Mr. George Ogilvie reports

ARIZONA SONORAN STANDALONE PEA FOR CACTUS OPEN PIT PROJECT REPORTS POST-TAX NPV8 OF US$2.03 BILLION (C$2.77 BILLION) AND IRR OF 24 per cent AND LOM EBITDA OF US$11.29 BILLION (C$15.36 BILLION)

Arizona Sonoran Copper Company Inc. has released the results from a National Instrument 43-101 preliminary economic assessment (PEA) on its 100-per-cent-owned brownfield Cactus project in Arizona, United States. The PEA supersedes the previously released prefeasibility study (PFS) in all respects and rescopes Parks/Salyer as an open-pit operation resulting from the inclusion of the MainSpring property. The inclusion materially improves the economics and operations of the project, producing a total of 5.3 billion pounds or 2.7 million short tons of LME Grade A copper cathodes over a 31-year operating life of mine by heap leaching and solvent extraction and electrowinning (SXEW), an established and industry-standard hydrometallurgical extraction technology. All dollar amounts referenced herein in U.S. dollars, and all references to tons are imperial or short tons, unless otherwise noted; one short ton equals approximately 0.91 metric tonne. The company previously issued a news release on July 16, 2024, disclosing an updated mineral resource estimate for the Cactus project, which formed the basis for the PEA.

A webinar will be held on Aug. 8, 2024, at 10:30 a.m. ET. Please join George Ogilvie, Nick Nikolakakis, Bernie Loyer, Steve Dixon and Anthony Bottrill in discussion of the PEA and the company's next steps by registering on-line.

The PEA is preliminary in nature and it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the project described in the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Mr. Ogilvie, president and chief executive officer, commented: "We achieved and far surpassed each goal to demonstrate leading NPV, IRR and payback, and all other operational and economic metrics from the Cactus project. The PEA represented herein delivers a highly compelling copper mining operation, on a stand-alone basis. The project size and top-tier location are complemented by a highly skilled operations and development team already based in Casa Grande and motivated to deliver an executable plan. After completing the MainSpring title transfer in March, 2024, and subsequently obtaining the general plan arrangement approval, MainSpring's integration to Parks/Salyer positively impacts the operations, lowers mining risks and is over all transformational to the economics."

He continued: "We now look forward to completing metallurgical programs and the infill drilling to support a PFS expected in [H1 2025]. Clearly, Cactus shows merit on a stand-alone basis and we will continue to move forward with this mine plan while continuing to work with our partner, Nuton Technologies, a Rio Tinto venture. We envisage Cactus, a brownfield copper mine, as having the size and scale capable of making a meaningful positive impact to the U.S. copper mining industry."

Key impacts on the NPV:

• Mine plan execution rescopes to 94 per cent open pit:
  • Parks/Salyer and Cactus West are open-pit operations; changes positively impact annual throughput, mining costs, operating costs and processing costs;
• Mineralized material impacts:
  • Life-of-mine tonnage processed of 889 million short tons, including:
    • 659 million short tons of oxides and enriched material:
      • Parks/Salyer: 69 per cent:
        • Including new MainSpring inferred mineral resources of 245 million short tons at 0.39 per cent total copper (see press release dated July 16, 2024);
      • Cactus West: 23 per cent;
      • Cactus East: 6 per cent;
      • Stockpile: 2 per cent;
    • 230 million short tons of primary sulphides to the leach pads with current recoveries reported at an average of 25 per cent from year 15:
      • Parks/Salyer: 34 per cent;
      • Cactus West: 66 per cent;
• Processing cost impacts:
  • Processing initial capital expenditure (capex) of $511-million, including contingency (SXEW plant and owner costs);
  • Processing sustaining capital of $553-million (process plant -- average of $18-million per year);
  • Processing operating expenditure (opex) of $2.29 per short ton;
• Other cost impacts:
  • Updated salvage cost, land sales, closure and royalties;
• Mining cost impacts:
  • Mining opex and capex impacted by Parks/Salyer rescope to an open-pit mining operation;
  • Initial capex of $157-million (preproduction stripping);
  • Mining sustaining capital of $544-million, optimizing the per-ton mining costs (average of $18-million per year);
  • Operating expenditures of $8.16 per ton processed.

Mr. Loyer, senior vice-president, projects, commented: "The evolution of the MainSpring and Parks/Salyer open-pit combination as demonstrated by this PEA presents a profound change to the Cactus mine business case. That impact can be gauged in the project's robust economics and also in the contribution that this generational asset is expected to make to our local communities for years to come. With the anticipated creation of more than 3,000 direct and indirect jobs and more than $2.2-billion in life-of-mine federal and state tax revenues, Cactus mine is anticipated to become a cornerstone business for the local economy. Great copper projects are where you find them and that often translates to remote and sometimes complicated jurisdictions around the world. In contrast, the combined heritage of the Arizona and Pinal county copper mining legacy married to a Casa Grande venue sets an incredible launch platform for this great project."

Mr. Nikolakakis, chief financial officer, commented: "The economics at Cactus in the PEA afford us an opportunity to begin seeking project financing. The company has been in initial discussions with a group of lenders, including commercial banks and an export credit agency. Cactus is projected to generate robust cash flows over a 30-plus-year mine life. The current economic metrics present a unique opportunity for the company to actively pursue financing alternatives as the project advances towards a prefeasibility and definitive feasibility study in 2025."

The company intends to file a technical report in respect of the PEA in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects, on SEDAR+ under the company's issuer profile and the company's website within 45 days of the MRE news release.

Preliminary economic assessment summary

The 2024 PEA supersedes the PFS titled "Cactus Mine Project NI 43-101 Technical Report and Pre-Feasibility Study, Arizona, United States of America," dated March 28, 2024 (with an effective date of Feb. 21, 2024), in its entirety. The PEA integrates the new Parks/Salyer additions from the MainSpring property as inferred mineral resources, rescoped as an open pit. By applying open-pit mining costs to the Parks/Salyer mineral resource estimate, it now contributes 531 million short tons of feed material grading 0.530 per cent total copper to the total 889 million short tons of feed material at 0.46 per cent total copper over the life of mine. Over all, the Cactus project PEA envisages a 31-year mine life with annual average throughput of 29 million short tons, for an average of 86,000 short tons of copper cathodes produced annually. The result is a lower risk brownfield open-pit mining operation with a long life and a streamlined permitting process on private land in Arizona with water rights and access to water from in situ water wells.

A total of 2,872 million short tons will be mined and a total of 889 million short tons will be processed, recovering 5.34 billion pounds of copper cathodes over the life of mine, or 2,669,000 short tons. Copper cathodes will be produced directly on site by heap leach and SXEW, including a four-year ramp-up period. Total copper recoveries are planned at an average of 73 per cent, extracting copper from the oxides, enriched and primary sulphides. Gross acid usage is calculated at 22 pounds per short ton at a cost of $160 per short ton.

On-site facilities at the mine site will consist of two open pits, one underground mining operation, a fine crushing plant incorporating all crushing, classification, agglomeration and conveying systems, a heap leach pad, water supply and distribution systems, technical and operational support offices, additional electrical substation, warehousing, and an SXEW process plant. On-site supporting infrastructure will include site power distribution, access roads, mine operations infrastructure and heap leach facilities, of which the power and roads are already in use.

Current on-site and nearby infrastructure includes:

• On-site administration buildings, geology, core storage, completed earthworks, substation, parking lot and access roads;
• Clean power through on-site substation for seven cents per kilowatt-hour;
• Paved access roads and easy access to interstate highways I-8 and I-10;
• Union Pacific railway line adjacent to the property;
• Casa Grande, Maricopa and Phoenix are all located nearby to supply materials/consumables in addition to a skilled labour pool;
• Permitted water available on site and additional water may be available through the city;
• Flat land and low altitude;
• Located within the city of Casa Grande industrial park.

Mining and processing operations

Mineralized material will be sourced mainly from the two open pits with an overall life-of-mine strip ratio of 2.3:1. The Cactus West pit (1.0:1 strip ratio) and new Parks/Salyer pit (3.2:1 strip ratio) comprise 94 per cent of the total material to the leach pads. The remaining 5 per cent of material will be sourced from the Cactus East underground deposit utilizing sublevel cave from the 1,200-foot (366-metre) level and 1 per cent from the stockpile.

Both Parks/Salyer and Cactus West will be mined using 40-foot (12.1-metre) single benches, with ramps sized to allow 320-short-ton class haul trucks. At Parks/Salyer, all walls have been designed with 45-degree interramp slopes while geotechnical stepouts are employed to reduce the overall slope to approximately 40 degrees. At Cactus West, interramp slopes range from 45 degrees to 50 degrees depending on material type, with typical overall slope angles of 41 degrees to 43 degrees. Gila conglomerate and alluvium constitute the large majority of the waste in the pits.

The mine schedule for open-pit mining at Parks/Salyer consists of 531 million short tons of feed material grading 0.530 per cent total copper, including 453 million short tons of oxide and enriched leach feed material grading 0.55 per cent total copper and 78 million short tons of primary sulphide leach feed material grading 0.41 per cent total copper. Open-pit mining will initiate in Parks/Salyer in year minus 1 and operate continuously for 23 years over seven pit phases. Total waste mined in Parks/Salyer is 1.68 billion short tons.

The mine schedule for open-pit mining at Cactus West consists of 306 million short tons of feed material grading 0.29 per cent total copper, including 154 million short tons of oxide/enriched leach feed material grading 0.26 per cent total copper and 152 million short tons of primary leach feed material grading 0.32 per cent total copper. Open-pit mining will take place at Cactus West in the years of 7 to 11, 15, 19 and 23 to 31. Phase 1 Cactus West is used to smooth stripping requirements of Parks/Salyer in the middle years of the mine plan, while phase 2 to phase 3 are mined in the later years and predominantly supply primary feed material. Total waste mined from Cactus West is 299 million short tons.

The stockpile project contributes 9.8 million tons of conventional leach feed material grading 0.24 per cent total copper, which will be used for project commissioning in year 1 of processing.

After a comprehensive review of Cactus East, sublevel caving (SLC) was selected as the preferred underground mining method. A sublevel-cave underground mine is planned for Cactus East, with development beginning in year 8 and mining completed in year 22, peaking at 3.9 million short tons per year. Total Cactus East feed material mined is projected to be 42 million short tons grading 0.83 per cent total copper. The initial Cactus East SLC level will begin at 1,325 feet (404 metres) below the surface over seven sublevels, to a final depth of 1,845 feet (562 metres). Access will be through a single decline with a portal located within the existing Cactus West pit. Haulage of mineralized material to surface will be through a vertical conveyor which can be supplemented with truck haulage to surface through the open pit if necessary.

The Cactus project heap leaching process design includes crushing of all material types for leaching to a minus-three-quarters-inch P80 size. All material types (oxides, enriched and primary) are to be leached in on a single pad with an initial leaching cycle of 180 days. A maximum three-year leaching cycle has been assumed (three lifts) as the practical limit for effective recovery based on experience and hydrodynamic analysis of the materials by HydroGeoScience Inc. (HGS). The copper leaching metallurgical test data have been extrapolated from the testing data at one year based on the rates prevailing after one year using a logarithmic curve fit projection that considers the decaying rate of copper extraction.

Average annual water consumption is planned at approximately 1,200 gallons per minute, the equivalent of 1,935 acre-feet per year, well within Arizona Sonoran's permitted 3,600-acre-foot-per-year industrial use allocation, using in-place on-site wells.

The PEA envisages that overall tonnage will comprise approximately 25 per cent oxide material, 50 per cent enriched sulphides (secondary sulphides) and 25 per cent primary sulphides within the life of mine. From years 15 to 22, placed short tons will consist of approximately 25 per cent primary sulphides, whereas, from year 23, placed short tons will comprise 100 per cent of the operation. Overall copper extraction is impacted by the lower rates from primary sulphides. In the PEA, Arizona Sonoran includes a conservative 25-per-cent extraction rate.

The total life-of-mine costs, operating costs per short ton of processed material and dollars per pound of cathode produced are summarized in the attached tables. Project operating costs include mine operating, process plant operating, and general and administrative costs (G&A). Total production costs include royalty expense. The AISC (all-in sustaining cost) additionally includes initial capex, sustaining capex, and reclamation and closure costs.

Mining operating cost estimates, prepared by AGP Mining Consultants Inc., are based on a small owner team managing mining activities using an owner-operator model. Process operating cost estimates were prepared by Samuel Engineering and G&A cost estimates were prepared by M3 Engineering with input from Arizona Sonoran, as summarized in the attached tables (note that numbers may not add due to rounding).

The capital cost estimates for the PEA were developed with a minus-25-per-cent-to-plus-30-per-cent accuracy. The company uses an estimated overall mining contingency of approximately 18 per cent and according to the Association of the Advancement of Cost Engineering International (AACE) Class 5 estimate requirements.

The PEA is based on the updated 2024 MRE, as published in the MRE news release on July 16, 2024, showing a 41-per-cent increase of measured and indicated (M&I) pounds and an 89-per-cent increase of the inferred pounds. The mineral resources for the Cactus project are shown in an attached table. For more details relating to the 2024 MRE, please refer to the MRE news release, a copy of which is available on SEDAR+ under the company's issuer profile and on the company's website.

Metallurgical test work

Metallurgical test work used for the PEA shows good metallurgical recoveries from all deposits with no deleterious elements. Testing in the PEA shows an average of 73 per cent of total copper extracted over all. A column leach testing program for oxides and enriched sulphides, from Parks/Salyer and the stockpile, is continuing at the BaseMet and McClelland labs (Tucson, Ariz., and Reno, Nev., respectively). Primary sulphide column leaching is expected to begin in the fourth quarter.

Project overview

The Cactus project is a brownfield project located approximately six miles (10 kilometres) northwest of the city of Casa Grande and 40 road miles south-southwest of the greater Phoenix metropolitan area in Arizona. The greater Phoenix area is a major population centre (approximately 4.8 million persons) with a major airport and transportation hub and well-developed infrastructure and services that support the mining industry. The Cactus mine project is accessible on North Bianco Road off of West Maricopa-Casa Grande Highway with direct access to Interstate Highway 10. During historic Asarco operations (1974 to 1984), a rail spur was connected directly with the United Pacific Railroad to ship concentrates to its El Paso refinery in Texas; while the spur has been removed, the on-site rail line is still in existence. Current on-site infrastructure includes power lines and substation, water wells and a water pond, geological buildings, core sheds, and administrative offices, keeping the capital intensity low and demonstrating robust economics.

The Cactus project is host to a large porphyry copper system that has been dismembered and displaced by Tertiary extensional faulting. The major host rocks are Precambrian Oracle granite and Laramide monzonite porphyry and quartz monzonite porphyry. The mine trend features the formation of horst and graben blocks of mineralization where the Cactus deposits are situated, extending from the Cactus East deposit, southwest to the Parks/Salyer deposit. Drilling to the northeast and southwest along the trend indicates that mineralization continues in both directions and at depth at the Cactus West deposit.

Ownership, social licence and permitting

The Cactus project is 100 per cent controlled by Arizona Sonoran through its wholly owned subsidiary, Cactus 110 LLC, and encompasses an area of approximately 5,720 acres. The Cactus project includes exploration and mining on private land and on two Arizona State Land Department (ASLD) leases. There is no federal nexus for permitting the project and all permitting is limited to State of Arizona required permits, including the aquifer protection permit, industrial air permits and the mined land reclamation permit, each of which Arizona Sonoran has received from state regulators. Modifications will be required to address changes in the mine plan presented in the PEA.

Of the 5,720 acres, 4,732 acres are considered fee simple and private land. The remaining acreage is state land, where Arizona Sonoran owns either the surface or mineral rights and is in the process of acquiring the surface rights from the state.

Arizona Sonoran has a well-developed community engagement plan that it has implemented through numerous public meetings and outreach. With the presence of legacy mining in the Casa Grande area and the determination of Cactus as a brownfield and disturbed site, the local community is supportive of the Cactus project. The company anticipates the project to create multiple decades of high-paying jobs that will benefit the local communities and the state. There is no significant opposition to the Cactus project.

Royalties

The Cactus project is subject to three net smelter return (NSR) royalties based on potential mining production. The MainSpring property does not contain any royalties. The Tembo/Elemental Altus NSR royalty applied to the originally acquired land package, including Cactus and Parks/Salyer, may be reduced to 2.54 per cent from 3.18 per cent, with a total payment of $8.9-million. On a portion of the Parks/Salyer deposit, BCE holds a 1.5-per-cent NSR royalty, with an option to reduce it to 0.5 per cent for payment of $500,000, and the ASLD owns a sliding net return royalty (2.0 per cent to 8.0 per cent and estimated at 2 per cent), payable to ASLD and the state trust. Arizona Sonoran will formalize the royalty percentages with the ASLD once the company submits a mineral development report to the ASLD, thus converting the existing mineral exploration permit to a mineral lease.

Opportunities and next steps, including Nuton LLC technologies

Technical studies

Following the issuance of the PEA, the anticipated next steps for the Cactus project include a PFS (which is expected to be completed in the first half of 2025), followed by an early works program, and the company expects to initiate a feasibility study in the second half of 2025. The company is planning project financing for the Cactus project in conjunction with a potential construction decision.

It is expected that the 2025 PFS will include the major economic and operational rescope; specifically, rescoping Parks/Salyer to an open pit and the additional integration of the Nuton technologies. Infill drilling programs are planned for Parks/Salyer composing the first 10 years of operations and into Cactus West for the expansion of primary mineralization suitable for leaching through the Nuton technologies. Pursuant to the option to joint venture agreement entered into between Arizona Sonoran and Nuton, a PFS that includes the application of the Nuton technologies should be issued no later than Dec. 31, 2024, unless mutually extended by written agreement of both parties. Assuming both Arizona Sonoran and Nuton agree to an extension of such PFS, completion is expected in the first half of 2025. Completion of the 2025 PFS will require the completion of infill to indicated drilling and updated metallurgical studies, including phase 2 Nuton metallurgical testing.

Parks/Salyer's grade, scale and scope secure it as the main contributor from day one to the Cactus project (Cactus West -- drilling and finding more primary material). Any future work on the project is not expected to change the mine plan within the first 10 to 15 years of the operation. It provides further optionality on a robust stand-alone plan.

An early works program is in the early phases of being defined and planned for mid-2025, dependent upon financing. The program includes executing the permitting and bonding requirements and optimizing a prestripping program for the Parks/Salyer pit. Due to the brownfield nature of the project, roads, power and on-site administration buildings are currently in place.

Nuton opportunity

The PEA proposes a robust stand-alone project incorporating conventional leaching technology. In order to capitalize on the primary sulphides, initial test work has validated the application of Nuton proprietary technology. As per the strategy outlined in the option to joint venture (JV) press release, dated Dec. 14, 2023, phase 2 metallurgical testing and Cactus West pit expansion drilling targeting the primary sulphides will be included to the 2025 PFS.

Nuton, a Rio Tinto venture, is a copper heap leaching technology. Nuton became a shareholder in 2022 and a potential JV partner in late 2023. Its Nuton suite of proprietary technologies provide opportunities to leach both primary and secondary copper sulphides, providing significant opportunity to optimize the mine plan and the overall mining and processing operations.

Other future opportunities

The project has several other opportunities available to continue the optimization of the operation.

The addition of an in-pit-crush-convey (IPCC) system for waste handling instead of truck haulage will be evaluated for improvement in the economics of the project.

There is a potential to access the high-grade Parks/Salyer material earlier by moving the Parks/Salyer open-pit centroid farther northward.

Quality assurance and quality control procedures

Skyline Labs is accredited in accordance with the recognized international standard ISO/IEC 17025:2005. Its quality management system has been certified as conforming to the requirements defined in the international standard ISO 9001:2015. The standard operating procedure (SOP) used while processing the Arizona Sonoran samples was to process samples in groups of 20. Each tray consisted of 18 samples with samples No. 1 and No. 10 repeated as duplicates. The results from each tray were analyzed and any variance in the duplicates of more than 3 per cent would result in the entire tray being reassayed.

The results of these analyses, including the QA/QC checks, were transmitted to a select set of individuals at Arizona Sonoran and the qualified persons.

Qualified persons

Each of the persons listed as follows is an author preparing the 2024 PEA and has reviewed and verified the contents of this news release as it relates to his or her area of responsibilities. By virtue of his or her education, experience and professional association membership, each of the listed persons is considered a qualified person as defined by NI 43-101.

Scientific and technical aspects of this news release have been reviewed and verified by the qualified persons listed as follows and Dan Johnson, director of projects, as defined by NI 43-101:

• Project management -- M3 Engineering, John Woodson, PE, SME-RM;
• Metallurgy -- M3 Engineering, Laurie Tahija, QP-MMSA;
• Mineral resources -- Allan L. Schappert, CPG, SME-RM, ALS Geo Resources LLC;
• Water and environmental -- R. Douglas Bartlett, CPG, PG, Clear Creek Associates, a subsidiary of Geo-Logic Associates;
• Mine planning -- Gordon Zurowski, PEng, AGP Mining Consultants Inc.

About Arizona Sonoran Copper Company Inc

Arizona Sonoran's objective is to become a mid-tier copper producer with low operating costs and to develop the Cactus and Parks/Salyer projects that could generate robust returns for investors and provide a long-term sustainable and responsible operation for the community and all stakeholders. The company's principal asset is a 100-per-cent interest in the Cactus project (formerly Asarco's Sacaton mine) which is situated on private land in an infrastructure-rich area of Arizona. Contiguous to the Cactus project is the company's 100-per-cent-owned Parks/Salyer deposit, which could allow for a phased expansion of the Cactus mine once it becomes a producing asset. The company is led by an executive management team and board, which have a long-standing record of successful project delivery in North America, complemented by global capital market expertise.

We seek Safe Harbor.