Gunnison Copper Corporation press release

Excelsior Mining Announces Updated Preliminary Economic Assessment on Johnson Camp Mine Incorporating Sulfide Leaching Technology

2023-02-22

TSX - Toronto Stock Exchange · Copper · Limestone · Molybdenum · United States

Phoenix, Arizona--(Newsfile Corp. - February 22, 2023) - Excelsior Mining Corp. (TSX: MIN) (FSE: 3XS) (OTCQB: EXMGF) ("Excelsior" or the "Company") is pleased to announce the results of its Updated Preliminary Economic Assessment ("PEA") on the Johnson Camp Mine Heap Leach, located in Cochise County, southeastern Arizona. The PEA considers the results of the drill program completed in 2022 and the implementation of sulfide leaching technology to improve recoveries. As part of the PEA, the combined report (the "Report") will also include a republishing of the Prefeasibility Study Update ("PFS") on the North Star Deposit of the Gunnison Copper Project. The Gunnison Project is designed as a copper in-situ recovery ("ISR") mine using solvent extraction-electrowinning ("SX-EW") to produce copper cathode and the Johnson Camp mine is a conventional open pit and heap leach operation. Results of the PFS and PEA disclosed in this press release are in United States dollars.

JOHNSON CAMP HEAP LEACH PRELIMINARY ECONOMIC ASSESSMENT

Economic Analysis

The Johnson Camp Mine ("JCM") has historically been an open pit, heap leach operation since Cyprus Minerals opened the property in the 1970's. The operation includes two open pits, a two-stage crushing-agglomerating circuit, a fully functioning SX-EW plant capable of producing 25 million pounds of cathode copper per year, a complete set of PLS and raffinate ponds, and full infrastructure (ancillary facilities, access, power, water, and communications).

Heap leaching of sulfide copper with accelerated pyrite oxidation is proposed in this PEA. The Project plans include mining oxide, sulfide, and transition material from the Burro and Copper Chief pits for 20 years and heap leaching for an additional year to produce copper cathode at a capacity up to 25 million pounds per annum (mppa).

To restart JCM for heap leaching, two developments need to take place simultaneously: pre-stripping and mine development, and the construction of a new heap leach pad, Pad 5. Both are considered to require between six and nine months to complete before irrigation of the new leach pad could commence. Piping of PLS and raffinate lines from Pad 5 to the JCM ponds also fits within this time frame. A PEA has been completed by M3 with respect to this planned re-opening.

Mining of JCM would be by traditional open pit and the highlights of the PEA financial model are tabulated below assuming a copper price of $3.75/lb.

The table below sets out the sensitivities of the After-Tax NPV and IRR to copper price:

| Sensitivity Analysis | | | | | | | Sensitivity | -20% | -10% | 0 | +10% | +20% | | Cu Price | $3.00 | $3.375 | $3.75 | $4.125 | $4.50 | | IRR After-Tax | 11.5% | 20.9% | 30.4% | 39.9% | 49.2% | | NPV* After-Tax | $32 | $107 | $180 | $251 | $321 | | *million $ at 7.5% discount rate | | | | | |

The PEA is preliminary in nature and 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 conclusions reached in the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Mineral Resources

The JCM Mineral Resources are provided in the table below.

Johnson Camp Mineral Resources (0.1% CuT cut-off)

| Classification | Tons | % Cu | lbs CuT | | Measured | 20,771,000 | 0.31 | 127,545,000 | | Indicated | 87,166,000 | 0.32 | 550,118,000 | | M&I | 107,932,000 | 0.32 | 677,663,000 | | Inferred | 50,998,000 | 0.32 | 322,656,000 |

1. The Effective Date of the mineral resources is July 13, 2022. 2. The project mineral resources are comprised of all model blocks at a 0.1 % CuT cut-off that lie within optimized resource pits. 3. Mineral resources that are not mineral reserves do not have demonstrated economic viability. 4. The estimate of mineral resources may be materially affected by geology, environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. 5. Rounding as required by reporting guidelines may result in apparent discrepancies between tons, grade, and contained metal content.

The JCM copper resources were modeled and estimated using information provided by Excelsior under Mr. Bickel's supervision. The information is derived from historical core holes drilled by Cyprus Mining, Arimetco, Summo USA Corp., and Nord Resources Corp, and new drilling completed by Excelsior in 2022. The drill hole database also includes analyses performed by Excelsior on the historical core. These data, as well as digital topography of the project area, were provided to RESPEC Company LLC ("RESPEC") by Excelsior.

Total copper grades, as well as soluble copper ratios, were interpolated using inverse distance, ordinary kriging, and nearest-neighbor methods. The mineral resources reported herein were estimated by inverse distance interpolation as this method led to results that most appropriately reflected the drill data and geology of the deposit. This is particularly true with respect to the estimation of the lowest-grade areas in the model, where potential over-estimation of volumes could materially impact the resource estimation at grades close to potential open-pit mining cut-offs. The nearest-neighbor estimation was completed for the purposes of statistical checking of the various estimation iterations.

The JCM mineral resources have been estimated to reflect potential open-pit extraction and potential processing by heap leaching. To meet the requirement of the resources having reasonable prospects for eventual economic extraction, a pit optimization was completed using the parameters summarized in the table below.

| Parameter | Value | Unit | | Copper Price | $3.75 | $/lb Sold | | Contract Mine Cost | $2.30 | $/ton Mined | | Technical Services | $0.25 | $/ton Processed | | Heap Management | $0.30 | $/ton Processed | | Heap Capital Cost | $0.80 | $/ton Processed | | Crushing/Agglomeration Cost | $1.10 | $/ton Processed | | G&A Cost | $0.05 | $/lb Cu Produced | | SX-EW Cost | $0.25 | $/lb Cu Produced | | Recovery | 95% | Acid Soluble Cu | | Recovery | 95% | Cyanide Soluble Cu | | Recovery | 70% | Sulfide Cu | | Royalty (incl. Stream) | 17.90% | NSR | | Acid Cost | $150 | $/ ton | | Acid Consumption and Costs by Formation | | | | Formation | Acid Cons. lb/ton | Acid Cost $/ton Processed | | Pioneer Shale | 20 | $1.20 | | Bolsa Quartzite | 25 | $1.50 | | Diabase | 30 | $1.80 | | Middle Abrigo | 55 | $3.30 | | Upper Abrigo | 45 | $2.70 | | Lower Abrigo | 40 | $2.40 | | Martin | 70 | $4.20 |

The pit shells created using these optimization parameters were used to constrain the project resources for comparison purposes. An exclusion line was used to limit the pit optimization on the west side of the Burro Pit to prevent the pit optimizations from encroaching on the existing process plant and the historical leach pad. The in-pit resources were further constrained by the application of a cut-off of 0.1% CuT to all model blocks within the optimized pits.

Mr. Jeffrey Bickel, C.P.G., with the independent firm RESPEC of Reno, Nevada, is a Qualified Person as defined by NI 43-101 and is responsible for this mineral resource estimate. He has verified, reviewed and approved the technical disclosure contained in this section of the news release. Mr. Bickel has verified the data underlying the results by reviewing the drilling, sampling, assay, and quality assurance and quality control data, as well as the geologic interpretations completed by Excelsior. Mr. Bickel is not aware of any environmental, permitting, legal, title, taxation, socio-political, marketing or other issues which may materially affect its estimate of mineral resources.

PEA Assumptions

The JCM plan has been developed based on a new mineral resource estimate for the Burro and Copper Chief deposits. The mine plan targets the full resource at Johnson Camp over a 20-year period. A contract miner will be executing the mining of the pits and delivering material to the primary crusher.

Mining of the deposit is expected to be accomplished with 100-ton haul trucks and front-end loaders. Mining is planned on 20-ft bench heights. The pit configuration is double-benched with catch benches every vertical 40 ft. An annual schedule was developed for the mine plan. Crushed and agglomerated material will be processed by placement on the newly permitted leach pad. This tonnage production is limited by the copper production capacity of the existing SX-EW plant of 25 million pounds of copper per year.

The mining contractor is expected to be responsible for mine supervision, equipment operation, equipment maintenance, and blast hole drilling and loading. The reference to specific equipment manufacturers is to illustrate equipment size and is not to be considered a recommendation. Production drilling is expected to be accomplished with Epiroc DM45 class drills or similar. Loading is expected to be accomplished with 14-yard CAT 992 class front-end loaders. Haul trucks are planned to be CAT 777 class 100-ton trucks.

The existing leach pads (Pads 1, 2 & 3) will not be used for future mining for new material extracted from the Burro and Copper Chief pits. The new leach pad area, Pad 5, is to be located northeast of the existing plant facility and is to be designed such that leach solutions flow by gravity into the new combined ILS-PLS pond located down slope of the new leach pad. The PLS solution will be pumped back to the existing JCM SX-EW plant. A storm water pond is also provided.

The Johnson Camp Mine is currently covered under Aquifer Protection Permit P-100514. Excelsior has obtained a significant amendment to the existing APP to accommodate mining at JCM from the Burro Pit. A new facility, Leach Pad 5, with associated impoundments has been added to the existing APP to accommodate resumption of mining at JCM.

The full capital cost for restarting the JCM heap leaching operation including mining pre-production, first fills/Owner's costs, leach pad construction, new leach pad stacking system, crusher and agglomeration refurbishment and haul road construction is approximately $58.9 million. Staffing for the JCM project is mostly in place however several new hires will be needed to augment the existing staff.

JCM Opportunities

1. Additional infill and step-out drilling, including drilling focused on deeper sulfides, could yield increased tonnage and/or grade in some areas within the mineral resource. 2. Detailed mine planning and scheduling may result in higher production rates and reduced mining unit costs. Mine plan optimization could bring higher grade material closer to start for better initial cash flow and could reduce waste tons. 3. Planned metallurgical test work on sulfides and transitional mineralization in 2023 could generate higher recoveries or lower acid consumptions than presently estimated and demonstrate that less crushing is required. 4. The estimated capital required for the JCM Project has been prepared to a PEA level. Additional detailed engineering work may reduce this cost. 5. Relocating the existing waste rock stockpile could be performed with smaller, cheaper equipment as well as timed later in the mine schedule to increase near-term revenue. 6. The copper price used for this study is $3.75/lb. Current copper spot copper prices are above this price level and may continue to increase, given the continued emphasis by the US and other governments towards renewable energy sources and electrification of transportation. Copper has a large role to play in these "green" initiatives. 7. Expansion of the current SX-EW facility to a production capacity of 50 mlbs per annum could be evaluated in a trade-off study to evaluate whether it would improve the project economics by increasing the cash flow. 8. Demonstration of successful leaching of sulfide and transitional material could provide opportunities for mining additional satellite deposits that are known to exist in the Johnson Camp District, including the Strong and Harris and Gunnison deposits. 9. Integration of planning efforts for the Johnson Camp, Strong and Harris, and Gunnison deposits could reveal synergies or development strategies for improving financial returns and increasing the mine life.

JCM Risks

1. Metallurgical test work to be performed on sulfides and transitional mineralization in 2023 could generate lower recoveries or higher acid consumptions that presently estimated. 2. This testing could also indicate that finer crushing is required to achieve high copper recoveries. 3. The acid price could remain high in the short term and could increase the operating cost of heap leaching. 4. Other reagent costs, principally diluent and extractant, could increase materially, increasing SX-EW operating costs. 5. The current increased price of natural gas which is used by the local generating company could impact the long-term cost of power needed for the Project. 6. The selected PEA copper price of $3.75/lb could be subject to volatility due to external factors. 7. More detailed engineering designs could result in higher costs. 8. Increased lead times for construction could materially delay the start of leaching and generation of revenue. 9. The cost of financing capital for the JCM heap leach could become prohibitive. 10. Obtaining the necessary environmental permit amendments could take longer than anticipated. 11. Changes to the new Pad 5 permit may be required to optimize sulfide leaching which could delay mine start-up.

Recommendations

Excelsior should complete the current metallurgical program and, if warranted, proceed to a feasibility study and then detailed engineering for the leach pad and crusher refurbishment.

GUNNISON PROJECT PREFEASIBILITY STUDY

Highlights of the PFS (United States dollars)

Net Present Value ("NPV") of $1,167 million after-tax at 7.5% discount rate using a life of mine ("LOM") average copper price of $3.75/lb;

Internal Rate of Return ("IRR") of 37.5% after-tax; Pre-production capital costs of $47.6 million includes 15% contingency, EPCM, freight, mobile equipment, owner's costs and capital spares;

Payback period for pre-production capital of 6.7 years after-tax; Average life of mine operating costs of $0.945/lb; Total Operating Cash Cost (including royalties, non-income taxes, salvage, reclamation and closure) of $1.225/lb All-In Cost (LOM capital costs plus operating costs) of $1.727/lb; Life of Mine: 2,154 million pounds of commercial production over 24 years; Staged production profile: initial production rate of 25 million pounds of copper cathode per annum, followed by an intermediate expansion stage to 75 million pounds per annum and final expansion stage to full production of 125 million pounds per annum (includes the construction of an acid plant at full production). The staged production profile makes possible the funding of future expansions out of cash flow; Approximately 15 months of wellfield pre-conditioning (additional operations) to dissolve and remove calcite, along with the addition of a raffinate neutralization plant to assist with the flushing and removal of accumulated CO2gas; Requirement for some additional work to reduce risk and optimize process and production.

A detailed sensitivity analysis to copper price is set out below under the heading "Financial Analysis". In addition, the risks and opportunities associated with the Gunnison Project are discussed below.

The PFS was completed by M3 Engineering & Technology Corporation ("M3") of Tucson, AZ and is effective as of February 1, 2023. The Technical Report (the "Report") summarizing the results of the PFS and prepared in accordance with National Instrument ("NI") 43-101, will be filed on SEDAR and Excelsior's website within 45 days of this news release. The PFS was updated because of the need to update the JCM PEA, which is contained in the same report.

Financial Analysis

The PFS base case generates an after-tax NPV of approximately $1,166.5 million (at a cash flow discount of 7.5%) and an IRR of 37.5%. This financial analysis is based on a number of assumptions which will be fully set out in the Report.

The base case uses the following parameters over the 24-years of production:

Copper selling price of $3.75/lb Total copper recovery of approximately 48% (based on a combination of metallurgical recovery and estimated sweep efficiency); Average of approximately 9.5 pounds of acid consumed for every pound of copper produced; Acid plant construction in year 7 with the price of sulfuric acid prior to that of approximately $150/ton and the price of sulfur of $130 per ton delivered after that: Combined state and federal tax rate of 25.9%; Staged production commencing at 25 million pounds per annum, ramping up to 75 million pounds in year 4, and then to 125 million pounds per annum in Year 7. The introduction of an additional year of pre-production calcite removal and neutralized raffinate flushing for every well to address CO2flow restrictions.

| FINANCIAL ANALYSIS SUMMARY | | | | | Pre-Tax | Post-Tax | | IRR | 40.6% | 37.5% | | Pre-Production Capital Payback (years) | 6.5 | 6.7 | | NPV (million $) @7.5% | 1,434.8 | 1,166.5 | | COST METRICS | | | | | | Cost/lb Copper | | Direct Operating Costs | | 0.945 | | Royalties, Taxes, Recl. & Salvage | | 0.274 | | Total Cash Cost | | 1.225 |

Total initial (pre-breakthrough) capital expenditures (including 15% contingency, EPCM, capital spares, owner's costs, mobile equipment and freight) are estimated at $47.6 million for Stage 1 initial production of copper cathode at approximately 25 million pounds per annum. Total sustaining capital costs over the life of the mine are $1,080.8 million, which includes production wellfield expansion, SX-EW expansion, acid plant construction and water treatment facilities. The average life of mine Direct Operating Cash Cost is $0.945/lb and the average life of mine Total Operating Cash Cost (including royalties, non-income taxes, salvage, reclamation, and closure) is $1.225/lb.

The Company has also evaluated an Alternate case without an Acid Plant. This case generated a pre-tax NPV@7.5%of $1,177.8 million and an IRR of 41.0% (after-tax: NPV@7.5% of $975.5 million and IRR of 38.1%). Total initial capital expenditures remain the same as the "Acid Plant" scenario. Total sustaining capital costs over the life of the mine are $879.7 million, which includes production well-field expansion, SX-EW expansion and water treatment facilities. Average life of mine Operating Direct Cash Costs are estimated at $1.35/lb for the "No-Acid Plant" option with an average life of mine Total Operating Cash Cost of $1.63 per pound.

Sensitivity analysis is shown in the table below.

Base Case After – Tax Sensitivities ($millions)

| Copper Price | | | | | | NPV @ 7.5% ($M) | IRR% | Payback | | Base Case | $1,167 | 37.5% | 6.7 | | 20% | $1,697 | 50.4% | 4.3 | | 10% | $1,433 | 44.0% | 6.2 | | -10% | $898 | 30.8% | 7.3 | | -20% | $627 | 24.2% | 8.0 | | Operating Cost | | | | | | NPV @ 7.5% ($M) | IRR% | Payback | | Base Case | $1,167 | 37.5% | 6.7 | | 20% | $1,031 | 33.2% | 7.1 | | 10% | $1,099 | 35.3% | 6.9 | | -10% | $1,233 | 39.7% | 6.5 | | -20% | $1,299 | 41.9% | 6.3 | | Initial Capital | | | | | | NPV @ 7.5% ($M) | IRR% | Payback | | Base Case | $1,167 | 37.5% | 6.7 | | 20% | $1,160 | 36.1% | 6.7 | | 10% | $1,163 | 36.8% | 6.7 | | -10% | $1,170 | 38.2% | 6.7 | | -20% | $1,173 | 39.0% | 6.6 |