Drilling Continues To Bring Cactus and Parks/Salyer Into Measured Category

CASA GRANDE, AZ - George Ogilvie, CEO of Arizona Sonoran Company, said, “The Company has continued to deliver on its key objectives and will continue striving to outperform. Ongoing work programs include our advanced metallurgical programs, final engineering, mine planning and site characterizations as we progress towards our PFS. Our drilling also continues, both infill and exploration, as we look towards upgrading resources again from the indicated to measured category. As the Project and Company continues to evolve, strengthening of the owner’s team sets us up well for future technical studies and any eventual decision to move into a construction and development phase.”

After receiving both the Mined Land Reclamation Permit and the Industrial Air Permit in early 2023, the Cactus Project has received all major permits related to its 2021 Preliminary Economic Assessment. As a result, the Company has demonstrated the ability to obtain major permits from the regulators with the support from the community. The framework to receive the remaining permits will be guided by the pending PFS and a future construction decision, including amending major permits with updated site characterizations and mine plans, and applying for the remaining minor permits. The Company continues to benefit from water rights to a permitted water source, as well as a streamlined State and local Municipality permitting process related to the private ownership of a brownfields project with no federal nexus.

Two years of metallurgical testing is now complete to the PFS level at Parks/Salyer and Cactus. Metallurgical column leach testing and hydrodynamic testing supports multi lift leach pads when crushed to a top size of minus 1 inch (25 mm). Depending on the deposit, enriched material recoveries range from 80-76% and the oxides recoveries range from 92-88%. Feasibility-level metallurgical testing is ongoing onsite in the TruStone Facility. Gross sulphuric acid consumption continues to show approximately 22 lb/t and net consumption of 16 lb/t in the oxides, whereas the enriched material continues to demonstrate acid generation which will be recycled onsite, potentially lowering costs.

Drilling

Infill to the indicated category drilling at Parks/Salyer is complete for the PFS. The Company expects a high percentage of the inferred mineral resources to convert to the indicated category, which will then be utilized to calculate first reserves in Q1 2024.

New drilling at the Parks/Salyer and Cactus deposits has been ongoing since April to bring Cactus East and the eastern half of Parks/Salyer into the Measured category. A total of 125,000 ft (38,000 m) of infill drilling in these two areas is expected to be completed by the end of 2023, with 45,000 ft (14,000 m) of drilling already complete at Parks/Salyer at the end of June. Exploration along the mine trend is ongoing, with previously identified target areas being evaluated for future drill testing by surface geochemical (Ionic Soil) surveys and 3D modeling of existing drill data.

In February, ASCU optioned an additional 523 acres of private land contiguous to Parks/Salyer known as MainSpring, for total cash consideration of US$14 million and due in staged payments. A total of US$3 million has now been paid to the vendor, the most recent payment of $2 million was made upon completion of the due diligence period. Final payments will be paid upon successful re-zoning the land ($5 million) and upon the second anniversary of the close date ($6 million). Re-zoning approvals are expected on half of the property late in 2023 and the balance in early 2024, based on local hearing dates. The additional land is expected to provide significant operational flexibility with respect to site and infrastructure requirements for the re-scoped PFS, as well as a new exploration target, as the southern extension of the Parks/Salyer deposit. Resultant from the acquisition, the combined Cactus and Parks/Salyer project is now 5,368 acres.

NutonTM Technologies

ASCU released preliminary extraction rates of 61%-82% for primary sulphide material from Stage 1 Nuton column testing after completing 50% of the 300-day cycle under the testing program. Extraction rates indicate the potential to achieve an optimized 80% life of mine extraction rate for primary sulphides. The Q1 2024 PFS base case will not incorporate the primary sulphide opportunity into the engineered mine plan. The Company is however, working with Nuton to reach a commercial framework agreement that would incorporate the Nuton case into an updated PFS or other future technical study. There is however no certainty that a commercial arrangement may be reached.

The Nuton primary sulphide leaching technologies are applied within a conventional crushed and agglomerated feed, bio-heap leach flow sheet, to extract copper sulphide minerals. The Nuton process also assumes the addition of catalytic and other reagents and a bacterial growth and inoculation facility.