KEWEENAW

PROJECT

USA

The Keweenaw Copper Project, which hosts the 543S deposit, covers about 9,000 acres of mineral rights located in Keweenaw County, Michigan, 35 kilometers northeast of the town of Calumet (figure K-1). Highland was entitled to earn a 65 percent interest in the project by completing a feasibility study by December 31, 2018 under a mining venture agreement between Highland and BRP LLC. 

The Company, having been unable to deliver the feasibility study in time, has initiated discussions with BRP with respect to the possibility of extending the deadline to complete the feasibility study or modifying other terms of the transaction.

The 543S copper-silver deposit is concealed beneath 3-30 meters of unconsolidated glacial sand and was discovered in 1973 by a joint venture between Homestake Mining and International Nickel. The discovery hole intersected 5.1 meters of mineralization grading 3.98% copper. The deposit was subsequently defined by 68 core holes, totaling 15,339 meters in length.

In 1990, Great Lakes Minerals drilled 1,507 meters in ten confirmation holes in the deposit. Due to low copper prices prevailing at the time, both Homestake and Great Lakes decided not to develop the property. Highland relocated the historic drill sites in 2011 and initiated a drilling campaign in mid-2012.

The 543S deposit is hosted by a sequence of basaltic lava flows of the Portage Lake volcanic unit that dip to the north at 40 degrees (figure K-2). Copper mineralization occurs over a strike length of 600 meters and dips to the north, following the stratigraphy of the host rocks.

Copper mineralization occurs predominantly as hypogene chalcocite with very minor occurrences of bornite, covellite, and chalcopyrite. Pyrite is scarce or absent and traces of native silver are also present. The highest-grade mineralization is found in volcanic fragmental amygdaloidal flow tops with chalcocite occurring primarily as filling between the fragments and in amygdules, but also forming disseminated replacements.

In August 2014, Highland announced an initial resource estimate for the 543S copper deposit. The mineral resource estimate was prepared by G Mining Services Inc. of Montreal, Quebec, and assumes an underground mining scenario. The initial mineral resource estimate is based on 262 diamond drill holes totaling 45,608 m, of which 220 are NQ size and 42 HQ size, on a drill grid spaced 30.5 m by 15 m.

Notes on Mineral Resources:

  1. Cu Equivalent = Cu% + (Ag g/t * 20$/oz * 80% * 90%) / (22.0462 lbs/10kg * 3$/lb * 31.1035 g/oz * 90% * 96.5%)

  2. Mineral Resources are reported using a copper price of 3$/lb and a silver price of 20$/oz

  3. A payable rate of 96.5% for copper and 90% for silver was assumed

  4. Preliminary metallurgical testing suggests recovery of 90% for copper and 80% for silver

  5. Cut-off grade of 1.9% Cu Eq. was used

  6. Underground mining costs are estimated at 57.27$/t of ore

  7. Production costs are estimated at 37.50$/t of ore: 12.00$/t for processing, 2.50$/t for general and   administrative costs, 0.50$/t for tailings and 22.50$/t for ore transportation to White Pine Complex

  8. A 5% royalty was used (4.99$/t ore)

  9. No mining dilution and mining loss were considered for the Mineral Resources

  10. Rock bulk densities are based on rock types, %Cu and proximity to specific gravity measurements

  11. Assay capping was applied to some mineralized domains

  12. Classification of Mineral Resources conforms to CIM definitions

  13. The qualified person for the estimate is Mr. Réjean Sirois, eng., Vice President Geology and Resources of G Mining. The estimate has an effective date of July 5, 2014

  14. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

  15. The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as indicated or measured mineral resources.

Figure K-1

Figure K-2

NI 43-101
Technical Report 543S Copper Project
Michigan, USA
2014