Marimaca Copper (MARI) - Cheaper Financing When Needed?

Morgan Leighton
November 10, 2021

Marimaca Copper is a TSX-listed copper company. The company's flagship asset is the Marimaca Copper Project in Chile's Antofagasta region. It is the only copper discovery made globally within the last five years. This is a low-risk project with substantial exploration potential. 

Matt Gordon caught up with Hayden Locke, President, and CEO, Marimaca Copper. Hayden has extensive experience as a mining executive with a significant part of his career spent in the development and leadership for successful LSE and ASX-listed mining companies. He has previously worked with J.P Morgan and Barclays Natural Resource Investments. As of 2018, he has served as the CEO at Emmerson Plc, a Morocco-based potash development company where he currently holds the Director position. 

Company Overview

Marimaca Copper (formerly known as Coro Mining Corp.) is a copper exploration and development company. It was founded in 2004 and is headquartered in Chile. The company is listed on the Toronto Stock Exchange (TSX-V: MARI). Compañía Minera Cielo Azul Ltda, Minera San Jorge S.A., Minera Coro Chile Limitada, Minera Rayrock Ltda., Machair Investment Ltd., Rising Star Copper Limited, and Sea To Sky Holdings Ltd. are the company's subsidiaries. 

Marimaca copper is developing its unique Marimaca oxide project in Chile. This copper-oxide project has a short delivery timeline and stands out in the copper space due to a host of unique characteristics. 

The company recently published a report along with Wood MacKenzie. This report highlights the various benefits of a SX-EW (solvent extraction electrowinning) plant. This plant brings the project closer to a global scale with a low carbon footprint per ton of refined copper produced. Wood Mackenzie served as an industry expert for this report, taking into account all PEA (Preliminary Economic Assessment) inputs, verifying the project's relatively low carbon intensity. The company is looking to reach the bottom of the carbon intensity curve per ton of refined copper produced. 

An Industry Shift

According to Marimaca Copper, there's been an ongoing shift within the mining industry where traditional lenders are increasingly focusing on the sustainability of projects. Carbon emissions and intensity have become an important part of the conversation as the world moves towards a green energy revolution. 

A refined copper operation has varying levels of carbon intensities. Project financing banks and traditional money institutions are now taking into account the emission intensity of projects. 

Marimaca Copper anticipates that a low carbon footprint will significantly cut down financing costs. The company is focused on addressing various metrics including sustainability, environmental frameworks, and stakeholder engagement. The company is also looking to acquire a connection to the national electricity grid, a proposal highlighted in the company's PEA. The company has had conversations with energy producers in northern Chile for a PPA (Power Purchase Agreement). This agreement will enable the company to fulfill its power requirements through electricity generated from renewable sources. 

Carbon Tax

Marimaca Copper anticipates that sustainability will play a major role in all future mining projects. There have been conversations surrounding a carbon tax by multiple countries. Although a carbon tax is yet to be implemented, there are predictions that a producer lower on the carbon spectrum will see significant benefits from a cost perspective. 

An estimated 6t-8t of carbon is emitted per ton of copper produced in a traditional copper project. Marimaca Copper is looking to significantly cut down these emissions, aiming for less than 1t of carbon emitted per ton of copper produced. In a scenario where a carbon tax is implemented per ton of emissions, the company would benefit from a premium for being environmentally sustainable. This added value will further assist the company in future capital raises and it can also fetch a premium for its end product.

Achieving Scale

Marimaca Copper is looking to scale up its copper project. Once the company has a connection to the national grid, it will be able to ramp up production while having a reliable energy source as the electricity requirement grows. As the energy is sourced from renewable sources, there will be minimal impact on the project's overall carbon footprint. The company is also looking to enter PPA agreements with upcoming renewable projects in the Atacama region. 

M&A Considerations

Marimaca Copper talks about a shift in M&A (Mergers and Acquisitions) in the base metals space. Greenstone is a majority shareholder at Marimaca copper. The firm is private equity open to an M&A in case of a liquidity event. The unique features of the company's project along with the sustainability factor will serve as a desirable factor for large corporations. 

Emissions have become a vital part of business development in recent times. Rio recently announced a $7.5Bn investment to revise its carbon emissions targets, aspiring to reach the goals earlier than originally planned. Anglo-American also announced its plans to reduce its emissions over 3 phases as it works towards reaching net carbon neutral operations by 2040. 

Marimaca Copper believes that these announcements will make its project significantly more attractive as a result of its carbon intensity profile. 

Targets 2021 and Beyond

Marimaca Copper is currently carrying out infill drilling at the Marimaca oxide project. The company has plans for an infill campaign on the depth extensions. This drill data will be a part of the planned resource update in 2022. The company has delayed its Feasibility Study until it achieves the desired project scale. The Feasibility Study has been pushed to next year. 

The company is also working on the permitting process, water connections, and electricity connections as it looks to enter construction at the earliest. As per a recent panel discussion, the company is looking to become a major global copper producer by 2024-2025. As the number of new and upcoming copper projects is fairly limited, the company is confident that it will reach its goal.

To find out more, go to the Marimaca Copper Website