Michigan Strategic Fund Board

300 N Washington Square

Lansing, MI 48913
February 26, 2024

Joint comments from Sierra Club Michigan and Wisconsin State Chapters re: Copperwood
Resources Inc. application for a Strategic Site Readiness Program (SSRP) grant.

Dear Michigan Strategic Fund (MSF) Board members,

The Michigan and Wisconsin Chapters of the Sierra Club wish to submit these comments based
on our shared concern for Lake Superior, the habitat and land base that it depends on for clean
water and for the use of scarce taxpayer money proposed to be used by the state of Michigan
to support a controversial and damaging mine proposal.

The Sierra Club urges you to reject the Copperwood Resources Inc. (CR) application for a SSRP
grant. The mine proposal by CR is currently incomplete and not fully permitted which exposes
the risk that it may not be feasible. CR’s inability to attract the required investment to
complete financing for the proposal casts doubts on its viability as this application to the Fund
for infrastructure development demonstrates. CR is a “junior miner” with no experience mining
anything anywhere and has already sold a controlling interest in its other holding (White Pine
North). Junior mining companies are often formed only to develop potential mines to a limited
extent with an ultimate goal of selling or merging with larger miners with actual experience.
This means that CR may or may not be the ultimate developer should the proposal actually gain
final approvals.

The uncertainties related to financing and an incomplete proposal is contrasted by the

statement in the approval recommendation by the Michigan Economic Development
Corporation (MEDC) that it has reviewed CR’s finances and “confirmed the Company’s ability to
fund the project.” (January 30, 2024 Memorandum to the MSF from MEDC). We question
whether this statement is accurate given the stated need for up to $425,000,000 in capital
investment for the proposal. CR’s owner (Highland Copper) is currently capitalized at just under
$41,000,000 (US) which demonstrates that it is in need of significant additional capitalization
and well beyond what is required – even if this application is approved.

CR is not fully permitted for operations to date. CR has not submitted final engineering and
design plans for its Dam Safety Permit – the most important and challenging design feature of
the mine proposal. This feature includes the “Tailings Disposal Facility” (TDF) that is initially
proposed to hold 30 million tons of metallic sulfide mining wastes safely in perpetuity. The
mining wastes would constitute more than 98% of the material excavated and that will include
metals of concern such as copper, lead, mercury and others that are toxic to aquatic life. The
TDF must remain stable forever given its upstream location near Lake Superior. Any unplanned
release of wastewater from the mine, processing facilities or the TDF risk contamination of
surface waters and Lake Superior itself. The lack of an approved Dam Safety Permit for such an
important design feature creates additional uncertainty as its approval is not a foregone or
automatic conclusion in the permitting process.

Highland Copper CEO Barry O’Shea has stated that approval of the grant would constitute a
“true endorsement” of the proposal which could help HC gain the required financing for the
proposal. This statement underscores the shaky nature of HC’s financial position and ability to
finance the proposal. We must point out that approval of this application will fuel the public’s
perception that the MSF has it’s “thumb on the scale” in favor of an incomplete, controversial
and damaging mine proposal. We believe it is inappropriate to approve this grant prior to the
proposal gaining state permit approvals. Approval of the grant risks putting pressure on state
regulators to approve permits to help ensure state money is not wasted. The Copperwood
proposal should be required to demonstrate it has a viable and safe proposal that can comply
with Michigan law – something it has not done to date.

We also question the wisdom of approving such a significant grant for infrastructure
development at the proposed mine site given the mining industry’s inherent boom and bust
cycle. Copperwood is only projected for an 11-year operating life. Metal prices are notoriously
volatile and prone to down cycles that make profitable mining on small margins difficult to
sustain. This can and does lead to short and long-term closures that affect workforces.
Suggestions that infrastructure for this operation (power lines, cell towers etc.) will benefit the
area long-term are dubious at best given the very rural character of the area and unlikelihood
of attracting new long-term residents. More importantly the boom and bust cycle ensures that
local governments will be responsible for the care and maintenance of any leftover
infrastructure. This can be very costly and ultimately harmful for local communities.

The rural character, lack of industrial development and recreation opportunities of this area are
what attract new residents. This proposal risks disrupting those quality of life elements forever
while only generating short-term jobs and wealth generation for shareholders. Mining
proposals simply cannot and do not create new long-term employment opportunities and
economic growth. Each proposal is inherently unsustainable as it depends on finite resource
extraction. Investment in long-term and sustainable industry such as tourism, logging,
recreation and more is a wiser course for the MSF.

For all these reasons we urge the Board of the Michigan Strategic Fund to reject the
Copperwood Resources Inc. grant application. On behalf of our more than 18,000 Wisconsin
members and 150,000 Michigan members, we thank you for considering our comments.

Sincerely,

Elayne Coleman, Executive Director Elizabeth Ward, Executive Director

Sierra Club – Michigan Chapter Sierra Club – Wisconsin Chapter