Fourth in a series on the money behind the Copperwood Mine. Everything here comes from Highland Copper’s own filings and from the State of Michigan’s own records. Sources are at the end. Previous pieces at lakesuperiorregister.com.
The short version
On Tuesday, August 25, the Michigan Strategic Fund Board votes on a resolution to send $44,971,691 to Copperwood Resources Inc. and $5,028,309 to the Gogebic County Road Commission — fifty million dollars of public money for site readiness at a mine that has not yet begun construction. (1)
I have written previously about the gap between what Michigan’s mining permit says reclamation will cost and what the state actually holds against it. (2)
This piece is about three things I have not written about, all of which come from Highland Copper’s own audited statements.
First: if this project fails, Michigan does not stand first in line. A Toronto royalty company holds a mortgage on the Copperwood property and a security interest that includes a pledge of the shares of Copperwood Resources Inc. itself — the Michigan subsidiary that owes the reclamation obligation.
Second: the financial assurance is not a floor. It has already been reduced once. Highland reported $240,188 returned to the company during the six months ended December 31, 2025.
Third: the last time the Michigan Strategic Fund approved money for this project, it attached a condition. That condition concerned Highland’s ability to raise private capital. Whether it has been met is a question the Board is in a better position to answer than I am.
What the state actually holds
Nonferrous Metallic Mineral Mining Permit No. MP 01 2012 was issued on April 30, 2012, originally to Orvana Resources US Corp; the permit holder was renamed Copperwood Resources Inc. in 2017. (3)
Special Condition N.1 of that permit sets the reclamation figure:
“The total financial assurance estimated for the Copperwood Mine for reclamation costs at the closure stage of production is determined to be $37,960,000 as of the date this permit was issued.” (4)
Against that, the state holds a surety bond of $6,479,089, secured in July 2023. (5) Behind the bond sits a cash deposit of $2,267,680 — roughly thirty-five percent collateral. (5) EGLE’s own file records the instruments arriving on July 27, 2023 and being accepted on August 2, 2023. (6)
That is the arithmetic from the first piece in this series. What follows is what sits underneath it.
Who is ahead of Michigan in line
Highland Copper Company Inc. is headquartered in Vancouver, British Columbia, and trades on the TSX Venture Exchange under HI and on the OTCQB under HDRSF. (7) The corporate chain runs from Highland in Canada, through Upper Peninsula Holding Company Inc., a Delaware entity, to Copperwood Resources Inc., the Michigan company that holds the permit and owes the reclamation obligation. (8)
Osisko Gold Royalties is both a shareholder in Highland, at roughly six percent, and a secured party. Highland’s annual financial statements for the years ended June 30, 2024 and June 30, 2025 disclose, in the notes concerning the Osisko royalty arrangement, a mortgage on the Copperwood property and a general security agreement over company assets that includes a pledge of the shares of Copperwood Resources Inc. (9)
Read that twice. The security package does not merely encumber the ore body. It reaches the equity of the subsidiary that carries the permit.
I want to be careful about what this does and does not establish, because the legal question is genuinely more complicated than a headline can carry. Michigan’s reclamation claim is not simply an ordinary unsecured debt; states have statutory tools, and how a mining reclamation obligation would rank against a perfected security interest in a distressed scenario is a question for lawyers with the actual documents in front of them.
But here is what can be said plainly. A secured creditor holding a mortgage and a share pledge is, by design, positioned ahead of general claimants in a default. The bond covers $6.48 million. Everything above that number — and the permit itself puts the number at nearly $38 million in 2012 dollars — is a claim that has to compete. Michigan would be competing.
That is a question the Board should have answered before it votes, not after.
The number that goes down
There is a second feature of the financial assurance that is easy to miss and hard to unsee.
Highland’s interim financial statements for the periods ended December 31, 2025 report $240,188 returned from the financial assurance cash deposit in respect of completed site work. (10)
That is how these instruments are designed to function — assurance is released as obligations are discharged. It is not improper. But it means the $6,479,089 is not a floor beneath the state’s exposure. It is a balance, and the balance declines.
There is a third number worth setting alongside it. On its own balance sheet, Highland carries an asset retirement obligation with undiscounted cash flows of $1,722,673, with payments modeled in years 16, 17 and 35 from the start of construction. (11)
So the state’s permit says the closure job is worth $37.96 million. The state holds $6.48 million, declining. And the company’s own accounting provision for retiring the asset is $1.72 million, most of it modeled decades out.
Three numbers, three orders of magnitude apart, describing the same hole in the ground.
The Board’s own condition
This is not the first time the Michigan Strategic Fund has considered money for Copperwood.
An earlier approval attached a condition relating to Highland’s ability to raise private capital — on the order of $150 million — before state support would flow. Subsequent attempts to route funding to the project stalled in Senate Appropriations and were later removed from the state budget in October 2025. (12)
Meanwhile the capital picture has not resolved. Highland announced a non-binding Letter of Interest from the Export-Import Bank of the United States for up to US$250 million in September 2025. (13) Non-binding is the operative word; a letter of interest is not a commitment of funds. Development capital expenditure for the project has been put at roughly $425 million, with a construction decision targeted for the second half of 2026. (14)
I do not know whether the prior condition has been satisfied, modified, or waived. The Board does.
Questions this raises
These are open to the Michigan Strategic Fund Board, to MEDC staff, to Highland Copper, and to EGLE:
Has the Board reviewed the State of Michigan’s creditor position with respect to reclamation costs, given the security interests disclosed in Highland Copper’s audited statements?
Was the private-capital condition attached to the earlier approval satisfied, modified, or waived? If it was not satisfied, on what basis does the current resolution proceed?
What is the state’s current reclamation cost estimate for Copperwood in today’s dollars? General Permit Condition F.6 requires an updated reclamation cost estimate on or before March 15 of every third year following issuance. (4) I have been unable to locate any such update in the public file, and I have an inquiry outstanding with EGLE on this point.
I will publish any answer I receive, in full, including any that shows I have gotten something wrong.
I have submitted these findings to the Michigan Strategic Fund Board as written public comment ahead of Tuesday’s vote. I have not asked the Board to vote any particular way. I have asked it to answer the questions above.
Previous pieces: “Copperwood Mine: The $31 Million Hole in the Cleanup Fund,” “Copperwood Mine: Its Owner Told Investors It Might Not Survive,” and “Copperwood Mine: The Group Vouching for the Mine Has the Mine’s CEO on Its Board.”
How this publication is researched and written, including my use of AI as a research and drafting tool, is on the About page.
Sources
Michigan Strategic Fund Board Meeting Agenda, August 25, 2026, 9:00 a.m., Item VI.a. michiganbusiness.org, MSF board meeting agendas.
Lake Superior Register, “Copperwood Mine: The $31 Million Hole in the Cleanup Fund.”
Mining Permit No. MP 01 2012, issued April 30, 2012 by the Michigan Department of Environmental Quality to Orvana Resources US Corp (Orvana Minerals release, April 30, 2012); permit holder renamed Copperwood Resources Inc., 2017 (EGLE MiEnviro site file).
Nonferrous Metallic Mineral Mining Permit No. MP 01 2012, Special Permit Conditions § N.1; General Permit Conditions § F.6.
Highland Copper Company Inc., Consolidated Financial Statements for the years ended June 30, 2025 and 2024: surety bond secured July 2023, valued $6,479,089; cash deposit $2,267,680.
EGLE MiEnviro, Copperwood site file: Financial Assurance Documents — shipment tracking correspondence, July 26 – August 2, 2023; arrival July 27, 2023, acceptance August 2, 2023.
Highland Copper Company Inc. trades on the TSX Venture Exchange (HI) and OTCQB (HDRSF), headquartered in Vancouver, British Columbia. Filings at highlandcopper.com and on SEDAR+.
Highland Copper Company Inc., corporate structure disclosures: Highland Copper Company Inc. (Canada) → Upper Peninsula Holding Company Inc. (Delaware) → Copperwood Resources Inc. (Michigan).
Highland Copper Company Inc., annual financial statements for the years ended June 30, 2024 and June 30, 2025, notes concerning the Osisko royalty: mortgage on the Copperwood property and general security agreement over company assets, including a pledge of the shares of Copperwood Resources Inc.
Highland Copper Company Inc., interim financial statements for the periods ended December 31, 2025: $240,188 returned from the financial assurance cash deposit in respect of completed site work.
Highland Copper Company Inc., annual financial statements (June 30, 2025): asset retirement obligation, undiscounted cash flows of $1,722,673, with payments modeled in years 16, 17 and 35 from the start of construction.
Michigan Strategic Fund prior approval and conditions; subsequent legislative history, including removal of Copperwood infrastructure funding from the state budget, October 2025.
Highland Copper Company Inc. press release, September 2025: non-binding Letter of Interest from the Export-Import Bank of the United States, up to US$250 million.
Highland Copper Company Inc., 2026 work plan release (January 27, 2026) and investor materials: development capital expenditure of approximately $425 million; construction decision targeted for the second half of 2026.