The Market Online speaks with Highland Copper Company Inc. and CEO Barry O' Shea as advanced copper project in the US ready for construction.
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00:00Welcome to the Capital Compass, I'm Lindsay Malczuk with Stockhouse Publishing.
00:09Today we're spotlighting a company that's aiming to meet the surging demand for critical minerals,
00:14with one of the few fully permitted copper projects in the United States.
00:18Highland Copper Company is advancing its flagship copper wood project in Michigan's Upper Peninsula,
00:24a near-term development opportunity with 3.7 billion pounds of contained copper,
00:29and an initial 11-year mine life.
00:32The project stands out not only for its size and scalability,
00:36but also because it's fully permitted, a rare achievement in today's regulatory environment.
00:42Backed by institutional investors and supported by state and local stakeholders,
00:46Highland is aligning its development timeline with a broader push for U.S. critical mineral independence.
00:52Joining us today here at the studios is Highland Copper CEO, Barry O'Shea.
00:57So thank you for joining me today. This is a pleasure.
01:00Nice to be here. Thank you.
01:01So, you know, I want to actually just jump right into this conversation if we can.
01:05Now, Copperwood, they are fully permitted and they are technically advanced.
01:10That we know for sure.
01:11So what are the remaining pieces that need to fall into place before a construction decision is made?
01:16Well, I'm actually going to start with some really good work that we did in 2024.
01:19We did our initial site impacts.
01:21Really important to turn the site from a greenfield into a brownfield.
01:24It had some really nice byproducts.
01:26We started working with local contractors, really engaging with the local unions and working with the state authorities.
01:31So really gaining, you know, gaining credibility in the region as we've done over the past many years.
01:37So 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.
01:46In January of 2025, we initiated detailed engineering alongside our partners, DRA Global.
01:51So with that, we did some metallurgical drilling in February to support a MET test program.
01:56We really think that ultrafine flotation technology can have a really significant boost to the economics of the project.
02:01So 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.
02:12You know, that's a big year in 2024.
02:14And now, you know, all that coming down the pipeline, that's pretty exciting news for sure.
02:19Yeah, you know, 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.
02:25It's time for it to move forward right now.
02:27So your model actually shows significant upside with a rising copper price.
02:31So really, I mean, how is the project positioned if the copper market doesn't go the way it's supposed to go in the near term?
02:39Well, listen, I think copperwood is robust to the whole series of copper prices.
02:43At a $4 copper price, that's actually the price that we did our feasibility study at.
02:46And it shows a good, robust project.
02:49At $4, it's 170 million NPV and 18% IRR.
02:53But really, where you see the torque is movement to $5.
02:56So that's a 25% increase in copper price.
02:58It gives rise to a 300% increase in net asset value.
03:02Naturally, we're sitting at around $450 or $460 today.
03:05So as you move along that curve, just incredible leverage.
03:09But we're not only depending on copper prices, there are other things that we can do.
03:12I mentioned the metallurgical test work to improve the grade recovery curve.
03:15There is significant capacity to add mine life to the project.
03:19And all of these things will continue to progress so that it's our execution alongside copper price that really adds value to the project.
03:26Well, that shows some sustainability right there.
03:28That's for sure.
03:29Now, let's flip over.
03:30There is strong momentum and community support right now with state and federal focus on critical minerals.
03:35So, you know, what's your prospects for securing government funding then?
03:39Yeah, I'm going to start with that local support.
03:41I think it's really important.
03:42I think everybody knows you need to be welcome in the exact community that you work in.
03:46It's the Western Upper Peninsula.
03:48It's a historic mining district.
03:50There's a real nostalgia and love for mining.
03:52In the recent six months, we've gone out and received resolution support from 22 local units of government from counties to townships to municipalities.
04:01So it really demonstrates that there's a true desire for the project.
04:05And with good reason.
04:06It's, you know, there are a whole host of things that this project will bring to the local area.
04:11Alongside that, there's obviously incredible bipartisan support at a state level.
04:17And of course, with the recent executive order at the federal level, the, I guess, the federal conversation on urgency for critical minerals and specifically copper has really intensified.
04:26So from local to state to federal, we're just feeling very welcome.
04:30Copperwood really is a project that needs to be built in the near term.
04:34In terms of financial support, you might know that the state of Michigan is considering giving us $50 million.
04:40That project nicely moved through the Michigan Economic Development Corporation.
04:44It was approved by the Michigan Strategic Fund.
04:46And it's also been approved at the House at the legislative level.
04:49It is now at the Senate Appropriations Committee.
04:52And I will acknowledge we've had some challenges there.
04:55And that's okay.
04:56At each level, you know, different units of government are looking for a different level of understanding of the project.
05:02So we continue to educate the Senate on the merits of the project.
05:06And there really are many.
05:07It's quite a generational opportunity from an economic perspective.
05:11Of course, it brings a critical supply of copper into the U.S.
05:15And I think most importantly, you know, acknowledging that the state of Michigan has very environmentally strong regulation.
05:21It's a project that can be built well for the local community sustainably and economic strength as well.
05:28You know, we're in some interesting times right now.
05:30To have that backing, that's pretty big news right there.
05:32Indeed.
05:33Yeah.
05:34Okay.
05:35So let's move on then.
05:36You do have some institutional backers like your largest shareholder, Orion.
05:40Okay.
05:41So that is clearly aligned.
05:43How do you see their involvement in the strategy when you're moving from development into production?
05:51So first of all, through the early stages of development, it's really important to have strong, you know, loyal shareholders like Orion.
05:58So we benefited from that.
06:00Orion have always seen, I think, the value of U.S. domestic copper production.
06:05And that's really playing out as we've seen over the past number of months.
06:08We think the timing is right.
06:10And again, having Orion there, you know, they've demonstrated on other projects real creative financing opportunities across the value chain from equity to debt and other pieces.
06:22So we think that they're going to play a strong role as we continue to move forward.
06:25And of course, that's going to be important as we consider project financing over the next year.
06:30Okay. So if we further into that a little bit, you know, with a large share count and more capital needed to move into production, how are you thinking about managing diletion and long-term share value then?
06:43Sure. So let me start with the share account.
06:45Actually, we do have just over 700 million shares outstanding.
06:48That is something that we'd actually like to take care of to some degree with a share consolidation.
06:52You probably know to do a good share consolidation, you know, you need a strong environment behind you, both macro and of course execution from a company perspective.
06:59And as we've laid out, we think there's going to be good opportunity for both of those through 2025.
07:04And ideally, we'll roll back the shares.
07:06I think that'll make the shares, you know, just more reasonable, certainly from a U.S. retail perspective.
07:12In terms of considering a project financing, yeah, naturally, we need to move our market cap along to be able to maintain appropriate dilution as we think about project financing.
07:22But you'll also know that to do an equity financing, it's at the tail end of a whole host of catalysts.
07:28We'll have worked through our engineering. We'll have understood the outcome of our metallurgical drill results.
07:33Ideally, we'll have had visibility some of the state and federal funding opportunities that we have.
07:38We'll understand where the debt financing has landed.
07:41And all of these things will bring increased viability and, of course, share price appreciation before we consider that final piece.
07:48Dilution, of course, is important. We want to manage our shareholders as we work through this process.
07:53Well, I mean, this has been such a delightful conversation and so much insight.
08:00Thank you so much for joining us today.
08:01Thank you very much. I appreciate it.
08:02Again, that was Barry O'Shea with Highland Copper Company.
08:06You can learn more about Highland over on their website at highlandcopper.com
08:11and be sure to bookmark stockhouse.com for all of your market news.
08:14I'm Lindsay Malchuk. We will see you next time.