Marimaca Copper: $68m Financing Partner Fuels Project Towards Production & Exploration Expansion

• Marimaca Copper announced a new financing partner, Assore International Holdings, who invested at a 15% premium to the current share price.
• The funds will be used for detailed design and engineering, debt financing process, and exploration activities, fully financing the company through to the final investment decision (FID).
• Assore, a South African family-owned mining business, is expanding into "future-facing minerals" like copper, and chose Marimaca as their first copper investment after extensive due diligence.
• The company plans to focus on developing the Marimaca Oxide project in Northern Chile and expanding exploration efforts, with potential news flow in the second half of the year.
• Hayden Locke, the CEO, emphasized that the additional funding will allow for more thorough engineering and the hiring of an experienced execution team, which he sees as crucial for mitigating risks in project development.

Marimaca Copper, a company developing the Marimaca Oxide project in Northern Chile, has recently announced a significant development that could accelerate its path to production and enhance its exploration efforts.

This project represents a significant opportunity in the copper mining sector, leveraging innovative extraction methods to tap into Chile's abundant mineral resources. Marimaca Copper's commitment to this project underscores the growing global demand for copper, a critical metal in the ongoing transition to renewable energy and electric vehicle technologies.

New Strategic Partnership & Financing

Marimaca Copper has secured a new financing partner, Assore International Holdings, in a deal that involves both a change in ownership structure and an injection of fresh capital. Assore's C$68 Million strategic investment will acquire a large majority of Tembo Capital's ownership stake in Marimaca Copper. Tembo, a private equity fund nearing the end of its fund life, is divesting its position, creating an opportunity for Assore to enter the project.

The deal comes with a 15% premium on the share price, a notable aspect in the current market environment where many companies are offering discounts to attract investment. Hayden Locke, President and CEO of Marimaca Copper, commented on the pricing:

"We as a management team and as a company do think that it's probably reflective of the value of the project or potentially even a little bit less than the value of the project. So Assore is getting a good deal; they're coming in at a good price from our perspective."

This premium pricing follows a pattern for Marimaca, as Mitsubishi had previously invested at a premium of $4.31 per share, while this new deal is priced at $4.50 per share.

Interview with President & CEO, Hayden Locke

Assore International Holdings: A New Strategic Partner

The new investor, Assore International Holdings, is the international arm of Assore, a South African family-owned mining business. Traditionally focused on manganese and iron ore in South Africa, Assore is now expanding geographically and into new commodities. They have investments in Gemfields and Atlantic Lithium and are the largest single investor in Vision Blue, Mick Davis's new private equity fund.

This move into Marimaca Copper represents Assore's first investment in the copper sector, aligning with their strategy to invest in "future-facing minerals" crucial for the energy transition and future economy. The partnership brings not only capital but also deep mining heritage and strong financial backing to Marimaca Copper.

Use of Proceeds & Project Advancement

The new funding is earmarked for several critical areas of project development and exploration:

• Detailed Design and Engineering: The company plans to use a significant portion of the funds to advance the project's engineering definition. This is crucial for reducing the risk of cost overruns during the construction phase.
• Debt Financing Process: The capital will support the parallel process of securing debt financing for the project.
• Final Technical Work: This funding will cover any remaining technical aspects that need to be addressed.
• Expanded Exploration: Marimaca is keen to add value through exploration, and the new partnership with Assore supports this strategic focus.
• Building an Owner's Team: The company plans to hire experienced professionals to form a robust execution team, critical for successful project development.

Locke emphasized the importance of this funding for project de-risking:

"The biggest risk, in my view, in terms of cost blowouts when you go into production is a lack of engineering - a lack of engineering definition before you start the work. So this money will allow us to go through a lot of our detail design and engineering and get to a highly engineered project."

Project Risks & Mitigation Strategies

Marimaca Copper's management has identified several key risk areas that they aim to address with this new funding:

• Geotechnical Risks: The company plans to conduct thorough geotechnical drilling around the plant, heap leach pad site, and waste dumps to better understand and mitigate potential earthworks challenges.
• Labor Productivity and Costs: By partnering with Techint, who recently completed a large-scale project in Chile, Marimaca gains access to up-to-date information on labor productivity and costs in the region.
• Execution Risk: The funding will allow Marimaca to build a strong owner's team with significant experience in developing similar projects, crucial for smooth execution.

While advancing the Marimaca Oxide project towards production is a primary focus, the company is equally excited about its exploration potential. The new funding ensures that Marimaca is fully financed for all planned exploration activities, which could potentially add significant value to the company.

Conclusion

Marimaca Copper's recent financing deal with Assore International Holdings marks a significant milestone for the company. The deal provides the necessary capital to advance the Marimaca Oxide project towards production while also supporting expanded exploration efforts. The deal's premium pricing and the entry of a strategic partner with deep mining experience signal confidence in the project's potential.

As the company moves forward with detailed engineering, builds its execution team, and continues exploration, investors will be watching closely to see how these efforts translate into project de-risking and potential value creation. While challenges remain, particularly in areas like geotechnical risks and labor productivity, Marimaca Copper appears well-positioned to address these with its strengthened financial position and strategic partnerships.

Macro Thematic Analysis: Copper Sector Outlook & Market Position

Marimaca Copper's ability to secure investment at a premium speaks to the project's attractiveness and the scarcity of quality copper projects in the market. As Locke notes,

"It's really a function of a lack of copper projects in the market at the moment that are really investable with that short timeline to development."

This scarcity, coupled with the growing demand for copper driven by the global energy transition, positions Marimaca Copper favorably in the market. The copper market is not without challenges. Short-term price volatility, driven by factors such as global economic conditions and trade tensions, can impact project economics. Additionally, the mining industry faces increasing scrutiny on environmental and social issues, requiring companies to maintain high standards of sustainability and community engagement.

The global transition towards renewable energy and electrification is driving a surge in demand for copper, creating a favorable macro environment for companies like Marimaca Copper. Copper plays a crucial role in renewable energy systems, electric vehicles, and energy-efficient technologies, positioning it as a critical "future-facing mineral."

The International Energy Agency (IEA) projects that the clean energy transition could quadruple mineral demand by 2040, with copper being one of the key beneficiaries. This increasing demand is set against a backdrop of constrained supply, as few new large-scale copper projects have come online in recent years, and existing mines face declining grades and increasing production costs.

Furthermore, geopolitical tensions and a growing focus on secure supply chains are prompting many countries and companies to seek reliable copper sources in stable jurisdictions. Chile, where Marimaca's project is located, has a long history of copper mining and a generally favorable operating environment, potentially giving the company an advantage in this regard.