Highland Needs Big Bucks to Build the Copperwood Mine

• Many financing options, but no sure thing

• Project stakeholders have established relationships with banks, financiers

• $50 million state grant still a possibility

The Copperwood mine project near Lake Superior on the western side of Michigan’s Upper Peninsula is approaching a “go-no go” decision on construction, perhaps as early as the end of the year, according to Highland Copper CEO Barry O’Shea. Construction of the underground mine and mill would require as much as $425 million in capital expenditures. As of Dec. 31, 2024, Highland had $14.4 million cash on hand, nowhere near enough to fund the project.

Highland has financing challenges -- and opportunities

It’s possible that an established, deep-pockets mining company might step in to buy the Copperwood project or all of Highland Copper, or partner with Highland to advance the mine to the construction phase.

Barring that, stock sales and bank loans are the conventional ways of funding mines like the Copperwood, which is proposed to be located in Gogebic County, on the southwestern edge of the Porcupine Mountains Wilderness State Park.

However, financing the Copperwood project will take some creativity due to Highland’s low stock price (around eight cents per share as of this writing), low market capitalization ($55.6 million) and large volume of shares already issued (more than 736 million).

That’s where Orion Mine Finance, which owns 28% of Highland Copper, and other major stakeholders come in.

“There are some relatively deep pockets that are already involved in this project, and I think that's one of the greatest strengths of the company and the project,” said Dr. Michael Doggett, a Canadian-based mineral economist who provided input into this report.

Those players have existing relationships with financiers and banks that could help to secure debt financing. Their involvement in the project also provides potential leverage for Highland Copper to use in its own campaign to raise capital. 

Orion has a reputation for using a wide range of mine financing solutions. Last year, for example, it provided a $750 million financing package to Skeena Resources Ltd. for a gold and silver mine in the Canadian province of British Columbia. The financing package was comprised of an equity investment, gold stream, senior secured loan, and a cost over-run contingency fund.

Notwithstanding the relatively large number of Highland Copper shares outstanding, there could also be, as part of the financing story, some type of additional equity raised through a private placement (non-public stock purchase) from existing big shareholders. As an intermediate between debt and equity, there could possibly be some type of convertible debt that would be converted to equity at some point in the future.

Another mine financing option is an “offtake agreement” with a copper smelting company or independent broker.

Under an offtake agreement, a buyer commits to purchasing a seller’s future production.

“Offtake agreements can be discussed at any time and can be a valuable tool in project finance. Given the desire for various commodity trading companies and smelters to secure offtake, it can potentially lead to favorable financing terms,” a representative of Highland Copper said in an email.

 Copperwood’s fate hinges on market fundamentals

The Trump administration’s tariff initiatives are creating “lots of uncertainty in markets,” Doggett said. “This is especially true with respect to the tariffs on China, which is a major supplier and refiner of many critical minerals including copper.” In the longer-term, the fundamentals of the metals market, driven by supply and demand, will determine whether Copperwood is viewed favorably by lenders and investors, not the current tariff turmoil.

Copper demand is expected to double by 2035, primarily due to green energy initiatives and continued demand from traditional, non-energy markets, according to industry sources. Experts predict a supply shortfall and higher copper prices in the near term, making projects like Copperwood potentially more attractive to lenders and investors.

As a “sweetener” in its sales pitch to lenders and potential investors, Highland might point to a proposed $50 million grant from the state of Michigan as a confidence builder. The grant would pay for infrastructure improvements, such as roads, power upgrades and enhanced telecommunications, but not for the construction of the mine itself.

“This $50 million grant is a wonderful endorsement from the State of Michigan and provides a significant financial boost to the economic strength of the Copperwood project,” Highland CEO Barry O’Shea said in a news release when the grant was approved by the Michigan Economic Development Corp.

The grant still requires approval from the state Senate, and was sidetracked when the Appropriations Committee declined to act on it by the close of the 2023-2024 legislative session, but Highland says it’s optimistic that the grant will be forthcoming this year.

Copperwood has other “positives” . . .

Highland Copper has the permits it needs to build the Copperwood mine, and there is significant local support for the project. Twenty-two units of government, ranging from townships to county boards, have issued resolutions of support, according to Highland Copper and InvestUP, a regional economic development organization.

The Trump administration's commitment to enhancing domestic minerals production may also have a positive impact on the financing environment for the mine.

“Highland will continue to assess potential government grants and loans in relation the recent executive order aimed at increasing domestic supply of critical minerals. There may be opportunities available for Copperwood given its ability to generate much needed US copper supply,” a Highland representative said in an email.

Finally, Highland Copper owns a 34% stake in the nearby White Pine North mining project, which is several years behind the Copperwood mine on the path to development. Highland, in cooperation with majority owner Kinterra Capital Corp., might be able to leverage its interest in White Pine North into a creative “two-for-one” financing deal.

. . . and a highly visible “negative”

Significant opposition to the Copperwood project has emerged, due to its potential impact on ecosystems connected to the Porcupine Mountains Wilderness State Park, which is just north of the proposed mine site – and the risk of a catastrophic tailings dam failure or other industrial accident if the mine goes into operation.

An online petition opposing the Copperwood project, organized by the Protect the Porkies environmental advocacy group, has garnered more than 465,000 signatures as of this writing.

Ed. Note:

Michael Doggett holds a doctorate in mineral economics from Canada’s Queen’s University and has 30 years experience in the field. He was contacted for this article through FAIME (Find an Independent Mining Expert), a nonprofit that maintains a database of experts who provide services to Indigenous communities and other communities affected by mining, and to organizations that support them.

Doggett provided input to this article on a voluntary, non-paid basis to support FAIME, using only publicly available information.