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Gunnison Copper (TSX: GCU)(OTCQB: GCUMF) Senior Vice President Craig Hallworth on New U.S. Defense Industrial Base Consortium Membership and Near-Term Path to Large-Scale Domestic Copper Production

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the Senior Vice President & CFO of Gunnison Copper (TSX: GCU)(OTC: GCUMF) — Mr. Craig Hallworth. Craig, how are you today?

Craig Hallworth: Hi, Gerardo. I'm great. So good to be here. Thank you.

Gerardo Del Real: Well, listen, let's get right to it. There’s a lot to dig into. You’ve had, I would say, some good fortune — but frankly, it’s been excellent execution. You’ve benefited from US$6/lb copper, which we’re right on the cusp of again, and you’ve been executing brilliantly.

Back a few weeks ago, you had a PEA that was filed with a post-tax NPV of US$2 billion. Congrats on that. And I want to dig into the details there, but I’ve got to start with the news this morning, because it's rare in 2026 that there's actually bipartisan support for much in this country.

You were just accepted into the U.S. Defense Industrial Base Consortium, the DIBC, which is a government-backed initiative focused on strengthening domestic supply chains for critical minerals and technologies that are essential to national security. That is a big get for a company with what I’ll say is a market cap that has a lot of catching up to do.

I’d like to start there, and then hopefully you can give me some guidance on what this means for the company and what it means moving forward.

Craig Hallworth: You're right, Gerardo. This is a big boost at Gunnison Copper. If you look at our mission statement, we exist to develop, advance, and produce copper in Arizona, in the United States. And we’re selling that. We’re selling it right now into the supply chains from our Johnson Camp Mine and soon upcoming from our Gunnison Copper Project.

And we’re looking to supply defense. We’re looking to supply manufacturing. So it’s a great fit for us — the Defense Industrial Base Consortium. This is an invitation-only grouping of American companies. It’s backed by the Department of Defense. What they’re seeking to do is to really advance and scale the domestic supply chains — the industrial base, if you will.

And it’s badly needed right now. We’re in a very uncertain world. If you look around the world — the tensions, the geopolitics — there’s conflict, and we need to have a strong military. We need to have munitions. Munitions are being depleted across the board, and those munitions need to be replenished.

And if you look at the scale of the munitions — if you look at, say, the Ukraine war and just how many drones are being built — we’re talking about millions of drones. And all of those drones need copper. And so do ammunition components, and so do rockets, and so does artillery. So everything needs copper. It’s one of the most used metals in defense.

And that’s where Gunnison Copper comes in. That’s how we can help this country strengthen the supply chain. We hope to work with the Department of Defense to accelerate our Gunnison Copper Project. 

It’ll be able to make something like 174 million pounds of copper a year, or even perhaps more with some optimization. And that’s going to be a material, national-level impact on the industrial supply base in this country.

Gerardo Del Real: Being a 100% Made-in-America copper producer and developer, I’ve got to believe that with the acceptance into the DIBC, it’s probably going to give you access to a lot of perks that a lot of companies are going to be envious of. And I know one of those has to be the potential for non-dilutive funding moving forward.

Craig Hallworth: Absolutely. That’s one of our main objectives here. You mentioned our market capitalization. We’re something like a C$200 million market cap today. The Gunnison Project — the CapEx for that — is going to be about $1.5 billion, and that’s because it’s a project with scale.

And like you said, it’s going to make finished copper in the United States. Over 50% of the copper we consume today — and that includes the defense sector in this country — is coming from foreign sources. And that’s not including all of the growth that’s projected.

Everyone knows there’s incredible growth coming in copper. When I talk to portfolio managers, when I talk to fund managers, when I talk to institutions, they are all extremely constructive on copper because they see the growth that’s coming. So that deficit, in terms of secure supply made in-country, is only going to get bigger.

And this is part of our motivation here for joining this consortium — access to government capital. If you take a look at our project, if you take a look at the CapEx, and if you take a look at the available government capital, there is a US$100 billion fund that has been earmarked for accelerating domestic critical mineral projects, just like the Gunnison Copper Project.

So I think it is a good partnership potential for us. I think it aligns with our values. We want to supply the defense sector. And in fact, we are supplying the defense sector, because we’re supplying Amazon Web Services, and they have extensive government contracts and cloud computing across the defense space.

So we’re already supplying the defense sector, and we are eager to do more. And I think partnering with the government makes a whole lot of sense here.

Gerardo Del Real: Well, look, it's a heck of an endorsement, given the fact that the PEA that was filed demonstrates an after-tax net present value of roughly US$2 billion. I would add to that — that's using a base copper price of US$4.60/lb. We're pushing $6/lb, and anyone paying attention to the space has a pretty good inclination of seeing much higher prices here in the mid to long-term.

Can you speak to the PEA that was filed and then some of the highlights there?

Craig Hallworth: We're getting a lot of feedback from all over the country. People are impressed with this study. They're saying this is a large project, it's got scale, and the grade compares very favorably with the big mines that are being mined in Arizona today.

We're leaching, on a total copper basis, 0.43% total copper. If you look at Freeport, if you look at ASARCO — those big companies with the big open pits in production today — they're typically under 0.3%. So we're at about a 50% higher grade at our project versus those big mines in operation today.

And we were able to add in one of our satellite deposits — it's called Strong and Harris — and that deposit has a grade of 0.85% total copper. So that's triple the grade of these big mines in production today.

So when people look at the project, they say, ‘This thing’s got scale — it’s going to make 174 million pounds a year.’ That's about 11% of the current national, across-the-country total refined metal from ore production today. So this thing's going to move the needle for the country. It's got a very good grade, and we were able to really increase the total metal produced as well.

We increased from 2.7 billion pounds of copper in the ground that we're going to mine and turn into finished product to 3.2 billion pounds. So that's an increase of 500 million pounds.

And that's what people want to see. Investors want to see metal increase. That's the number one thing. I mean, after all, that's why we're in business, right? We're in business to build a mine that makes copper. And when we talk about making copper — the more copper, the merrier.

So we worked hard as a team. We worked all year. Let’s add as much metal to this thing as we can. And part of that came from including this satellite deposit, Strong and Harris, and the other half of that increase in metal came from optimizations we were able to do to the main pit — the main Gunnison pit.

So we’re really excited about the study. Everyone says it looks great, and investors are very happy with the improvements that were made over the previous study.

Gerardo Del Real: The million-dollar question as always, Craig — what comes next? Impressive work, obviously, and you've clearly been very busy behind the scenes, but what comes next?

Craig Hallworth: We are now gearing up for our Pre-Feasibility Study. And in fact, we're going to start metallurgical testing this month.

We've got a work program that we've created. We're going to be coming to the market very soon — in the next few weeks — to let everybody know all of the details. 

What are we going to be doing? What is the metallurgical testing program we're going to be doing? What is the infill drill program we're going to be doing to upgrade all of the resources to get us to a reserve? What’s the path on the engineering to advance that? Is there exploration drilling? 

The answer, I believe, is going to be yes, because we think that we can add a lot more tonnes to Strong and Harris. This is the satellite deposit — the very high-grade deposit I mentioned earlier — and I believe we'll be able to add a lot more tonnes to that. But that requires some exploration drilling, so we're going to have that in our budget.

And on top of that is finally the most important part, which is our permit amendments. What's the plan for the permit amendments? How are we going to get those permits amended? What’s our strategy? What are all the details? Who’s going to do it?

And you're going to hear all about that in the coming weeks. So please follow us at our website. Watch for our news releases. You're going to hear about the detailed work program, and we're going to be delivering catalysts from that in the next 3, 6, 12, and 24 months.

So it's not going to be all saved up for the end in two years. When we go to market with that PFS study — with the reserve and with the permits amended — there are going to be big things happening all the way through, and you'll need to keep watching our news releases for those details.

Gerardo Del Real: You were able to previously secure, I believe, almost US$14 million in Department of Energy funding. How is the treasury looking?

Craig Hallworth: We have US$7 million in hand today that we can spend on the Gunnison Project. And we've also got about another US$10 to US$15 million for Johnson Camp.

For the Gunnison Project, we expect to monetize those 48C tax credits in the next few months, and watch our space for news on that. We're going to be having some news on that progress very soon. That will take us up to about US$15 million in cash.

So we've got plenty of cash to start this Pre-Feasibility Study and get a substantial way through the work program. We don't need to raise money anytime soon, Gerardo. We've got cash on hand, and we've got more non-dilutive cash coming in from the sale of the 48C tax credits. We have the flexibility to proceed materially with this work program.

Now, if market conditions present favorable conditions, then we might go to the market to fully fill out the treasury for the entire work program, which is going to take us over two years — but there's no rush to do so. We have flexibility.

Gerardo Del Real: Well, the acceptance into the DIBC, I think, is also going to give you some flexibility you previously didn’t have. Great work, Craig, all the way around. Looking forward to having you back on and catching up soon.

Craig Hallworth: Thank you for having me, Gerardo. Have a great day.

Gerardo Del Real: Thank you.

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