Copper Price Resurging: Why Marimaca Copper is a Company to Watch

• Copper demand is surging, driven by the renewable energy transition and the rise of AI
• Marimaca Copper's low-cost, high-grade oxide deposit in Chile positions it for success
• The company boasts strong ESG credentials and support from key strategic investors
• Marimaca's project benefits from excellent infrastructure and a clear permitting pathway
• The experienced management team is focused on delivering a "mine of the future"

The Copper Market Awakens

The copper market is experiencing a resurgence, driven by the global transition to clean energy and the rise of advanced technologies like artificial intelligence. Prices spiked to $11,000 per tonne in May 2024 as investors anticipated significant new demand from these emerging sectors, and have remained elevated since.

Renewable energy infrastructure and electric vehicles are far more copper-intensive than their conventional counterparts. According to industry estimates, the green energy boom could drive an additional 2 million tonnes per year of copper demand by 2030, equivalent to 9% of current global consumption. At the same time, the proliferation of AI and smart-grid technology is creating new sources of demand for copper in high-performance computing and electrical infrastructure.

However, this demand growth comes at a time when the copper industry is facing deepening structural challenges on the supply side. Ore grades are continuing their long-term decline, while the pipeline of new mine projects is constrained by a lack of recent discoveries, rising costs, and resource nationalism in key producing regions.

As a result, many analysts are now forecasting a sustained period of copper market deficits in the years ahead as demand outpaces supply growth. S&P Global warns that "unless massive new supply comes online in a timely way, the goal of Net-Zero Emissions by 2050 will be short-circuited."

This combination of robust demand growth and tightening supply is creating opportunities for copper miners and explorers that can successfully navigate the industry's challenges. In particular, projects with favorable economics, established infrastructure, and supportive jurisdictions have the potential to attract significant investor interest in the current market environment. As the world pivots to a more electrified, interconnected, and intelligent future, copper's role as an essential building block is becoming more critical than ever.

Demand Projections & Supply Challenges

However, the copper industry has been sounding the alarm about looming supply shortfalls for years. S&P Global predicts that even before factoring in AI, global copper demand will double to 50 million tonnes by 2035 - equivalent to the last 122 years of copper consumption. The main driver is the shift to renewable energy and electric vehicles, which are far more copper-intensive than fossil fuel-based systems.

The International Energy Agency and Bloomberg NEF estimate that just the renewable power and EV sectors will require 120 million tonnes of copper by 2030. This presents an immense challenge for the mining industry.

As Marimaca Chief Executive Officer Hayden Locke explains, "To supply S&P's 2035 demand scenario, the industry would need to find, permit, build and expand operations equivalent to another 17 more Escondidas, the most productive copper deposit we've ever found."

Compounding the challenge, copper grades are declining globally as the best deposits are depleted. Unless massive new supply comes online quickly, the energy transition could be short-circuited. This sets the stage for a scenario akin to the 20th century "scramble for oil," with the potential to be even more disruptive given copper's high geographic concentration.

Hayden Locke, CEO of Marimaca Copper

Marimaca Project Overview

Against this backdrop, Marimaca Copper is advancing one of the most significant new copper discoveries in Chile, the world's top copper jurisdiction. The Marimaca oxide deposit, located near Antofagasta, hosts over 200 million tonnes grading 0.45% copper in the Measured & Indicated categories, positioning it as one of the largest copper finds in more than a decade.

Importantly, Marimaca is an unusually low-cost project thanks to its shallow, high-grade oxide mineralization and proximity to existing infrastructure. A 2020 PEA outlined a $285 million CAPEX, bottom-quartile OPEX of $1.29/lb copper, and a rapid payback of less than 3 years. A Definitive Feasibility Study (DFS) is currently underway, with completion expected in early 2025. The DFS is anticipated to further enhance the project's robust economics.

Recent updates from Marimaca have highlighted a 44% increase in Measured and Indicated Resources, now totaling 900,000 tonnes of contained copper. This significant resource expansion underscores the project's growing importance in meeting future copper demand.

Marimaca also holds considerable exploration upside, with multiple untested targets that could represent a new copper district. The crown jewel is Sierra de Medina, 25 km from Marimaca, which has multi-million tonne potential at grades approaching 1% copper.

Sustainability & Environmental Considerations

Marimaca is differentiating itself through its commitment to responsible, sustainable development. The project already has industry-leading sustainability credentials, including net-zero waste targets, 100% renewable power, and the exclusive use of seawater rather than scarce continental water sources.

Management's goal is to build "the mine of the future" and continually improve Marimaca's already impressive ESG metrics. This focus on sustainability is a competitive advantage in securing permits, financing, and offtake agreements.

Financing & Investment Strategies

Marimaca is well-funded to advance its flagship project while maintaining a tight share structure. The company's strong institutional backing includes Mitsubishi, which invested at a premium to the current share price and has an option to increase its stake further.

CEO Hayden Locke notes that "there is an elevated level of interest in copper" from the investment community, given the bullish long-term fundamentals. While Marimaca's valuation is at a premium to peers, Locke believes the company is "undervalued relative to the amount of technical de-risking work we've done and the quality of the project." Multiple financing options are on the table, including additional strategic investments, a market offering, and royalty/streaming deals.

Permitting & Community Engagement

Marimaca is taking a proactive, best-practice approach to permitting and community relations. The company has already obtained two environmental permits in Chile and has engaged top-tier consultants to help navigate the approvals process for the flagship project. The relatively simple oxide project helps to minimize risks compared to large-scale sulfide developments.

Marimaca has been exploring in the region since 2016 and informally engaging with local stakeholders. The company is now ramping up its formal community consultation process ahead of its final permit application, expected later this year. Country manager Jose Antonio is "confident that most of the potential roadblocks or risks had been identified and catered for" through Marimaca's diligent preparation and adherence to local processes.

Infrastructure & Logistics

One of Marimaca's key advantages is its proximity to world-class infrastructure, including power, water, ports, and highways. The project is essentially surrounded by major mines and industrial facilities.

Water will be sourced from an existing ocean discharge system, avoiding any impact on local aquifers. Power will come from Chile's grid via a short 25 km transmission line connecting to a substation near the site. The Mejillones port, suitable for importing mining equipment and exporting copper cathode, is only 45 minutes away by road. An existing mining camp will house workers during construction.

This outstanding infrastructure not only reduces execution risk and CAPEX requirements, but also accelerates the development timeline. First production is targeted for 2027.

Final Thoughts on Marimaca's Potential

The Marimaca project is a standout in the challenging world of copper development. Its large, shallow, high-grade resource in a tier-1 jurisdiction makes it a rare find that could be a game-changer for any company. Throw in the unrivaled infrastructure, clear permitting pathway, and obvious exploration upside, and it's no surprise that industry heavyweights like Mitsubishi are taking notice.

While mining is never without risks, Marimaca has checked an unusual number of boxes for a copper developer. If the experienced management team can execute as planned, Marimaca has the potential to be a profitable, growing copper producer by the end of the decade - ideally timed to ride the wave of copper demand from the renewable energy and AI revolutions.

For investors, Marimaca represents a compelling way to gain leverage to the copper price with a de-risked, high-quality asset. While the current valuation is not cheap, it appropriately reflects the company's outstanding fundamentals and scarcity value in a sector starved of new development opportunities. As Marimaca continues to advance towards production, it has the potential to be part of the solution to the world's looming copper deficit.

Copper Macro Thematic

The global energy transition is ushering in a new era for copper. As the world electrifies transport, builds out renewable power infrastructure, and increasingly turns to copper-intensive technologies like AI, demand for the red metal is set to surge.

Copper's unmatched thermal and electrical conductivity makes it irreplaceable across a wide range of applications critical to decarbonizing the economy. Electric vehicles use up to 4x more copper than internal combustion engines. Wind and solar farms require 5-10x more copper per megawatt than conventional power generation. The global power grid must expand dramatically to handle renewable energy, and copper is the lifeblood of the grid.

This perfect storm of demand drivers has experts like Robert Friedland, Ivanhoe Mines' founder, warning of an impending "revenge of the miners" - a structural supply deficit that could send copper prices soaring. New mines can take over a decade to bring online, and there's a stark lack of new copper discoveries to replace rapidly depleting existing mines. Grades are falling, ore bodies are getting deeper and more expensive, and resource nationalism is on the rise.

The result is a market that is fundamentally very tight, with little margin for error. Even small disruptions, whether from labor unrest, extreme weather, or construction delays, could have an outsized impact on prices. Longer-term, the stage is set for a secular bull market in copper as demand outstrips supply year after year.

For investors, this creates a compelling opportunity to gain exposure to a critical metal with unmatched long-term fundamentals. While near-term volatility is inevitable, the strategic case for copper has never been stronger. The key is finding well-positioned miners in stable jurisdictions with the assets and the management teams to capitalize on copper's increasingly electric future.

Key Investment Thesis

• Copper demand growth from renewable energy transition and AI is unprecedented.
• Supply response will be constrained by falling grades, lack of new discoveries, and challenging jurisdictions.
• The copper market is likely to remain in deficit, supporting higher long-term prices.
• Selective copper miners offer excellent leverage to this structural growth story.
• Marimaca Copper stands out for its high-quality asset, strong ESG credentials, strategic partnerships, and clear path to production.

The copper market is on the cusp of a transformative bull cycle driven by the unstoppable force of electrification. Demand is surging, supply is struggling to keep pace, and a growing number of governments and investors are waking up to copper's irreplaceable role in building a low-carbon future. For the few mining companies with the right assets in the right places, this represents a generational opportunity. Marimaca Copper, with its rapidly advancing discovery in Chile, has emerged as a rising star in this exciting new era for copper. While risks remain, the fundamental investment case is compelling - making Marimaca a company to watch for any copper investor.