interra copper corp. buy (cse: imcx / otc: imimf) current

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Interra Copper Corp. (CSE: IMCX / OTC: IMIMF) Maiden Drilling on a New Copper-Gold Porphyry in B.C. - Initiating Coverage

BUY Current Price: C$0.20 Fair Value: C$0.42 Risk: 5

Sector / Industry: Junior Resource Click here for more research on the company and to share your views

___ Price and Volume

Company Data

Raised $2.7M subsequent to Q1.

See last page of this report for important disclosures, rating and risk definitions. All figures in C$ unless otherwise specified.

Highlights ➢ Interra Copper is focused on exploring and developing the copper-gold

porphyry Thane project in B.C. ➢ Six mineralized areas have been identified in the Thane project, with

significant copper grades of up to 13.9%, 77.8 g/t Au, and 56.4 g/t Ag from rock and chip samples.

➢ Thane is in the Quesnel Terrane, known for its high-tonnage porphyry deposits. Thane is also sandwiched by Centerra Gold’s (TSX: CG) two copper porphyry projects, Kemess and Mt. Milligan, nearing- and in-production, respectively.

➢ Well funded via a recently completed $2.7M equity financing. ➢ Management and directors own 9% of the outstanding shares. ➢ The company is planning to commence a maiden drill program

(2,400 m) next month. Results of this program will provide us more insights on Thane’s potential.

➢ Based on our review of all the published data and maps, we arrived at a preliminary/speculative estimate of 300+ Mt for Thane. For conservatism, we have only used 25% of our estimate for valuation.

Risks ➢ The value of the company is dependent on copper/gold prices. ➢ Exploration and development of porphyry projects can be capital

intensive. ➢ Access to capital and share dilution. ➢ Thane does not have a NI 43-101 compliant resource estimate.

YTD 12M

Ret. -2% -33%

CSE 15% 106%

52 Week Range C$0.095 – C$0.35

Shares O/S 74.5M

Market Cap. C$15M

Yield (forward) N/A

P/E (forward) N/A

P/B 2.8x

Sid Rajeev, B.Tech, MBA, CFA Head of Research Nina Rose Coderis, B.Sc (Geology) Equity Analyst

June 18, 2021

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Equity Research of 13


12km away from a road and a powerline

Overview - Thane Project Thane was acquired for $2.7M in March 2020. Thane is made up of 40 claims covering 206 sq. km of land within the northern portion of the Quesnel Terrane. The project is 12 km from the road, and the main powerline, going to Kemess. Although the project is not yet directly connected to these structures, access to infrastructure can help speed up future development of the project.

Road and Powerline Location Relative to Thane

Source: Company

Quesnel and Surrounding Projects

The Quesnel Terrane is known for porphyry (higher tonnage-lower grade) deposits. The northern section (where Thane is located) has a relatively sparse exploration history, lending itself to more untapped opportunities. The B.C. government has encouraged explorers to survey this region.



Well-known area for porphyry deposits

Sandwiched by Centerra’s Kemess

and Mt. Milligan properties

Kemess has 6.7 Moz in gold

reserves/resources

Mines and Projects in the Quesnel Terrane

Source: Company

Well-known mines within the vicinity include Centerra’s porphyry copper-gold Kemess mine to the north (~110 km), and the copper-gold alkalic porphyry Mt. Milligan mine to the south (~140 km). Kemess is comprised of two zones – Kemess Underground and Kemess East.

Reserves & Resources (Dec. 2020)

Source: Centerra Gold

Kemess underground is expected to produce over 12 years, with the first five years producing 129 Koz Au and 23.6 Kt Cu per year, and an all-in sustaining cost (AISC) of US$682/oz Au. At the southern end, Mt. Milligan produced 162 Koz of gold, and 38 Kt of copper



Constituted by six mineralized zones

Grab samples

reaching 13.9% Cu, 77.8 g/t Au, and 56.4

g/t Ag

in 2020, with production costs of US$744/oz Au and US$1.18/lb Cu. The mine contains 2.1 Moz Au (0.39 g/t) and 375 Kt Cu (0.22%) of proven and probable reserves, that can be tapped for production for the rest of its nine-year mine life.

Mt. Milligan Reserves (Dec. 2020)

Source: Centerra Gold

Mineralized Areas - Thane

The company has identified six main mineralized areas which is the focus of their exploration: Cathedral, Cirque, Gail, CJL, Lake, and Mat.

Six Mineralized Areas on the Thane Project

Source: Company

The mineralized areas were identified based on soil and rock sampling, along with geological mapping, and a 12.5 km IP survey. The project has never been drilled. All six samples from the mineralized areas confirmed the presence of copper and gold, with values of up to 13.9% Cu, 77.8 g/t Au, and 56.4 g/t Ag.

Cathedral Mineralized Area The primary area of interest is the Cathedral area, on the southern end of the project area. It is comprised of five mineralized zones, Cathedral Main, Cathedral



Principal exploration in Cathedral area

with13.90% Cu and 6.85 g/t Au

South, Pinnacle, Arc, and Gully, with significant gold and copper grades in grab samples taken from different zones. Focus is on the Cathedral Main, which has returned up to 13.90% Cu and 6.85 g/t Au. Values from the other zones include 4.72% Cu and 1.33 g/t Au from the Cathedral South zone, 11.10% Cu and 2.77 g/t Au from the Arc zone, and 3.13 % Cu and 0.32 g/t Au from the Gully zone.

Five Zones in the Cathedral Mineralized Area

Source: Company

We note that the Pinnacle zone’s structure is tilted. Kemess and Mt. Milligan have similarly titling structures as well. Tilted structures can be advantageous when reaching for higher grade ore, since drilling can be done laterally rather than vertically, leading to less burden when drilling.

Cirque and Gail Mineralized Areas

Cirque and Gail mineralized areas have also returned high-grade gold samples. A chip sample from Cirque has the highest gold grade in Thane @ 77.8 g/t Au from the Ootes zone. The chip sample was 0.12 m wide, returning 3.26% Cu, 77.8 g/t Au, 56.4 g/t Ag, and 1.08 ppm Mo.



77.8 g/t Au from Cirque

Commencing Thane’s first drilling

program in 2021

Samples Taken from the Cirque and Gail Mineralized Areas

Source: Company

Gail mineralized area rock samples have returned an average grade of 0.44% Cu. An exploration program conducted in 2012 had returned 7.69% Cu, 2.84 g/t Au, and 65.2 g/t Ag. To date, we believe work at the Cirque and Gail areas has outlined a significant area of copper-gold-molybdenum mineralization that aligns with the interpretation that the Thane project hosts multiple alkalic porphyry deposits. An IP survey has identified potential for a related blind porphyry system (east of Cathedral South), which is approximately 500 m wide and 1,000 m long.

2021 Exploration Plans A 2,400 m diamond drill program (eight holes) on the Cathedral area is expected to commence next month. IP surveying for Cirque and Gail will continue as these areas have returned significant copper and gold grades. IMCX is aiming for a new copper-gold discovery this year.

Preliminary Speculative Target (FRC Estimate) Based on our review of all the published data, and compilation and alteration maps, we are assigning preliminary dimensions of 400 m (length) x 400 m (width) x 200 m (depth) for the Cathedral Main and the Cathedral South zones.



Compilation Map

Alteration Map

Source: Company



Potential for 300+ Mt

For conservatism, we are discounting

our estimate by 75% for valuation

purposes

Management and directors own 9%

The following table summarizes our preliminary estimates. Grades are comparable to the other deposits in the region.

FRC’s Preliminary / Speculative Estimates

Source: Company

Management and Directors

Source: Sedi / Company

Brief biographies of the management team and board members, as provided by the company, follow: Greg Hawkins - Chairman Mr. Hawkins holds a BSc in Geology from the University of Alberta and an MSc in Mineral Economics from McGill University. He has been involved in the Mining Exploration and Investment industries since 1969 and has been variously responsible for the identification and/or delineation of 10 mineral deposits in Canada, USA, Chile, Ghana, Mali and Zaire. Mr. Hawkins is currently a Director of New Pacific Metals Corp. and was the Founding Project Consultant and/or Founding Director of seven public and private Exploration/Development ventures and has participated in or been responsible for the definition of at least one



resource/reserve in every case, with six of those cases resulting in production in the USA, Chile, Ghana, Mali and DRC, collectively accounting for over $2.1 billion in market cap at the companies’ respective peaks. In 1990 Mr. Hawkins started CME, an international full service consultancy and contracting firm with 100+ clients in 25 countries and 3000 employees. He has authored a number of papers on exploration, exploration philosophy and mineral economics since 1979. Dave McMillan – Interim CEO, President and Director Mr. McMillan has been involved in the mining and financial markets for over 40 years and has, since his retirement from the securities industry in 2000, held numerous director and executive roles in public and private companies. During his 17 years in the securities industry, Mr. McMillan was an investment adviser, vice-president, director and senior partner at one of the top private brokerage firms in Canada. During this time, Mr. McMillan was instrumental in the financing of many junior exploration companies in North America and South America, including the junior exploration companies that originally discovered the mineral resources that led to the development of the Kemess and Mount Milligan mines, both of which are located in the same geological trend as the company's Thane project in British Columbia. Chris Naas – COO and Director Mr. Naas is a graduate in geology of Dalhousie University (B.Sc., 1984) and is a professional geoscientist of British Columbia. He has over 34 years’ experience in the mineral exploration field in Canada, Africa and South America and brings extensive experience in the supervision of mineral exploration programs in western North America and internationally that have successfully developed mineral resources from grassroot prospects. In 2005 he consolidated land positions and co-founded Yellowhead Mining Inc. ("Yellowhead"), where he was instrumental in developing the Harper Creek property. Yellowhead was later acquired by Taseko Mining. Mr. Naas served on the boards of directors of Yellowhead until 2012 and Harper Creek Mines, Yellowhead's subsidiary, until 2019. Jason Nickel - Director Mr. Nickel is an experienced mining engineer, investor and entrepreneur with a diverse 25-year mining background in operations, engineering, feasibility and exploration / development of venture capital projects. Most recently he held position as Mine Manager for a significant Canadian emerging producer, leading the production and development of new underground and pit operations. He has provided management and consulting services to the industry since 2008. Since 2011, Jason has served on 3 previous TSX-V / CDNX board of directors’ and has been heavily involved with several other junior resource public companies and mining project start-ups. He holds a degree in Mine Engineering from UBC and a GDBA in Business Administration from SFU Segal School of Business. Previously his experience includes several roles from Mine Planner, Sr. Mine Engineer, Mine Foreman, to Chief Engineer, Mine Manager and Vice-President.



Samir Patel - Director Mr. Patel is a securities lawyer with over 11 years of experience in securities and corporate law, particularly in relation to M&A transactions, continuous disclosure requirements, corporate governance and equity financings. He is currently General Counsel & Corporate Secretary at First Mining Gold Corp., a gold exploration and development mining company listed on the Toronto Stock Exchange, and has been with First Mining Gold since June 2016. Prior to that, Mr. Patel spent three and a half years as Corporate Counsel and Corporate Secretary of Wellgreen Platinum Ltd. (now Nickel Creek Platinum Corp.), a Canadian PGM-Ni mining exploration company listed on the Toronto Stock Exchange. Mr Patel has a Bachelor of Laws (Honours) degree from the University Nottingham in the United Kingdom. Mr. David McAdam, B. Com. – Director Mr. McAdam has over 30 years of finance and operations experience in large and small capitalization companies, where has been the financial lead in raising over $250 million in equity and securing over $100 million in debt. Mr. McAdam has been the financial and/or operational lead in over 90 acquisitions, including the integration of the target companies. Mr. McAdam has been the Chief Financial Officer of several public and private companies including a number of public and private BC-based mining companies (one a Vancouver based TSX company with producing assets in South Africa and public reporting across the TSX-AIM-JSE exchanges). Other sectors include for-profit provider of English as a Second Language training to foreign students (Executive advisory and Investor Relations), a Fortune 150 waste management/recycling company (VP Ops and Director of Finance).

Our net rating on the company’s management team is 4.1 out of 5.0 (see below).

Source: FRC



Three out of six

directors are independent

Subsequent to Q1, the company raised

$2.7M

In-the-money options and warrants

can bring in up to $0.85M

Strength of Board

Source: FRC

Financials

Source: FRC / Company

Stock Options and Warrants: The company has 23.19M options (weighted average exercise price of $0.29) and 12.02M warrants (weighted average exercise price of $0.39) outstanidng. 3.47M warrants and 1.65M options are in-the-money, implying a potential to raise $0.85M.

Valuation We are valuing IMCX based on the average Enterprise Value to Resource ratio of copper and copper-gold juniors.



Copper and copper-gold juniors are

trading at $0.03/lb CuEq.

Source: FRC / S&P Capital IQ / Various Companies

Applying $0.03/lb to our preliminary estimate on Thane, we are arriving at a fair value estimate of $0.42 per share on IMCX. We are initiating coverage with a BUY rating. If positive, results of the upcoming drill program will be catalysts for IMCX’s shares.

Risks We believe the company is exposed to the following key risks: ➢ The value of the company is dependent on copper/gold prices . ➢ Exploration/development of porphyry projects can be capital intensive. ➢ Access to capital and share dilution. ➢ Thane does not have a NI 43-101 compliant resource estimate. As with most junior exploration companies, we are assigning a risk rating of 5 for IMCX.



Fundamental Research Corp. Equity Rating Scale: Buy – Annual expected rate of return exceeds 12% or the expected return is commensurate with risk Hold – Annual expected rate of return is between 5% and 12% Sell – Annual expected rate of return is below 5% or the expected return is not commensurate with risk Suspended or Rating N/A— Coverage and ratings suspended until more information can be obtained from the company regarding recent events. Fundamental Research Corp. Risk Rating Scale: 1 (Low Risk) - The company operates in an industry where it has a strong position (for example a monopoly, high market share etc.) or operates in a regulated industry. The future outlook is stable or positive for the industry. The company generates positive free cash flow and has a history of profitability. The capital structure is conservative with little or no debt. 2 (Below Average Risk) - The company operates in an industry where the fundamentals and outlook are positive. The industry and company are relatively less sensitive to systematic risk than companies with a Risk Rating of 3. The company has a history of profitability and has demonstrated its ability to generate positive free cash flows (though current free cash flow may be negative due to capital investment). The company’s capital structure is conservative with little to modest use of debt. 3 (Average Risk) - The company operates in an industry that has average sensitivity to systematic risk. The industry may be cyclical. Profits and cash flow are sensitive to economic factors although the company has demonstrated its ability to generate positive earnings and cash flow. Debt use is in line with industry averages, and coverage ratios are sufficient. 4 (Speculative) - The company has little or no history of generating earnings or cash flow. Debt use is higher. These companies may be in start-up mode or in a turnaround situation. These companies should be considered speculative. 5 (Highly Speculative) - The company has no history of generating earnings or cash flow. They may operate in a new industry with new, and unproven products. Products may be at the development stage, testing, or seeking regulatory approval. These companies may run into liquidity issues and may rely on external funding. These stocks are considered highly speculative. Disclaimers and Disclosure The opinions expressed in this report are the true opinions of the analyst about this company and industry. Any “forward looking statements” are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our forecasts will materialize. Actual results will likely vary. The analyst and Fundamental Research Corp. “FRC” does not own any shares of the subject company, does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subject company. Fees were paid by IMCX to FRC. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takes steps to ensure independence including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release of liability for negative reports are protected contractually. To further ensure independence, IMCX has agreed to a minimum coverage term including an initial report and three updates. Coverage cannot be unilaterally terminated. 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interra copper corp. buy (cse: imcx / otc: imimf) current

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