Marimaca Copper (MARI) - Resource Grows with Funded Infill Drilling

Marimaca Copper Corp. is a Canadian copper exploration company focused on exploring and developing new copper resources to supply an increasing global demand for this essential commodity. 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 that offers 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 Canada. 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. The Marimaca Project is one of the most important copper oxide discoveries in northern Chile for over a decade. The company believes that it has the potential to be one of the best open-pit copper oxide projects globally. 

Marimaca Copper is developing the Marimaca oxide deposit in northern Chile. This unique copper project has a very low strip ratio and low capital cost. This project is ideal for an open-pit operation. These characteristics have enabled the company to develop the project on its own, leading to unique propositions that provide outstanding economic viability. 

Chile’s recent elections saw the change in government and the appointment of a new President. There has been a sense of cautious optimism in the country following these administration changes. The company anticipates that the new administration would start to remove the common uncertainties for investors. 

Drill Program 

Marimaca Copper recently published a press release highlighting a 25,000m drill program. This drill program is focused on exploration targets that would help quantify the exploration upside for the Marimaca project. In 2021, the company successfully carried out concept drilling and discovery drilling on its new targets. 

The drill program along with the ongoing infill drilling will enable the company to define the additional resource tonnage. Following this, the company is looking to quantify the project for investors. The company anticipates that this project has significant growth potential. The new drill program is set to commence imminently. 

The program will also enable the company to work towards a decision on DFS (Definitive Feasibility Study), which is planned for the second half of 2023. Out of the 25,000m, 22,500m is allocated to infill drilling, to convert the inferred resource, while 2,500m is allocated for the exploration component. 

The exploration drill metres are targeted towards the extension of the company’s Marimaca Oxide Deposit depth extension, also called Mamix. These depth extensions to the oxides were found by the company last year. The exploration drilling is focused on making a new discovery along with extension at Mamix. 

The company anticipates that once the budget is approved by the board, it can drill up to 30,000m. These additions will include drilling to bring the Mamix resource to the M&I (Measured and Indicated) category. This will be followed by drilling satellite targets at the Mercedes deposit. 

Cash Position

Marimaca Copper is fully funded to execute the planned drill program while maintaining a cash surplus by the end of 2022. However, in a scenario where the company expands the program, it might consider a capital raise.

The incremental expansion drilling will provide the company with the data to decide between additional drilling, raising funds, or delaying the DFS which is planned for the second half of the next year. 

The DFS has been delayed before by the company because the extension discovery presented an opportunity for a bigger project. The company has worked extensively with its met consultants and geologists to carry out recutting of all the existing geological interpretations, leading to favourable results so far. However, additional work is needed before the company makes a decision. 

Following this, the company has plans to initiate drilling at Mamix and bring the resource to the indicated category. Next, the company will test the blue sky potential for the project. Lastly, the company will assess whether the DFS should be delayed or not. 

The company isn’t in favour of a further delay in the DFS. This is because the project not only offers a strong exploration potential but also provides a relatively short timeline to reach first copper, a rarity in the copper space. This will enable the company to reach first copper faster than many of its peers. 

In 2021, Marimaca Copper had a major focus on the development front. However, the company had to reconsider as the oxide deposit’s depth extension was found to be right off the bottom of the PEA pit shell. This led to the company drilling out the deposit as it's a part of the Marimaca oxide deposit. 

Based on the exploration targets, the company anticipates that the resource will reach the 1Mt mark, even when the expanded satellite targets, namely Mercedes, Cindy, and Robles are excluded. The company also has additional district targets which were identified through high-resolution drone-mounted magnetic surveys. It drilled the 3 conceptual targets and all 3 returned shallow oxide mineralization that was well above the average economic cut-off grade for a similar deposit in Chile. 

Marimaca Copper is looking to balance between shareholder dilution and chasing relatively high-risk exploration upside or entering production, and minimising the dilution to carry out aggressive exploration in the broader district. The company believes that the Marimaca district has the potential to be developed into a single project. 

Environmental Considerations

Chile, in recent times, has seen increased discussions surrounding environmental concerns, and the steps companies need to take to address these issues. The new government in Chile is focused on 2 major aspects. First, to provide a level of social security, and second, to protect the environment.

Marimaca’s project is on the bottom end of the risk spectrum when it comes to environmental impact. This is because the project is based in a low coastal range and It does not feature any local communities nearby. Additionally, the company intends to utilise seawater in place of freshwater aquifers. Lastly, the company isn’t operating on farmland. These factors place the company at the bottom end of the environmental and social risk impact spectrum.

According to the company, the project’s biggest risk is timing. It seeks to accelerate the permitting process so that it can run in parallel with the company’s ongoing engineering work. The right timing is essential for the company to develop the project. The company’s current long-term copper price stands at $3.15/lb. Each year the project is delayed, the company will lose $50M on its NPV (Net Present Value). Furthermore, each year the company runs operations without producing will cause further dilution of its current shareholders. The company is looking to limit the number of additional shares that are issued to prevent over-dilution. 

Targets 2022 and Beyond 

The company’s timelines are highly dependent on the exploration drilling. However, based on educated assumptions, the company intends to work on its parenting strategy in the present. It has plans to initiate the engineering side of the permitting strategy imminently. It has plans to decouple the engineering for the permits from the actual engineering of the project build. 

Based on the extensive consultation and analysis, the company found that its environmental impact assessment for the project will be carried out under the DIA (Declaración de Impacto Ambiental) protocol. Once an application is submitted, it takes 12 months on average to be processed. Although the process can be faster, there’s a typical 12 month period between the submission date of the DIA engineering and DIA application and construction approval. 

Currently, the company is looking to prepare and submit the DIA application at the earliest. During the 12 month time period, the company intends to carry out Feasibility Study engineering, and basic engineering along with financing discussions. This will ensure that the company concludes all the necessary work by the time it receives construction approval. Ideally, the company is looking to begin construction in 2023. 

As the project is a simple open-pit operation with virtually no pre-strip, the construction timeline is expected to be relatively short. The pre-strip is expected at 3Mt, which is a small plant. A fairly easy topography further makes construction simpler. The company anticipates that the overall construction timeline would be under 18 months. Based on these estimates, the company could start producing first copper by 2024-2025. 

Marimaca Copper’s project has a significant exploration upside that has the potential to grow bigger over time. It is looking to get into production at the earliest to take advantage of the strong copper market. 

M&A Considerations

Marimaca Copper isn’t looking to add another development-stage copper project to its portfolio. However, the company is open to discussing a potential opportunity that provides cash flow from a strategic perspective, as this would help change the company’s investment case significantly. 

Such an opportunity will provide the company with a cash flow for its high-growth potential project. Currently, the company is focused on project advancement.

‍To find out more, go to the Marimaca Copper website