Marimaca Copper (MARI) - "Bigger Than We Expected"

Marimaca Copper Corp. is a Canadian copper company, focused on the Marimaca copper oxide project in the Antofagasta region of Chile. The project is an open-pit, low capital and low-risk operation that boasts as the only major copper discovery globally in the last five years.

Matthew Gordon spoke with Hayden Locke, President and CEO of Marimaca Copper Corp. (TSX: MARI) regarding the company’s most recent activities.  

Company Overview

Marimaca Copper Corp. recently concluded with a visit to Chile, which was aimed at showing the Marimaca copper project to various investors and analysts. The time spent in the country enabled the company to be present in various conversations and presentations of the Chilean government. The conversations were held regarding the proposed reforms to the country’s constitution. The Chilean minister of mines, Marcela Hernando, has continued to be vocal regarding her and the Chilean government's opposition to the nationalisation of the country’s mines. The company states that Hernando is opposed to any form of nationalisation and believes that the government is realising the damage being caused by a handful of vocal and radical supporters of nationalisation. Marimaca Copper Corp. believes that the government is actively trying to instil confidence in the international markets regarding Chile’s investment security.  

Marimaca Copper Corp. has recently announced that it entered into a binding agreement with 5Q SpA, a Chilean company, for the sale of its non-core Rayrock assets which include the Ivan SX-EW processing plant and the associated mining claims. The agreement comprises USD$ 11 million in total considerations towards Marimaca Copper Corp., with USD$ 150,000 payable upon signature. The company will see a further USD$ 350,000 upon approval of the Ivan Rayrock technical permits and USD$ 1.8 million, USD$ 2.7 million and USD$ 4.2 million on the 12, 18 and 24-month anniversaries of the agreement.

Chilean constitutional reform

The company recently attended the annual CESCO week, hosted in Santiago, Chile. The week serves as a commercial and networking opportunity for various companies in the mining industry. The CESCO week, which was held in person for the first time since 2019, also allowed the Chilean Minister of Mines, Marcela Hernando, to speak to the mining community and provide feedback regarding the currently debated constitutional reforms of the country, which are proposed to include the nationalisation of the country’s mining sector.

The international copper markets have been awaiting more information regarding the re-writing of the Chilean constitution, with the community fearing that the nationalising of the country’s mineral sector will be included in the country’s new constitution.

The investigation into a possible constitutional reform was commenced after the country experienced severe civil unrest in October 2019. The unrest was addressed through an agreement of peace as well as the suggestion of a new constitution for the country in November 2019. The Chilean government commissioned an independent committee to facilitate talks with various stakeholders to produce a new constitution which will be put to a vote by the country’s citizens.

The approval of a proposal made by members of the constitutional committee, that could pave the way to the nationalisation of some of the country’s largest copper mines on the 1^st of February 2022, only added fuel to the fire of fear. The proposal however must still be voted into the proposed constitution by a two-thirds majority of the country’s constitutional convention. The two-thirds approval of the bill will then result in the country adding the proposal to the proposed constitution that must be voted for by the country’s citizens.

Hayden Locke, the president, CEO and director of Marimaca Copper Corp. states that it was an interesting time to be in Chile, but also refreshing to hear the Chilean minister of mining give a response to the rumours and proposals of nationalising. He states:

“It was really refreshing to see the government being quite aggressive in terms of their response to the rumours of nationalisation saying under no circumstances that we want to nationalise the industry.”

Locke further believes that the recent announcements of CODELCO, the Chilean state-owned mining company regarding the privatisation of various of its non-core assets also show that the government is committed to ensuring the international markets that the fears of nationalisation are unfounded. He states:

“I think we're really starting to see the government waking up to the damage that's been caused by these headlines, by this radical view.”

Sale of non-core assets

The company’s visit to Chile was not only insightful but also an opportunity to show investors and analysts the Marimaca copper project. Locke states:

“Just making regular visits to go down into country, taking some analysts and investors to site. It's one of the big things that we talk about is the infrastructure and locational advantages of our projects and just, there's nothing like seeing it. So we wanted to get some analysts and investors down and the feedback was, wow, it's even better than we thought it was.”

The Chilean visit further served as an opportunity to offload the company’s non-core Rayrock asset which includes the Ivan SX-EW Processing Plant and its associated mining claims in a sales agreement with 5Q SpA. The binding sales agreement with 5Q SpA, a private mineral processing company based in Santiago, Chile consists  of a total consideration of up to USD$ 11.0 million, plus up to USD$ 6.0 million in contingent payments.

The total consideration Marimaca Copper Corp. will receive consists of USD$ 150,000 upon signing and USD$ 350,000 upon approval of the technical permits for the Ivan Rayrock assets. Marimaca Copper Corp. will further receive between USD$ 1.8 and 2.1 million on the 12-month anniversary of the agreement and then a further amount of between USD$ 2.7 and 3.1 million on the 18-month anniversary of the agreement with the final amount of between USD$ 4.1 and 5.2 million due to the company on the 24-month anniversary of the agreement.

The sales agreement will also entail Marimaca Copper Corp, holding a 1.5% net smelter return (NSR) royalty on any future underground production from the Ivan underground ore body.

The sale of the Ivan SX-EW is motivated by the company’s belief that it does not form a further part of the project’s optimal development path. 

Recent Discoveries  

Marimaca Copper Corp. announced in late March of 2022, that the in-fill drilling program it conducted at the Marimaca Copper project intercepted high-grade mineralisation outside of the previously defined mineralisation zone. The first 7 holes of the reverse circulation (RC) infill drill campaign intercepted broad zones of near-surface green copper oxide mineralisation in six of the seven initial RC drill holes. The implications of the infill drill program encountering mineralisation with grades often exceeding those of the mineral resource estimate published in 2019 is that the deposit is now considered to be open at depth as well as to the south-east.

“…as we said in one of our announcements, we're still in the early stages of discovery, that's what these drill holes are telling us. We've got a lot of work to do, and a lot more places we can spend that money wisely to create better returns for our investors.”

The interception of such high-grade mineralisation came as a surprise to the company, which previously believed that the mineralisation to the southeast of the deposit was declining in grade. Locke states:

“The interpretation was, from the drilling previously done that this area was thinning. And what these drill holes tell us is actually it's not thinning and it could actually be expanding again and going into a broader zone of mineralisation.”

The way forward regarding the mineralisation discovery is still under consideration by the company. Locke believes that the mineralisation results warrant further exploration, and states:

“…the biggest question now is what happens further to the south. And Sergio has now the dilemma of do we start diverting some of our resources to looking at extensional step-out drilling down to the south, we almost certainly will look at that.”

Potential scale and raising funds

The recent discovery of the mineralisation extension at the mineral oxide deposit (MOD) of the project shows the potential for further growth according to the company. The company plans to continue with the planned infill drilling, which will continue toward the north of the project targeting the conversion of the project’s resources from the inferred category to the measured category.

The potential scale of the project however is not lost to the company, with Locke stating:

“At this stage, is it materially going to change the scale to change our view that actually what we've got is now a globally significant Copper project? In my mind, 50,000 ton or more of production per annum is kind of a threshold.” 

Marimaca Copper Corp. however, remains focused on advancing the project by reaching its predetermined milestones. The company plans to complete a feasibility study as well as the permitting of the project by the end of 2022. The company will then in parallel continue with the exploration of the project, with explorational drilling envisioned to target the oxide extensions of the deposit at depth and along strike.

The company believes that the raising of funds should not be a challenge. The timing and valuation at which it raises funds however must be carefully considered. The company will aim to raise funds at a point which will minimise potential shareholder dilution with Locke stating:

“Well, we know we'll be able to raise more money. We have lots of people offering us money. But I think the biggest question is, what's the right price for us to do that. We already have a very firm view that we're going to have a resource upgrade at some point in the middle of the year. And so logically, we don't want to raise money prior to the market understanding what we're thinking internally in terms of what that scale could be and the material increase in value that will come along with that”

Moving Forward

Marimaca Copper Corp. aims to complete the envisioned 22,500 infill drill program at the project’s mineral oxide deposit by Q2 of 2022. The company is further aiming to complete an additional 10,000 m of exploration drilling at the deposit’s depth extension.

The company further aims to update the project’s mineral resource estimate (MRE), with the results of its infill drilling program by the start of Q3 2022. The definitive feasibility study of the project is envisioned to be initiated in Q3 2022, which will occur in parallel with the continued exploration of the project’s deposit and additional identified satellite deposits. 

To find out more, go to the Marimaca Copper website