Can you provide an introduction to Arizona Sonoran Copper Company and to its Cactus asset?

Arizona Sonoran closed its initial public offering in November 2021 and is listed on the Toronto Stock Exchange under ASCU. In April 2022, we also listed on the OTCQX under the symbol ASCUF. Our Cactus Mine project, which includes the Cactus Mine and Parks/Salyer deposits, is a big copper porphyry system located entirely on private land in Arizona. The Cactus Mine was a former producing open pit mine in the 1970s and 1980s and a significant amount of infrastructure was left on site. Our PEA issued in 2021 demonstrated a resource of approximately 3.5 billion lbs of copper (1.6 billion lbs in the indicated category and 1.9 billion lbs in the inferred category) over an 18-year mine life. In 2022, we also issued a 2.9 billion lb inferred maiden resource at a grade of 1.015% CuT on the Parks/Salyer project, thus bringing our global resources up to 6.5 billion lbs (1.6 billion lbs ind and 4.9 billion lbs inf). The new resource estimate demonstrates the scalability of the Cactus Project and the potential for sharing future infrastructure.

What do you believe attracted Rio Tinto to join Arizona Sonoran as a shareholder?

Key factors include a scalable copper project, low capex requirement, a credible management team, and key permits in place, including the right to take water for the next 50 years from an industrial use only aquifer approximately 2,000 feet below the surface.

Our proposed plan is to restart production of the oxide and enriched leachable material with an SXEW plant using a heap leach operation. Currently, there is no commercial technology to leach copper from a primary sulfide. The Rio Tinto group of companies has created a subdivision, NutonTM, which has developed a technology allowing for the leaching of a primary sulfide under a commercial application. If this NutonTM technology proves to be successful, Rio Tinto believes we will be more open to entering into a commercial agreement with them where they would share in the profits from the sale of copper from the primary sulfide.

Can you elaborate on the permitting aspect of the project?

All the land we control at Cactus and Parks/Salyer is on private land. We benefit from a streamlined permitting process with the state regulator and the local municipal authority.

What did the PEA for the Cactus project show, and how is inflation affecting the results? How does Parks/Salyer impact the Cactus Project?

We put out a PEA in August 2021. At that time, we ran the resource using a copper price of US$3.15/lb Cu, which is still below the current spot price despite the significant fall off of copper over the last few months. At the same time, we ran the financial and economic model using a copper price of US$3.35/lb Cu, which was very conservative at the time. Using those numbers, we came up with an NPV8 of US$312 million after-tax and an IRR of 33%. The expected capex to bring this mine back into production was only US$124 million as it will be a heap leach operation.

What are Arizona Sonoran’s priorities for the coming months?

Arizona Sonoran will complete a combined technical study on both the Cactus and Parks/Salyer projects. The team is currently working on enhanced metallurgical studies, conducting hydrology and geotechnical work and necessary infill drilling to bring both deposits to at least the indicated category. Recall that Parks/Salyer is an inferred resource. If the metallurgical program is successful with Nuton and commercial terms are agreed upon, we may have the unique opportunity to include the primary resource into a leachable mine plan within the next 12-18 months. We intend on completing a feasibility study in due time, with the goal to put in place the project financing to start the 18-month construction and development period. We would like to see this asset come into production in the next three years. We see this project as one of top five independent copper projects in the US, with the potential to start supplying copper domestically within the next few years.