An Emerging Copper Company

Pumpkin Hollow

Highlights of the Integrated Feasibility Study (All dollar amounts are stated in United States currency)
  • Long mine life of 23 years with low-risk profile located in an ideal mining jurisdiction close to existing infrastructure, an increase of 5 years from the first published integrated feasibility study, with production ramp-up targeted for 2018;

  • Assuming the Base Case of US$3.15 copper, US$1,200 gold and US$18 silver, the Integrated Project generates Life-of-Mine ("LOM") after-tax net cash flow of US$2.5 billion, NPV@ 5% of US$1.1 billion, an after-tax IRR of 15.6% with 4.7 year payback;

  • Significant LOM metal production of 4.5 billion pounds (2.05 million tonnes) of copper, 512,000 ounces of gold and 15.6 million ounces of silver in a quality copper concentrate. Average annual copper production of 275 million pounds in years 1 to 5;

  • The project development contemplates a 63,500 tons/day open pit mine and 6,500 tons/day underground mine, feeding a single 70,000 tons/day concentrator, generating substantial annual cash flow over LOM;

  • Proven and Probable Mineral Reserves, including open pit and underground mineable, are 572 million tons of ore grading 0.47% copper equivalent1, containing 5.05 billion pounds of copper, 761,000 ounces of gold and 27.6 million ounces of silver;

  • Initial capital costs are estimated to be $1.04 billion including contingencies, excluding working capital of $33 million. Sustaining LOM capital is $0.63 billion;

  • Low LOM site operating costs of $11.80 per ton of ore-milled (Year 1 to 5 - C1 Production Costs at $1.49/lb. payable copper), excluding leased equipment and Nevada State Minerals Tax;

  • The IFS includes drilling data to 2011 for the underground deposits and 2013 for the open pit deposits. Further upside and optimization potential exists from current drilling in 2015 which is not included in the IFS; and

  • The IFS confirms the technical and financial viability of constructing and operating a 70,000 tons/day copper mining and processing operation at Pumpkin Hollow comprising a single large concentrator with mill feed from both open pit and underground operation.

NI 43-101 Integrated Feasibility Study - July 2015
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Annual copper production in concentrates and C1 operating costs:

  Units Years 1-5* Years 1-10* LOM (Average)
Copper in Concentrates 000s lbs./yr. 274,700 246,300 198,200
Copper in Concentrates Tonnes/yr. 124,600 111,700 89,900
C1 Production Costs** $/lb payable copper $1.49 $1.70 $1.76
* Note starting post ramp-up period
** The direct cash costs of mining, milling and concentrating, site administration and general expenses, concentrate treatment charges, and freight and marketing costs, less the net value of gold and silver by-product credits.

1The copper grade equivalency was determined using Base Case metals prices and metallurgical recoveries of 89.3%, 67.3% and 56.3% for copper, gold and silver respectively

Summary of Economic Results:

    Low Case Base Case High Case
Copper Price $/lb $2.85 $3.15 $3.75
Gold Price $/oz $1,200 $1,200 $1,200
Silver Price $/oz $18 $18 $18
                                                                              (In Millions of US Dollars)
Net Smelter Revenue, after royalty   $10,768 $11,990 $14,434
Net Cash Flow Pre-tax $1,831 $2,992 $5,315
Net Cash Flow After-tax $1,584 $2,514 $4,249
Annual Net Cash Flow Yr. 1-5 avg. $204 $262 $366
Pre-tax Operating Margin* Yr. 1-5 avg. $300 $380 $540
NPV 5% Pre-tax $659 $1,362 $2,768
NPV 5% After-tax $534 $1,100 $2,155
IRR Pre-tax 11.3% 17.5% 28.8%
IRR After-tax 10.4% 15.6% 24.6%
Payback - years Pre-tax 7.9 4.2 2.8
Payback - years After-tax 8.2 4.7 3.2
* Note: Net revenues less smelter charges, concentrate transport and site operating costs, including operating lease costs.

NOTE: Readers are advised that the information contained herein regarding a phased Stage I and Stage II project development option is derived from prior NI43-101 feasibility studies dated December 2012 and November 14, 2013 and should not be relied upon. An alternate development plan comprising a single concentrator and dual sources of mill feed from open pit and underground operations is described in a May 2015 NI43-101 Integrated Feasibility Study. No decision has yet been made by management on a development option. Readers are cautioned that the foregoing economic analysis may be subject to change based on the results of the Integrated feasibility study.

(All amounts are stated in United States dollars):

The following sections are summarized extracts from a feasibility study contained in a NI 43-101 Technical Report relating to a standalone PLUM. A press release dated November 19, 2012 initially reported the results of the feasibility study.
  • The project development consists of a 6,500 ton-per-day underground operation at the East deposit, feeding a single 6,500 ton-per-day concentrator located near the East shaft;
  • First production targeted for early 2015, with an initial mine life of 12 years;
  • Proven and Probable Mineral Reserves (East deposit only):

    823 million pounds of copper
    220,765 ounces of gold and 4.7 million ounces of silver;
  • LOM metal production contained in concentrates totals:

    759 million pounds of copper
    167,439 ounces of gold and 2.7 million ounces of silver;
  • Average annual copper production in concentrates:

    Years 1 to 5: 74.6 million pounds per year
    Years 1 to 10: 66.9 million pounds per year
  • Average annual gold and silver production in concentrates:

    Years 1 to 5: 23,700 ozs gold per year
    Years 1 to 10: 15,900 ozs gold per year
    Years 1 to 5: 340,100 ozs silver per year
    Years 1 to 10: 248,600 ozs silver per year
  • Initial capital costs are estimated to be $329 million including contingency, excluding working capital of $15.4 million and excluding approximately $17 million already expended for shaft related activities. A further $40 million will be allocated from current cash on hand to fund future capital costs.
  • LOM site operating costs are $41.46 per ton of ore-milled. Copper production costs, net of gold and silver revenue credits are:

    Year 1 to 5: $1.21 per pound of payable copper
    Years 1 to 10: $1.51 per pound of payable copper
  • Summary of Economic Results:

    1. Base Case: Three year trailing average price of $3.59/lb. copper, $1,419/oz. gold and $27.14/oz. silver:

      NPV at 5% is $419 million, pre-tax.
      NPV at 8% is $309 million, pre-tax.
      Internal Rate of Return is 28.6% and payback is 2.5 years.
    2. Alternate Case: Quoted copper forward prices to 2022 then long term price of $2.75/lb. copper; gold and silver same as Base Case:

      NPV at 5% is $276 million, pre-tax.
      NPV at 8% is $201 million, pre-tax.
      Internal Rate of Return is 24.3% and payback is 2.7 years.
    3. Average annual operating cash-flow (Years 1 to 5):

      Base Case: $149 million.
      Alternate Case: $139 million.
NI 43-101 Technical Report Feasibility Study (Open Pit) - October 2013
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NI 43-101 Technical Report Feasibility Study (Underground) - December 2012
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NI 43-101 Technical Report Feasibility Study (Integrated) - February 2012
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