Gunnison Copper: Solving the Acid Supply Problem on the Way to a 2028 PFS

[MUSIC] This month Craig Hallworth was appointed president and CEO of Gunnison Copper. Gunnison's flagship asset is a Gunnison Copper project. A preliminary economic assessment for March shows an NPV of $2 billion using an 8% discount rate and an IRR of 23% payback period at 3.9 years. The company is planning for a PFS by 2028. Gunnison's other operations is Johnson Camp Mine, a Rio Tinto joint venture. Johnson is producing copper cathode from a run of the mine ore with first copper production using new ton technologies expected later this year. Craig, what good mining stock daily? >> Hi, Michael. So good to be here. Thank you for having me. >> Craig, there's a lot that I mentioned at the top there. You did move from CFO to CEO this month. What's at the top we're going to do is add Gunnison. >> Yes, it's an exciting time for Gunnison. I mean, we started our production at the Johnson Camp last year. Everyone was watching that. It was exciting because it was one of the first restarts in many, many years. People had been waiting to see what we could do. We delivered, we were able to construct, restart, and start production at both the run of mine oxide circuit as well as the new technology circuit by the end of last year. So now the one production of Johnson Camp, we're ramping it up this year. I expect us to be into commercial production next quarter. And with copper at all time highs at $6.50, that's going to just be phenomenal for us in terms of cash flow generation. But you asked, what am I doing now? What am I focused on now? And we're crystal clear on our focus. We're focused on advancing the Gunnison copper project. That's our flagship project. It's a lot bigger than Johnson Camp. This thing's going to produce something like 175 million pounds of copper per year over a 21 year mine life. It's got really nice economics. It's something where we're going to be producing a finished copper cathode at the site. It's mostly oxide copper ore. That means traditional heat bleach with sulfuric acid and plating into the finished copper cathode in our SXEW plant. So this thing's going to have a national level significance for the country. And we're just so excited to advance that starting in this year 2026. You mentioned in the DA that you did call it a straightforward mine plan. However you did mention that you might have to move a road. Can you explain a bit about that? Yes. So our project is ideally located. We're in southern Arizona. If people know the area, we're about an hour southeast of Tucson right down the I-10. That's the interstate. We're right off the interstate. And like you alluded to, actually part of the interstate overlaps the edge of our main pit of the Gunnison pit. Now look, we've got two pits at this project. We've got the main pit Gunnison. And then our latest study, we added our high grade satellite pit, Strong and Harris. And just so everyone knows that high grade pit, that's at 0.85% total copper. So that's considered a very, very high grade for Arizona. And the overall project, you know, it's both 540 million tons at 0.43% total copper process. So I think it's got a really nice grade. Now to go back to your question, we do have the I-10 that's overlapping part of the edge of the main pit. So we're planning to realign that. And that realignment is a very straightforward process. It's under the state permitting regime. Adod, that's Arizona Department of Transportation. They have what's called primacy. So it's not a federal process. It's a state process. The highway has been moved before. It was 2018, 2019 near Eloy. We saw the highway moved. Adod was the agency that did the approvals that led that process. And that's what we believe will happen here. And so we're going to be speaking to Adod very, very soon and starting the ball rolling on this. But you know, we've already made significant progress on this, Michael, because last year we hired Kim Lee Horne. This is a well-regarded, prestigious engineering firm in Arizona. We hired them to do a feasibility study on moving the I-10. And that study was completed in 2025. And so it outlined essentially all the steps we need to do. And I align the cost of $42 million. That's included in our initial CAPEX. That's in our 43-101 report. And in the 43-101 report, you can read quite a lot about the highway re-alignment. But the main catalyst that I'd like to point investors to, if they're interested in when will we hit a major de-risk point on the highway move, that's going to happen very soon. I believe that will happen in the first half of 2027. It's called the design concept report. So the design concept report, what that is, is it's an extensive report, the main part of which is a feasibility study, which if you remember a few minutes ago, I explained we've already completed that. So we're well on our way to completing the design concept report. There are a number of other minor studies included in that that will be completing over the next six to nine months. And then according to advisors, we believe A.DOT will probably take something like three to six months for their internal processes to review and ultimately give us an approval. And so when we get that approval, which could be something like mid-2027, maybe Q3-2027, I think that's the major de-risk catalyst for that because that approval is kind of the big stamp that you need to then proceed with the detail engineering and then ultimately construction on the movement and re-alignment can begin. So with anything meaningfully happened in terms of when you're actually doing the mind construction in terms of that being a hold up for getting the whole mind through to completion. No, not at all because the pre-stripping can occur, almost the entire pre-strip can occur prior to the highway re-alignment because if you look at some maps and obviously this is an audio format, but there's some maps in our technical report that will show you where the highway overlaps the pit and you'll see it's on the very edge. So it's not necessary to move the highway prior to almost all of the pre-strip and it's a two-year pre-strip. You know, that occurs over the course of the two-year construction period that we outlined in the PEA. So there's plenty of time to move the highway. We think that construction of the highway takes probably under 12 months. There is some potential to actually start this process prior to the final investment decision if that's a path we wanted to take and if we wanted to start that process even before construction. But I think there's very low risk in terms of timing pre-strip versus highway alignment even if we start that at the beginning of construction. You did mention that we are in a high-metal environment in your enjoying these high copper metal prices any chance in terms of actually moving the PFS up from 2028. I think we're going to stick to our timeline there. I think we're going to be conservative in our timeline. You know, we see other companies and some are aggressive and some are conservative. But you know, we think it's a 24-month timeline and I'll explain why. The first year of this program, let's call it data collection, right? We need to really, really collect all the data we need to do the very best study and optimization and configuration of this project that we can. We've got an extensive drilling program planned. We're going to be doing a few things with this drilling program. We'll be doing, of course, the obvious thing which is the infill drill, getting all that inferred resource, you know, up to measured and indicated so we can later then, you know, upgrade this to a reserve as we look at the economics. But in addition to that, we're doing a lot of drilling for resource expansion. And we believe there's a huge upside here for the resource model, for how much resource we can ultimately show the market that we have because they could look at our strong and Harris pit. This is the one that wasn't in the original PEA back in 2024, but it was something that we added in the latest PEA. It's got very high grade. We added in a small pit of 25 million tons in the latest PEA, but we already know that there's 75 million tons there. We know that from historical drilling. And we know that there is extremely probable drill targets all in and around the known mineralization because of geophysical work we've done. We've got highly correlated magnetic anomalies to the known mineralization. And we've got very, very big magnetic anomalies around it. And within the individual sort of lenses of material that we know about. So we believe strongly that these magnetic anomalies that have not been drilled at the strong and Harris satellite deposit with the appropriate drilling. And remember, we're ear marking 10 million US for resource expansion drilling. And the bulk of that will be at strong and Harris due to the high potential. So with luck, with success, if the geologists are right, I think we could see a very significant increase in the strong and Harris pit. We see too as much as 150 or 200 million tons. And I think that's going to add a lot more metal. You know, we added 20% in metal to this project in 2025 with the work we did. We went up from 2.7 billion pounds of copper. to 3.2 billion pounds of copper in the mine plan. And investors just fed that back to us and that was what they wanted to see. That was great and that's what people want to see. And that's why we're focusing on this in our drill program for 2026. So I think we have a high potential at strong and Harris, but we also have potential in other areas of the property. If you look at some of our materials, you'll see in our Cochis mining district that we control, we've actually got 12 known deposits today. And we are just looking at this as a big district that with further work could have a lot more satellites in it that could feed into the main gonson processing plant. And just before we move on, I just want to say in the drill program, there's one more important area. And that's drilling for metallurgical testing. So something that we're very focused on in our PFAS is to do our robust metallurgical test program. And this is really important if you're someone very technical following us or if perhaps you're one of the bigger mining companies that we're talking to who might want to do an investment with us or partner with us. People want more certainty on things like the recovery rates that we're predicting or the acid consumption. And at the PEA level, the study that we put out, if you take a look at how many column tests, for example, these are tests you do in the laboratory for metallurgical analysis. We had something like 20 or 25 of those, which is sufficient for a PEA level study. We're planning almost 300 such tests in the PFAS. So we're going 10 or even 15 X on our total testing to get robust and big data sets that everyone can feel very, very confident that from a statistical point of view, from a probability point of view, from a confidence-interview, a bold point of view that what we're saying for recoveries and for acid consumption is correct. - Talking about that drilling right now, what is it like in terms of actually being to get drillers and getting the people for doing the work? These are red hot metal prices. There's a lot of tailwinds, there's a lot of government support for copper for metal projects. Certainly heard from a number of other people saying that look, my asses have been delayed. It's really hard to kind of secure workers. It is environment. Could that cause any issues in terms of as you're marching up to the PFAS? - It's interesting because I've heard a lot of talk about this recently. I mean, we have our drillers locked in, we've got two rigs that are going to be starting and then we're going to be moving that up to six as the program develops and as the work unfolds. So we don't have any concerns about being able to secure the rigs that we need or the people that are needed to operate those rigs. That seems to not be a problem in our geography here. But I have her talk about this. So I believe that other areas may be suffering some shortages. In terms of assay labs, there are a number of labs and the one that we're going to be working with, I won't say it by name, but we already have our agreement with them. So I'm optimistic that our timelines will be as intended. - It's sticking with the PAO, so there was mention of an acid plant as well too. Can you talk a little bit about more of that piece? - This is incredibly important and this is something that isn't spoken about very often. If you are a heap leach operation, which is what this is, you know, it's an oxide copper heap leach and that's something that's going to deliver a much lower operating cost. It's going to deliver a much lower upfront capital cost than a comparable concentrator sort of flow sheet, right? Concentrators cost a lot more in CapEx, much higher unit costs. They make wet tailings. Those are usually a problem for people. We don't have those problems. And finally, it's going to make the finish copper in the United States, right? We're going to make the finish copper cathode, which is going to be supplied to the domestic market. So for all these reasons, being a heap leach operation is very, very beneficial for us as a company and, you know, frankly, for our society. But it all depends on the supply of acid because that's the major input from an operating basis into operating a heap leach, right? Because the acid is what you sort of put it on the ore and it leaches, it's called the copper out of the ore into the solution, that solution's pumped to the plant where the finished copper is made. So securing a supply, a dependable supply of acid is extremely tricky in Arizona because there's no excess acid production at all within Arizona. So you have to import acid from foreign. And it's either going to be from Mexico, which is the preferred place because it's the closest or it's going to be from Canada, which has lots and lots of acid, but it's very far away. So high frates, or worse yet, Asia, even further, even higher frates. So great, again, this is a major, major part of the cost of getting acid to your site. It's a bulk commodity. So the less frate you have, the less distance or the less volume, the better for your pricing. So securing supply of acid is difficult. And in the best of times, the pricing is highly volatile and is really outside of your control. Like, look at today, we have China, you know, just recently. They banned acid exports. China's a major supplier. They've got so many smelters over there. They're making an acid as a byproduct of smelting if people don't know. They blocked their exports. And that's had ripple effects around the world. And it's really, really caused us spike in the price of acid. And you're seeing incredible prices of acid. You know, at our Johnson Camp, we're buying acid today, right? We're in production today. We don't have an acid plant yet. We're buying acid. And we have a locked in contract. And it's $270 per short time. If you look at some of the studies out there, you see other projects saying they're going to buy acid for $150 or $160 a ton. And it doesn't say anything about where they're going to source it or how they came up with that price. So when you look at the prices that are in the real world, they're a lot, lot higher. You can't even secure a supply of acid. So there's a lot of risk. This is the biggest reason why we want to have an acid plant. Is reduce the risk of the acid supply for this main commodity input. Because when we make our own acid, the major input that you buy to make your acid is called molten sulfur. And that's produced in abundance domestically in the oil and gas industry. So for example, in our study, readers can look at that and see all of our analysis on all the people we talk to in oil and gas and in rail infrastructure to come up with our pricing and to come up with our supply point. And we're planning to buy our molten sulfur out of Beaumont, Texas. There's four different companies there with oil refineries. They make north of 1.5 million tons of sulfur per year. We're only going to need 300,000 tons a year to fully operate our acid plants. So to sum it up, we've reduced the risk. We'll make our own acid. We're going to have a supply that's domestic and in abundance. And finally, there's a big, big value increase to us. Because it only takes one ton of sulfur to make three tons of acid. So instead of paying freight on three tons in for a bulk, we're only going to pay freight on one ton in for sulfur. So it just makes all the sense in the world. Now, the trade-off to sort of conclude on this is that there's almost 300 million in upfront capex. So when people look at our upfront capex, it's 1.55 billion. They might say to themselves, that sounds a little high. A big part of that is almost 300 million for the acid plant. But the benefits you get for that, far, far, far away, any negatives of that increase upfront capex. Say that again in terms of the prices. I mean, we do have high acid prices right now, just because of the trade disruptions that have been going on. But this is just a point right now as well, too. Looking at historic prices and the way that you're set up, you do believe that you will have supply prices for acid that will be sustainable over the long run. So if you're talking about projects that are purchasing acid, I think there's a lot of risk there. I think there's a lot of risk. If you're purchasing acid in the spot market today for delivery in southern Arizona, you're going to be in the probably 300 dollar plus range per short ton of acid delivered. Now, keep in mind, where you're located, that makes a big difference. Because remember, freight is a very big part of the total cost. So there's a benchmark price plus freight. So it's very, very localized, and it's very, very specific to where the project is. And the market information is very opaque. You're not going to get information out of about this publicly for free. You're not going to get good information at all. So it's very difficult for investors to sort of peel the onion on this and come up with their own projection of the price for acid. But I can tell you that I think the future for acid is a very high price. It's volatile and it's risky. And that's the main reason why we've elected to build our own acid plant. Let's turn to Johnson Camp as well. So what again, are you producing out of that? What's the cash flow that's coming out of that? And then that's going to be seeing you through to being able to eventually develop Gunnison. So the Johnson. Camp is a very special unique situation. This is a mine restart and it was done with our partner Newton. Newton is a division of Rio Tinto. They've developed a technology for sulfide copper leaching. So if you think about sulfide copper in the past and the present, you need to build a concentrator for that. You can't recover that effectively with just regular old acid. You might only get 10% recovery on that. So that's not going to be cost effective. So up until now, you've had to build an expensive concentrator making a copper concentrate or less shipping it over to Asia for smelting. You're not going to control the finished product and there's a lot, a lot of costs, not to mention wet tailings and all the problems with that. So I think where Newton's coming from is if they can show the world that their sulfide leach technology works and it's economic and that's what they're showing with us at the Johnson Camp that that will be a whole new ballgame for new projects as they come into construction right because now there'll be a choice. Do you want to come into construction with a concentrator approach or do you want to come in with a sulfide leachie approach? But before we get to that sort of revolution, they need to show the market that this thing works and that it can deliver in a cost effective manner. From the point of view, does it work? Does it produce copper? The answer is clearly yes. We've been producing copper with the technology since December of 2025. It's now midway through 2026. So we've got a track record of five or six months where we've been producing copper. So we know that works in terms of making copper. But what about the cost? What's the cost per pound? That's something we don't have clarity on yet. As we ramp up the circuit, you can't really rely on those unit costs to date because we're only at about 40% of name played capacity. So of course, on a per unit basis, the costs are going to look very high as all the fixed cost is divided over a lower than intended number of units. Now once we get this thing up to full capacity, which I expect by the end of the year, I think then as we start to develop a six and 12 and maybe even a 18 and 24 month track record, that'll be the track record that the market can say, look, now we can see how much it costs. So we're not going to know how much it costs reliably in the very near future. It's going to be some amount of time. So investors will have to bear with us as we ramp this up as we report publicly in our MDNA and our financial statements and other disclosures to start to see the cost. But you can't really judge it based on the costs at a 40% ramp up as they are still working on this thing. What's the structure of the partnership with Ritenta? So again, this is very unique. So Ritenta, a K Newton, has fully funded this. The construction was about $145 million. There's probably been about $45 to $50 million in other carrying and other ramp up costs to date through the project. So we're at something like $200 million of investment. And think about it as like a 0% interest financing. So Ganesin is the 100% owner and operator of the Johnson Camine. The Toyota does not have any equity stake and they gave us all the money, but we have to pay back the money. We have to pay back the money, but it's restricted to only being paid back from positive cash flows from Johnson Cam. So if there's continued losses at Johnson Cam, then Ritenta has to fund those. And if it never makes money and something goes wrong with the technology and we have to shut it down, then Newton has to pay for that as well. So it's a ring-fenced asset as the way I'd look at it. There's very little risk to Ganesin because all of the costs are covered by Newton. Now in the more likely scenario where the technology is successful, then I think what we're going to be seeing is positive cash flows starting later this year as we get into profits per unit. Those positive cash flows will be repaid to Newton thereby reducing the amount of funding to be repaid. And then over the life of what's called stage two, this is a four year remaining four year agreement that ends in mid 2030, we'll be repaying that funding. Now, the earlier of either A, we fully repay the funding to zero or B, we get to mid 2030, the end of stage two. At that point and then going forward, all of the free cash flow will accrue to Ganesin. Newton does have a one time option to joint venture with us at the end of stage two. They can elect to become a 49% minority partner if they want, or I think in the more likely scenario, they won't do that and they'll instead license us their technology going forward from that point. We think there could be something like a 10 year mind life left as at mid 2030. So I think this thing could be a nice secondary asset that could generate a reasonable amount of cash flow for us over the years. How are you taking advantage of all of these tailwinds that we are getting for mining right now? You know, you have the Department of Energy and War, which are backing a domestic copper. I saw that you also are supplying copper to AWS at Amazon for the data centers. I'd be interested in how that deal came well as well too. But again, with these high metal prices, easily, you know, governments wanting to champion domestic metal projects. What do you see in terms of, you know, as you have a student CEO role in terms of kind of taking advantage of this environment, the way that it stands? It's just an incredible time to be advancing a project or mining or producing critical mineral in the United States. I think the Trump government, it's the best we've ever seen in terms of stimulation of the domestic market. It's just been incredible like one after the next positive developments. And you know, what we're doing here, if you look at our mission statement, is we're advancing, developing, constructing and operating copper mines in southern Arizona to supply finish copper to the domestic clean energy, defense and manufacturing supply chains. So our mission statement and our values, they align very, very closely with what we're seeing coming out of the federal government. And I think that positions us very well to continued partnership with the US government. If you look at our track record, we have already partnered with them. We partnered with the Department of Energy. Back when we were at the earlier stages of the Johnson camp construction, we spoke to the Department of Energy. This is late 2024. We applied. We showed them our project. We said, we think you should back us. We'll be able to bring this into production within a year. And we're going to supply the US supply chains with this for clean energy and other. And they agreed. They said, we agree. This is a good project. They gave us a 13.9 million allocation of what was called 48 C tax credits. So essentially endorsed us. We were the only copper project that was at least that we know of publicly that received such an endorsement in 2025. And the important thing is that over the course of 2025, we delivered. We successfully restarted. We successfully started production. And now we're selling copper into the supply chain. And like you mentioned, one of our customers through our off-take or reotento is Amazon Web Services. And this is an incredible company that of course everyone's heard of them. They're really big player in data centers in cloud computing. And what some people might not know is that AWS, they're actually a major supplier to the Pentagon. They're cloud computing capabilities. They're supplying it to over three branches of the United States Armed Forces. So AWS is the defense supply chain amongst other things. So I think what we're showing is that A, we can deliver to the government what we said, B, we're already in the defense supply chain. We're already supporting it. And C, we didn't talk much about this yet. But we have really good support in Cochise County. That's where we operate. The state of Arizona. That's the broader place where we operate. We brought two minds. In the last five years, all the way into construction and production and got those fully permitted with sort of no challenges to that. So I think that's a testament to how we work well with the stakeholders, with the communities. And so we've got a good track record and we're not controversial. So when you add up all these factors, I think it puts us in a great position to further talks with both Department of Energy and Department of War about how we could partner with them because all of our values and our mission are fully aligned with them. And I think it just makes all the sense in the world for further partnership. And in fact, the senior team and I here are very, very much focused and putting a lot of energy into developing a further partnership. For example, we'll be in Washington next week meeting with people from both the departments of energy and the Department of War for further discussions. So keep watching us, follow us on GunnisonCopper.com, look at our news releases. And I think you might see some developments in this area in the near future. >> Lastly, Greg, let's talk about time. timelines and news that investors should particularly focus on over the next 12 months. So I assume then you're going to be seeing drill results that are going to be coming out. You talked about the major news announcement regarding what is happening with the road and then there also be metallurgical coming up as well too, correct? Yes, those are all excellent examples of catalysts that are coming up. And there's some more, but before I talk about what's more is like those catalysts, I just want to emphasize for investors, those are not things that are all going to, you know, it'll be radio silence and then you'll hear about them in two years when we finish the study. These are things that are going to be happening in, you know, three, six, 12 months, 18 months. So there's a lot of catalysts that are going to hit this calendar year. And in fact, I believe we have a strong chance of completely amending at least one of our permits in this calendar year. I believe the mindland plan of reclamation could be amended within this calendar year. So that's an example of an additional catalyst. That's a big, big catalyst because when we talk to those bigger mining companies, right? Part of our strategy here is we would like to partner with a bigger, well capitalized, you know, big, balance sheet mining company that builds minds, right? That would be a good partner for us as a junior company to help us advance, construct, and go into production at the Gunnison project. And they're very nervous and concerned whenever it comes to permitting because there's lots and lots of examples of projects with opponents that were delayed for years or even decades because they didn't, you know, have their permits and they couldn't get the permits. So in our case, you know, we've got a strong rack track record of permitting, but even so, I think actually having the permit amendment in hand with sort of no lawsuits on that, I think that's going to be a big, big, de-risk for those and help us to land that big strategic partner. Greg, thank you for speaking with Miningstock Daily. Thank you so much, Michael, and thank you to all the listeners. The information presented should not be considered investment advice. Miningstock daily and civilians are not responsible for any loss arising from any investment decision and connection with the material presented herein. Please do your own research or speak with a license of financial representative before making any investment decisions.