Advanced copper project in the US ready for construction

The Market Online

01-05-2025

With one of the few fully permitted copper projects in the United States, Highland Copper (TSXV.HI) (OTC:HDRSF) is advancing its flagship Copperwood project in Michigan's Western Upper Peninsula, a near-term development opportunity with 3.7 billion pounds of contained copper and an initial 11-year mine life.
The project stands out not only for its size and scalability, but also because it's fully permitted, a rare achievement in today's regulatory environment. Backed by institutional investors and supported by state and local stakeholders. Highland is aligning its development timeline with a broader push for US critical mineral independence. Highland Copper, CEO Barry O'Shea joined Lyndsay Malchuk in studio to discuss further.
LYNDSAY: Now, Copperwood are fully permitted and are technically advanced, so what are the remaining pieces that need to fall into place before a construction decision is made?
BARRY: Well, I'm actually going to start with some really good work that we did in 2024. We did our initial site impact. Really important to turn the site from a greenfield into a brownfield. It had some really nice byproducts. We started working with local contractors, really engaging with the local unions and working with the state authorities. So really gaining credibility in the region as we've done over the past many years.
So with that we stepped into 2025 and we're really turning the project with something that's been sitting at feasibility level for a period of time to a project that is truly ready for construction. In January of 2025, we initiated detailed engineering alongside our partner, DRA Global. With that we did some metallurgical drilling in February to support a MET test program.
We really think that ultra fine flotation technology can have a really significant boost to the economics of the project. Through 2025, we'll be advancing our engineering, looking to de-risk and optimize the project, prepare ourselves for project financing, and ideally a construction and decision in 2026.
LYNDSAY: That's a big year in 2024 and now all that coming down the pipeline. That's pretty exciting news for sure.
BARRY: Copperwood at the end of the day is one of the most advanced copper projects in the U.S. and it's time to build it.
LYNDSAY: Your model actually shows significant upside with a rising copper price. How is the project positioned if the copper market doesn't go the way it's supposed to go in the near term?
BARRY: I think Copperwood is robust at a whole series of copper prices. At a $4 copper price, that's actually the price that we did our feasibility study at, it shows a good robust project. At $4 it's 170 million NPV and an 18% IRR. But really where you see the torque is movement to $5. That's a 25% increase in copper price and it gives rise to a 300% increase in net asset value. Naturally we're sitting at around $4.50 or $4.60 today. So as you move along that curve, just incredible leverage.
But we're not only depending on copper prices, there are other things that we can do. I mentioned the metallurgical test work to improve the grade recovery curve. There is significant capacity to add mine life to the project and all of these things will continue to progress, so that it's our execution alongside the copper price that really adds value to the project.
LYNDSAY: There is strong momentum and community support right now with state and federal focus on critical minerals. What's your prospects for securing government funding?
Barry: I'm going to start with that local support, I think it's really important. I think everybody knows you need to be welcomed in the exact community that you work in. It's the Western Upper Peninsula, it's a historic mining district, there's a real nostalgia and love for mining. In the recent six months we've gone out and received resolutions and support from 22 local units of government, from counties to townships to municipalities. It really demonstrates that there's a true desire for the project and with good reason. There are a whole host of things that this project will bring to the local area.
Alongside that, there's obviously incredible bipartisan support at a state level. And of course, with the recent executive order at the federal level, the federal conversation on urgency for critical minerals and specifically copper has really intensified. So from local to state to federal, we're just feeling very welcome.
Copperwood really is a project that needs to be built in the near term. In terms of financial support, you might know that the state of Michigan is considering giving us $50 million. That project nicely moved through the Michigan Economic Development Corporation. It was approved by the Michigan Strategic Fund, and it's also been approved at the House, at the legislative level.
It is now at the Senate Appropriations Committee and I will acknowledge we've had some challenges there. And that's okay. At each level, different units of government are looking for different levels of understanding of the project. So we continue to educate the Senate on the merits of the project. And there really are many, it's quite a generational opportunity from an economic perspective.
Of course, it brings critical supply of copper into the U.S., and I think most importantly acknowledging that the state of Michigan has very environmentally strong regulation. It's a project that can be built well for the local community sustainably, and for economic strength as well.
LYNDSAY: You do have some institutional backers like your largest shareholder, Orion. How do you see their involvement in the strategy when you're moving from development into production?
BARRY: So, first of all, through the early stages of development, it's really important to have strong, loyal shareholders like Orion. So we benefited from that. Orion have always seen, I think, the value of U.S. domestic copper production, and that's really playing out as we've seen over the past number of months, so we think the timing is right. And again, having Orion there, they've demonstrated on other projects real creative financing opportunities across the value chain from equity to debt and other pieces. We think that they're going to play a strong role as we continue to move forward. And of course, that's going to be important as we consider project financing over the next year.
LYNDSAY: Okay. So if we further into that a little bit, with a large share count and more capital needed to move into production, how are you thinking about managing dilution and long-term share value then?
BARRY: Sure. So let me start with the share account. Actually, we do have just over 700 million shares outstanding. That is something that we'd actually like to take care of to some degree with a share consolidation. You probably know to do a good share consolidation you need a strong environment behind you, both macro and of course execution from a company perspective, and as we've laid out, we think there's going to be good opportunity for both of those through 2025 and ideally we'll roll back the shares. I think that'll make the shares just more reasonable, certainly from a U.S. retail perspective.
In terms of considering a project financing, naturally we need to move our market cap along to be able to maintain appropriate dilution as we think about project financing, but you'll also know that to do an equity financing, it's at the tail end of a whole host of catalysts. We'll have worked through our engineering, we'll have understood the outcome of our metallurgical drill results. Ideally, we'll have had visibility, some of the state and federal funding opportunities that we have, we'll understand where the debt financing has landed, and all of these things will bring increased viability and of course, share price appreciation before we consider that final piece. Dilution of course, is important. We want to manage our shareholders as we work through this process.
LYNDSAY: Give us three points why investors should be looking at you right now.
BARRY: I think Highland Copper is one of the most advanced copper development assets in the U.S. at the moment. As a starting point, we're fully permitted, I think that is the key building block as you think about advancing into true construction.
Number two, we provide really incredible leverage to changes in copper price. To give you a sense, a 25% increase in copper price from $4 to $5 gives rise to a 300% increase in net asset value.
And lastly, it's our local support. We have 22 resolutions of support from all local units of government, municipalities, townships, counties. It's really reflected that we're welcome in the region. These are all the things that are the building blocks that, that make a project truly construction ready.
So through this year, we have a host of catalysts starting with detailed engineering. We're doing MET work to optimize the project, consideration of stepping into a project financing and really getting ourselves ready, to develop our project in 2026.
Again, that was Barry O'Shea with Highland Copper Company. You can learn more about Highland on their website at highlandcopper.com
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