Indicated 97,600 0.33 0.23 0.04 90 0.24 717 517
Inferred 168,026 0.27 0.17 0.04 90 0.17 1,007 699

 

TCu=total copper, ASCu=acid soluble copper, CNCu=cyanide soluble copper, Rec.Cu=recoverable copper, (%)=percentage, Mlbs=Million pounds

  1. The reasonable prospects for eventual "economic extraction" shape has been created based on a copper price of $US2.80/lb, employment of in-situ leaching extraction methods, processing costs of $US0.60/lb copper, all in operating and sustaining costs of $US1.25/tonne, a recovery of 90% for total soluble copper and average specific gravity of 2.6t/m3.
  2. Approximate drill hole spacing is 80m for indicated resources.
  3. The average dip of the deposit within the Indicated and Inferred mineral resource outlines is 20 degrees. Vertical thickness of the mineralized envelope ranges from 40m to over 200m.
  4. Numbers may not add due to rounding.

Mineral Resources that are not mineral reserves do not have demonstrated economic viability.

Project Description:

The project consists of 531.5 hectares (1,312.8 acres) of mineral rights and 5.75 hectares (14.02 acres) of surface rights and is subject to a 2.5% gross royalty on revenue. The Miami, Arizona area hosts several heap leach copper mines with road access, electrical power, experienced labour, supply centers and industrial service providers.

Underground Development:

The 2020 PEA confirmed that the most cost-effective method to develop the wellfield is by way of a ramp from surface to the mineralized zone. Stage 1 includes an access ramp to the top of the deposit and a decline following the Gila/Pinal Schist contact to access the higher-grade portions of the deposit. Stage 2 is expected to commence toward the end of Stage 1 to access the lower grade portion of the deposit. The main components of the underground development are shown below.

Excavation Type Qty Length (m) Dimensions Shape Total Length (m)
Main Access Ramp to Portal 1 1,456 4.6m W x 4.6m H Arch (wall 3.1m) 1,456
Vents/ Access from Ramp to Van Dyke shaft 2 15 3.6m W x 3.6 m H Flat 30
Phase 1 Decline 1 1,141 4.6m W x 4.6m H Arch (wall 3.1m) 1,141
Phase 1 Vent/Egress Decline 1 216 3.6m W x 3.6 m H Flat 216
Vent/Egress Raise 1 401 3.0m dia Bore 401
Galleries 10 74 6.1m W x 6.1m H Arch (wall 4.6m) 740
Phase 1 Total Excavation 3,984
Phase 2 Decline 1 1,173 4.6m W x 4.6m H Arch (wall 3.1m) 1,173
Phase 2 Vent/Egress way 1 23 2.0 m x 2.0 m Flat 23
Galleries 14 54 6.1m W x 6.1m H Arch (wall 4.6m) 756
Phase 2 Total Excavation 1,952
Combined Total Excavation 5,936

 

Underground development will be completed using conventional drill and blast tunneling techniques by mining contractors with appropriate ground support as required. Phase 1 of the underground development is contemplated to be completed during the pre-production phase. The mine plan is estimated to produce roughly 190,000 cubic meters of waste rock from the underground development that will be stored in a valley directly adjacent to the portal on land owned by Desert Fox.

Well Field Design/Copper Recovery Plan:

The copper recovery circuit has been designed to establish a closed system for fluid injection and recovery using a fan pattern wellfield array to recover soluble copper. In this configuration, angled wells are advanced from underground galleries with an average well spacing of 21 meters ("m") between recovery holes within the deposit. The ratio of recovery wells to injection wells is 4:1 per array with an overall ratio of 1:1 with an estimated 1,925 injection and recovery wells required LOM.

Copper Extraction and Acid Consumption:

Chrysocolla, malachite, and azurite (all 100% soluble) are the most abundant copper minerals in the Van Dyke deposit, with secondary copper minerals being chalcocite and native copper. An overall 76% Cu recovery (including Plant Efficiency of 95% and Pre-conditioning of the mineralized zone to ensure a high sweep efficiency) was used in the PEA. Leaching is carried out using a weak (5gram/liter) solution of sulphuric acid over a 5-year period. Acid consumption is estimated to be approximately 1.5lb acid/lb copper produced based on the current testing and historical leach test results.

Forecasted Copper Production:

The Base Case contemplates 85Mlbs/year (similar in scale to Taseko's Florence ISCR project) of Grade "A" copper cathode production that includes an initial ramp up year (yr. 1) at 60% of production capacity and a three-year (yrs. 14-17) ramp down period with reduced annual production at the end of mine life. Mine life is estimated to be 17 years.

The Pregnant Leach Solution ("PLS") recovered from the wellfield is pumped to the PLS retention pond on surface and then to the Solvent Extraction Electrowinning ("SX-EW") facilities for copper recovery. Reagents are added to the solution from the SX-EW plant to bring the solution to required operating concentrations and is then recycled back to the wellfield. No deleterious elements in the PLS were identified during the pressure leach tests conducted by Copper Fox.

Infrastructure:

The project is located within the town limits of Miami, Arizona with sewer, water, communications, and powerlines available. The administration, maintenance, warehouse facilities, the SX-EW facilities and truck scale are sited to take advantage of local topography, accommodate environmental considerations, and ensure efficient operations. The processing facilities include:

  • Solvent extraction plant
  • Electrowinning tank house and tank farm for auxiliary vessels
  • Solution ponds to handle: PLS, raffinate, process water, emergency pond
  • Water treatment plant
  • Ancillary facilities including warehouse and maintenance shop
  • Administration offices

The ISCR operation is expected to operate with a net water surplus, however, if water is needed to support operations, it will be sourced from groundwater in the alluvium unit which supplied water to historic leach operations.

Cost Estimates:

Initial Capital, Operating and Sustaining Costs are based on comparable projects in Arizona and quotes from suppliers where available. When information from comparable projects or from suppliers was not available; industry standard inflation factors were applied where necessary.

Initial Capital Costs (presented below) are defined as all costs incurred until commencement of copper production, including pre-production operating costs. The Initial Capital Cost estimates are based on new construction costs and consists of direct and indirect cost factors. Factored estimates are used for Codes A, D, E, and all indirect costs. For Codes B and C, detailed estimates are used.

Capital Estimate Summary
WBS Code Description Cost ($US 000s)
A General Site 11,440
B ISL Well Field 6,035
C Underground Mining 49,676
D Processing 62,225
E Buildings and Facilities 9,750
PP Pre-Production Operating Costs* 22,287
Total Direct Costs 161,413
X Indirect Costs 48,827
Y Owner's Costs 23,913
Total Indirect Costs 72,740
Z Contingency (30% of Direct and Indirect)) 56,386
Total Capital Cost 290,539

 

*Indirects, Owner's Costs, or Contingency is not applied to Pre-Production Operating costs.

Contingency is included to cover undefined items of work within the scope of the project and is set at 30% of direct and indirect costs.

Indirect Costs:

Indirect Costs are calculated as a percentage of Initial Capital Costs and captures charges that construction contractors might apply or include in their rates. The factors and estimated Indirect Costs are shown below

Indirect Categories and Factors
Construction Indirects - % of Direct Costs 15%
Spares - % of Processing Costs 5%
Initial Fills - % of Processing Costs 0%
Freight and Logistic - % of Direct Costs 5%
Commissioning and Pre-operational Start-up Allowance
EPCM - % of Direct Costs 10%
Vendors Allowance
Taxes and Duties 3%

 

Sustaining Capital Costs:

Sustaining Capital Costs are all capital expenditures incurred after commencement of copper production required to maintain annual copper production. Construction of a water treatment facility are included in the LOM Sustaining costs outlined below:

Sustaining Capital Estimate Summary
WBS Code Description COST ($US 000s)
A General Site 0
B ISL Well Field 46,147
C Underground Mining 23,903
D Processing 5,420
E Buildings and Facilities 0
Total Sustaining Capital
75,470


$US 0.07 /lb Cu

 

Operating Costs:

The LOM Operating Costs were developed using first principals and comparable estimates from similar scale project in Arizona. Estimated Total Operating Costs and LOM Unit Costs required to produce a pound of copper are summarized below:

Operating Costs LOM Cost (000's) LOM Unit Cost ($US/lb Cu)
Drilling Cost 156,417 0.14
Frac Cost 88,009 0.08
Pump Costs 23,641 0.02
Drill Electricity 5,106 0.00
ISL Well Field Acid Costs 82,579 0.08
Wellfield Monitoring (KP) 7,540 0.01
Pumping Electricity Costs 122,466 0.11
Maintenance Costs 130,348 0.12
Processing Costs 220,210 0.20
G&A, Offsite Costs 187,179 0.17
Water Treatment 33,150 0.03
Reclamation and Closure Costs 19,184 0.02
TOTAL OPEX 1,075,830 0.98

 

* All numbers are rounded following Best Practice Principles.

All In Sustaining Costs:

All In Sustaining Costs include total operating costs, royalties, severance taxes, and sustaining capital costs as outlined below:

Cash Cost Category Unit Cost ($US/lb)
Total Operating Costs 0.98
Royalties 0.07
Severance Tax 0.02
Sustaining Capital Costs 0.07
All in Sustaining Cost (AISC) 1.14

 

Closure and Reclamation:

Closure and reclamation would be in accordance with the requirements set out in the state and federal permits required to develop and operate the project includes the following major activities:

  • Rinse the underground wellfield to restore groundwater quality within the mined area to levels specified in the project permits.
  • Buildings and other infrastructure, including the SX-EW plant would be decommissioned, sold, and removed.
  • Reshape the earth structures and disturbed areas to achieve long term stability and protection against erosion.
  • Reshape the waste rock dump and construct vegetative cover.
  • Excess water, including wellfield rinse water, would be treated, and released for two years following the cessation of commercial operations.
  • Decommission the water management structure.
  • Decommission the water treatment plant.

The estimated Reclamation and Closure Costs are summarized below:

Reclamation and Closure Cost ($US 000's)
Well Field Decommissioning $4,434
Infrastructure Decommissioning $4,043
SX-EW Decommissioning $3,180
Water Treatment Plant Decommissioning $4,054
Total Reclamation and Closure Costs $15,711

 

Economic Analysis Summary:

The economic analysis of the Van Dyke project has been performed on a 100% basis and derived from input parameters set out below. The pre-tax and post-tax NPV and IRR for the Van Dyke ISCR project at various discount rates are shown below. The 7.5% discount rate has been chosen as the Base Case in line with other Arizona based ISCR projects. The economic analysis includes recovery of capital, operating and sustaining costs, county, state and federal taxes and royalties. Input parameters include 3-year pre-production period, long-term copper price of $US3.15/lb, 17-year mine life and 5 years for reclamation/closure and monitoring. Corporate income taxes are assumed to be 21.0% federal and 4.9% state.

The payback periods are 2.0 years pre-tax and 2.1 years post-tax. The sensitivity of the pre- and post-tax NPV to the discount rate is summarized below:

Rate Pre-Tax NPV Post-Tax NPV Pre-Tax IRR Post-Tax IRR
(%) $US000's $US000's (%) (%)
5.0% $1,030,565 $835,974 48.4% 43.4%
7.5% $798,963 $644,667 48.4% 43.4%
8.0% $759,934 $612,436 48.4% 43.4%
10.0% $623,480 $499,781 48.4% 43.4%
12.0% $513,253 $408,832 48.4% 43.4%

 

Net Cash Flow:

The Base Case, Net Free Cash Flow after recovery of all operating, capital and sustaining costs pre-tax is estimated to be $US1.757 billion and $US1.436 billion post-tax.

Project Sensitivities:

The NPV and IRR are most sensitive to copper prices and metallurgical recovery, as illustrated in the figures below:

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Figure 1

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Figure 2

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Qualified Person:

Elmer B. Stewart, MSc., P.Geo., President, is the Company's designated Qualified Person and has approved the scientific and technical disclosure in this news release.

The PEA has been prepared by Moose Mountain Technical Services. Each of the individuals listed below is an independent Qualified Person for the purposes of NI 43-101. All scientific and technical information in this press release is based upon information prepared by or under the supervision of those individuals, and each has approved the scientific and technical information in this release.

  • Susan C. Bird, MSc., P.Eng., Moose Mountain Technical Services
  • Bob Lane, P. Geo., Moose Mountain Technical Services
  • Tracey Meintjes, P.Eng., Moose Mountain Technical Services
  • Jim Norine, P. E., Ausenco

The Technical Report on the Preliminary Economic Assessment of the Van Dyke project will be filed in accordance with NI 43-101 on SEDAR (www.sedar.com) within the required 45 day statutory period and will be made available on Copper Fox's website at www.copperfoxmetals.com.

About Copper Fox

Copper Fox is a Tier 1 Canadian resource company listed on the TSX Venture Exchange (TSXV: CUU) focused on copper exploration and development in Canada and the United States. The principal assets of Copper Fox and its wholly owned Canadian and United States subsidiaries, being Northern Fox Copper Inc. and Desert Fox Copper Inc., are the 25% interest in the Schaft Creek Joint Venture with Teck Resources Limited on the Schaft Creek copper-gold-molybdenum-silver project located in northwestern British Columbia and a 100% ownership of the Van Dyke oxide copper project located in Miami, Arizona. For more information on Copper Fox's other mineral properties and investments visit the Company's website at www.copperfoxmetals.com.

For additional information contact Lynn Ball at: investor@copperfoxmetals.com (844) 464-2820 or (403) 264-2820

On behalf of the Board of Directors

Elmer B. Stewart
President and Chief Executive Officer

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Information

This news release contains forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and forward-looking information within the meaning of the Canadian securities laws (collectively, "forward-looking information"). Forward-looking information is based on management's current expectations and beliefs and is subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Forward-looking information in this news release includes statements about the Van Dyke project being a technically sound in-situ copper recovery project, utilizing underground access and conventional solvent extraction and electrowinning recovery methods, low cash costs, strong cash flows; 5,936m of planned underground development; operation of the production wells using a fan pattern wellfield geometry; the copper extraction plan; estimated copper cathode production; the expectation for the ISCR operation to operate with a net water surplus; estimates on capital, operating, reclamation and closure costs; reclamation plans;, mine and waste rock management; the economic analysis of the project, including pre and post-tax NPV, IRR and payback periods; construction and location of waste rock storage facility, infrastructure, access roads, sewage services, power supply communications, and infrastructure; annual production of copper and waste; the construction and operation of a proposed SX-EW plant; life of mine copper production; C1 and AISC costs per produced pound; projected future metal prices; estimated timing and amounts of future expenditures; geological interpretations, potential mineral recovery processes and all assumptions used in the PEA. Information concerning indicated and inferred mineral resources also may be deemed to be forward-looking information in that it reflects a prediction of the mineralization that would be encountered if a mineral deposit were developed and mined.

In connection with the forward-looking information contained in this news release, Copper Fox and its subsidiary have made numerous assumptions, regarding, among other things: the economic models for the Van Dyke project, including the Base Case model are reliable and accurate; costs of production; success of mining operations; projected future metal prices; engineering, procurement and construction timing and costs; the timing and obtaining of permitting and approvals; the potential mineralization in the Van Dyke deposit; the geological, metallurgical, engineering, financial and economic advice that Copper Fox has received is reliable, and is based upon practices and methodologies which are consistent with industry standards; and the continued financing of Copper Fox's operations. While Copper Fox considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies.

Additionally, there are known and unknown risk factors which could cause Copper Fox's actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Known risk factors include, among others: the results of the PEA may not lead to the development of a mine at Van Dyke or commercial mining operations; the project development plans and timing for Van Dyke as outlined in the PEA may not occur as currently anticipated, or at all; the indicated and inferred resources may never be upgraded to a higher resource category; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; uncertainties related to the estimated mine life; the possibility of delays and cost overruns in engineering, procurement and construction of the project and uncertainty of meeting anticipated project milestones; unforeseen environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other factors that could materially affect the resource estimate used in the cash flow analysis; the receipt of state and federal permits and certificates required for production may not be completed in a timely manner, or at all, state or federal environmental approvals may not be obtained in a timely manner, or at all; the actual mineralization in the Van Dyke deposit may not be as favorable as suggested; fluctuations in metal prices and currency exchange rates; conditions in the financial markets and overall economy may deteriorate; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of the metallurgical testwork; the uncertainty of the estimates of capital and operating costs, recovery rates, and estimated economic return; the need to obtain additional financing and uncertainty as to the availability and terms of future financing; the possibility of delay in exploration or development programs or in construction projects and uncertainty of meeting anticipated program milestones; uncertainty as to timely availability of permits and other governmental approvals.

A more complete discussion of the risks and uncertainties facing Copper Fox is disclosed in Copper Fox's continuous disclosure filings with Canadian securities regulatory authorities at www.sedar.com. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Copper Fox disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events, or developments, except as required by law.

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Project Progress

Drilling programmes continue to upgrade mineral resource confidence, close the gaps in resource and to target extensional areas of the mineralised formation. Currently the Phase 2 reverse circulation ("RC") drilling programme is being completed in the South East of the Nifty open pit. There are now approaching 4,000 samples from this programme that have not had assays returned. Further to this, there remain over 8,000 samples for which assays have not been returned from the +16,000 metre South West drilling programme that was completed in November. The RC drilling continues to intersect ore grade intervals and following receipt of assays, will be included in the mineral resource model for the design and scheduling of the planned Nifty open pit. Once all of the assays have been received, a follow up Phase 2 drilling programme will be planned in the South West of the Nifty open pit and a follow up Phase 3 drilling programme in the South East of the Nifty open pit will be planned. This is very positive for the Nifty Copper Project as there are further copper tonnes to be added to the project copper inventory but also potentially delays final mine designs and schedule progress.

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Engineering design of the SX-EW plant and heap leach pads is nearing completion. The new heap leach pads construction and design detail is required for the Works Approval submission so that construction activities can commence. Concurrent with the design process, tenders are being issued for the purchase and supply of long lead items.

Metallurgy check column test work continues. Four columns have been undertaken, including the fourth column which is a 6-metre column to match operating conditions. Results have been as expected and optimisation of reagent consumptions continues. When this round of work has been completed, a number of follow up tests will be conducted to further optimise the operating parameters. Reporting to the market on these results will be done once the test work has been completed on the residues and the reports compiled. There will also be follow up tests undertaken on core and sonic drill samples. In addition, there are 550 sonic samples yet to be assayed that have been obtained from around the site to test for the location of stockpiled oxide material.

A consultant has been engaged to firstly, build a complete mass balance and copper recovery cathode software model for the project based on the metallurgical parameters and then secondly, to design and build a metallurgical accounting system for the project so that it is ready upon the commencement of plating copper metal at Nifty. This work is well advanced.

Finance process will commence once the Restart Study is finalised. Outstanding items are schedules, with allowance for an extended approval timeline, and final costs on a number of items including civil construction elements of the heap leach pads and associated crushing infrastructure.

Government Approvals are required in the new areas of the project. As a State Agreement tenement there is a Ministerial approval required to amend the project size and life. There is a requirement for clearing permits for the new clearing required for the new heap leach pads and an amendment to a current approval for the extension to the waste dump. There is an amended Mining Proposal required for the restart of the pit, pads and SX-EW which includes submission of a Project Management Plan and a Mine Closure Plan. There is an amended Works Approval required for the restart of the SX-EW and the new heap leach pads and an amendment to the Water Licence for the change in water extraction method from underground. There are also a number of smaller permits required around the restart of the mining operation, that require reactivation or renewal.

The process of obtaining these approvals is well advanced, having conducted initial meetings and workshops, document compilation is nearing completion. The first submission of the required proposals for the clearing of native vegetation for the waste dump and the new heap leach pads has already been lodged. This is the first stage in the approval process, with management and consultants preparing submissions for the subsequent approvals. Progress is being hampered by shortage of personnel and availability of external specialists to complete the various reports that are required to lodge approval documentation. The expectation is that all documents will be lodged by the first quarter 2022.

Government staff have been very helpful in assisting CYM in making sure that the required proposals contain all that is necessary for an efficient approval process but the various departments, like the whole WA resource industry are suffering from understaffing, and it is expected that the timelines to approval will be longer than originally anticipated. Site visits have been undertaken and the learnings from these visits have been helpful in ensuring that the proposal documentation is complete.

During CYM's tenure, staff have rectified a number of legacy issues at the site that have been paid little attention for some years and site crews have managed to rectify a number of areas that have previously been raised by the regulators. Further, the site crew have been cleaning and collecting years of rubbish and waste to centralised locations and are now going through a process of scrap, recycle or disposal for these waste streams. These waste streams also include chemicals and reagents that are expired and have been on site for many years. The sale of unwanted or scrap equipment has been commenced with sold items already been removed from site. This process will continue for some time due to the volume of equipment, materials, scrap and rubbish that has built up while Nifty was operational.

Refurbishment of the oxide crushing circuit and SX-EW plant has begun. Currently the plant is being stripped down and assessed for refurbishment on an item-by-item basis. The items to be refurbished are then despatched to the required refurbishment location for the work to be undertaken whether on site, in Perth or Kalgoorlie or another specialist location. As an example, the EW electric rectiformer has already been delivered to the workshop in NSW for its refurbishment. The items are also matched with any parts or spares in stock in the warehouse.

The accumulation process as described in the site clean-up section has also delivered a significant number of new and "useable" items back into the store, which had previously been located in sub or "squirrel" stores around the site. Stores staff are still in the process of cataloguing all these items for which they lack sufficient centralised storage areas for. As items are declared not required and sold it creates space to bring in items from those other areas.

Accommodation Camp refurbishment has begun with the eastern side of the camp undergoing a refurbishment process first. The refurbishment will bring the accommodation standard to be aligned with Cyprium's attraction and retention requirements for site personnel. Once the eastern refurbishment is complete the western refurbishment will commence. The dry mess is undergoing a refurbishment process concurrently with the eastern side of the camp.

Management Appointments

CYM is pleased to announce it has strengthened its management team as it progresses towards becoming a copper producer. The appointments made are to ready the team for the transition from Restart Study to construction and ultimately to production at the Nifty Copper Project. The company is fortunate to be able to make such quality appointments during a very tight labour market and this reinforces the quality of Cyprium's portfolio of Copper projects and the appeal of the Nifty Restart to experienced industry veterans.

John Banning has been promoted as the Chief Operating Officer for Cyprium. John's previous role for Cyprium was General Manager - Nifty and he is a mining engineer with over 20 years' experience in the mining and construction industries covering multiple commodities. His professional expertise extends from project development, construction, operations, technical, business improvement and management. John has previously been an independent consultant, Managing Director and Regional General Manager. He has worked with multiple large and mid-size resource companies in Australia and overseas.

Gavin Hammer has been promoted as the General Manager - Project Development and Operational Readiness. Gavin's previous role for Cyprium was Manager Engineering. Gavin is a maintenance professional with over 30 years' experience in asset maintenance and management, which includes surface and underground operations within fixed and mobile plant applications. His areas of expertise include the construction, commissioning, optimisation and asset management of process plants and mobile fleet operations in local and remote regions. Prior to joining Cyprium Metals, Gavin spent 5 years in Indonesia at the Wetar Copper Project follow by 2 years in Western Africa in operational and project construction roles.

Clint Moxham has been appointed as General Manager - Nifty. Clint is a mining engineer with over 20 years' of experience, with a track record of delivering greenfield and restart operations. He has a reputation of safe operations with a career long record of team management and mining operations successes. He is a mining engineer, geologist and mineral economist, with multi commodity expertise ranging from mining strategy, risk management, data analysis, infrastructure development, geological understanding, option analysis and mining due diligence.

Amanda Croft has been appointed Technical Services Manager - Nifty. Amanda is a geologist with over 20 years' experience in the mining industry covering multiple commodities. Her professional expertise extends from development and operational open pit and underground mines as well as greenfield and brownfield exploration in Australia and Africa. She has previously held management roles with a number of resource companies.

Managing Director Barry Cahill commented:

"The Cyprium team continues to kick goals on its way to producing copper metal plate at Nifty. Drilling success continues, design process is proceeding, and we have commenced refurbishment of the project. Despite our best efforts and the exceptional progress that we have made in 8 months, there are pressures being felt throughout the mining industry. These additional pressures are primarily due to labour shortages, increasing costs, COVID related impacts and long timelines that have impacted on our original projections.

These same factors are also impacting on processing times for regulatory approvals. Consequently, we have been forced to reschedule our forecast project timelines, with the commencement of new construction activities now expected in September 2022, following regulatory approvals. Copper metal production at Nifty will now commence by the second half of 2023. As usual for our team, we will aim to commence copper production at the earliest opportunity."

To view the Investor Webinar Presentation, please visit:
https://www.abnnewswire.net/lnk/E9LNO8T3



About Cyprium Metals Ltd:

Cyprium Metals Limited (ASX:CYM) is poised to grow to a mid-tier mining business and manage a portfolio of Australian copper projects to deliver vital natural resources, strong shareholder returns and sustainable value for our stakeholders. We pursue this aim, in genuine partnerships with employees, customers, shareholders, local communities and other stakeholders, which is based on integrity, co-operation, transparency and mutual value creation.



Source:
Cyprium Metals Ltd

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