Meridian Mining (MNO) - "It's Bigger & Better Than We Thought"

Meridian Mining is focused on becoming the next mid-tier Copper-Gold developer and producer with a focus on Brazil. The company's priority is on the Cabaçal project, an advanced stage VMS (Volcanogenic Massive Sulphide) district-scale Copper-Gold asset located in the state of Mato Grosso, Brazil.

Matt Gordon caught up with Gilbert Clark, Executive Director and Chairman, Meridian Mining. Gilbert has over 20 years of international experience within the natural resources industry. He was formerly a Partner with Sentient Equity Partners. He also served as a Senior Investment Advisor and Director of Sentient Asset Management Canada. His portfolio covered base and precious metals with investment companies in Greenland, South America, and Europe. Gilbert's natural resource business experience spans across continental Europe, Eastern Europe, the Americas, Africa, South East Asia, Greenland, and Australia. His educational credentials include a Bachelor's degree in Geology from Macquarie University.

Company Overview

Meridian Mining is a Copper-Gold development company focused on the Cabaçal Copper-Gold Project in Brazil. The company was founded in 1980 and is headquartered in the United Kingdom. It is listed on the Toronto Stock Exchange (TSX-V: MNO), the OTC Markets (OTCQB: MRRDF), and the Frankfurt Stock Exchange (FSE: 2MM). The company's asset portfolio includes the Espigão Copper-Gold Polymetallic Project, the Ariquemes Tin Exploration Project, and the Cabaçal Copper-Gold Project. 

Meridian Mining is a Brazilian copper, gold, and silver resource development company. The company is working towards gaining 100% ownership of the Cabaçal VMS camp. It is looking to demonstrate the potential of this emerging world-class asset. 

The Cabaçal VMS Camp was historically mined between 1987-1991 by BP. Meridian Mining presented a sample from the past operation featuring 111g/t gold and 5% copper. The company has expanded the high-grade gold structure by 2km. The Cabaçal deposit features continuous mineralization that extends outwards from the mine. The company is currently carrying out drill operations at the deposit.

Cash Position

Meridian Mining previously raised capital at $0.75c at a full warrant. The most recent capital raise was done at $0.20c with a half warrant. The latter was a marketed deal with a lead order. The company was able to raise $10.4M without warrants in 2 days. The company received support from Beacon Securities, PI Financial Corp., Cormark Securities Ltd., and CIBC (The Canadian Imperial Bank of Commerce. 

The company saw a healthy portion of institutional investors along with several HNWIs (High-Net-Worth Individual). The company has observed growth in its market cap and share price consistently over the past 6 quarters. Its assets are significantly large, low-cost, and feature very high grades. The company currently has $10M in cash flow. 

The Cabaçal Copper-Gold Project

The Cabaçal mine was previously under Rio Tinto's ownership. It was sold to an under-funded Brazilian company that carried out limited exploration on the asset. The mine was then acquired by Meridian Mining. 

In early 2021, the Cabaçal mine had a 500m strike length. The company was successful in expanding the mineralization by a factor of 4, bringing it to 2,000m with an average thickness of 60m by 200m across strike length. 

Through in-depth analysis of the historical exploration data, drill data, soil samples, and geophysics, the company was able to identify 7 hydrothermal mineral deposits. It recently announced a C2A (Copper-Zinc and Gold prospect) target at the 2 VMS sequences within the deposit. 

The cumulative mineralization at the deposit is 3.7km at the surface. Despite the historic mining operations, the Cabaçal project still has an entire belt of low CapEx (Capital Expenditure) shallow deposits. 

In the past 2 months, the company has uncovered grades that feature 49m at 4%, 2% of 2g-4g gold, and copper in one of the veins. This vein has a 150m cross strike length and was previously mined by BP. The company continues to infill these veins for resource expansion.

The Cabaçal Project features a 20Mt historical resource with 0.6g copper and 0.6g gold grades. As the previous operator aimed for a small open-pit operation, the company believes that the historical figures are significantly under-estimated. Meridian Mining is working towards a large open-pit operation at the Cabaçal deposit. The company's scoping study highlights a 2.5Mt/year mill along with a huge mine. 

Targets 2022 and Beyond

Meridian Mining is looking to publish its first resource by Q2, 2022. The company is looking to explore the underlying copper and zinc system at the Cabaçal deposit providing it an estimate on the deposit's edge. These results will enable the calculation of the underlying resource. 

The company initiated a Scoping Study in Q3 2021. This allowed the company to attain guidance to launch a PEA (Preliminary Economic Assessment) once the study is concluded. The PEA is estimated to conclude by Q3 2022. 

Meridian Mining is utilizing the production data to minimize any potential risks that may be a result of accelerating the project. The company has a strong understanding of the project's metallurgy and environmental criteria. It recently launched an EIA (Environmental Impact Assessment) which will be followed up by a Bankable Feasibility Study. Additionally, the company has obtained the permits and access agreements for the ESG (Environmental, Corporate, and Governance) component. 

The company was restructured to build a strong team while retaining the senior management for the efficient deployment of capital with a limited risk factor. 

The company is looking to deliver the PEA before the end of next year. The majority of macros including the flow-sheet equipment have already been included in the Scoping Study. It is looking to initiate contractor discussions by Q2, 2022. 

It is looking for groups that have recently built projects and mines, leading to a fair estimation of the cost profile. As the operation will be executed using Nelson Cyclones and floatation cells, no novel technologies are needed. This, in turn, brings down the project OpEx (Operating Expense) by a significant margin. 

Meridian Mining is currently focusing all its resources on the Cabaçal asset. The project has a strong upside and the company is deploying capital to build the mine and fulfill the option agreement. The agreement will enable the company to attain 100% project ownership over time. 

The company has initiated the Scoping Study with a 2.5Mt/year mill capacity. It has 2 additional open pits, 3km to the northwest and 1km to the southeast. This pit will enable the company to ramp up mill operations to 3-3.5Mt/year. 

The company does not plan to carry out wet tailings operations. This is because it would cost an estimated $30M to carry out the civil work for the tailings. Instead, the company is focused on dry stack tailings that would be incorporated into the waste dumps. 

As the Cabaçal is largely flat in topography, building a tailing dam for a 10-year mine life Scoping Study will cost around $30M. This would lead to a drop in CapEx to $25M while the OpEx will jump by sub-$1. The downside of this strategy is a longer permitting process. 

Brazil's Operational Landscape

Brazil has a diversified economy that encompasses manufacturing, industry, mining, energy, financial services, and more. Despite the broad economy, the country suffered adversely due to covid. Over time, the country was able to rebound from the setbacks. Mining is one of the key industries in the country.

Meridian Mining has concerns regarding the energy transition risk. To gain an agreement for equities by institutional investors, the company needs to demonstrate a very low ETR (Estimated Time of Restoration). To achieve this, the company is considering the 3 hydroelectric dams present within a 30km radius of the asset. These dams will provide a sustainable clean grid for its operations. The company also has Running River under consideration for power supply. It is currently identifying potential energy risks. Obtaining power from Running River is estimated to cost between $4M-$5M/MWh. 

The company is looking to attain growth at an executive level by bringing in key people in Brazil. This will enable the company to minimize the asset's execution risk. It recently hired Soraia Morais, an expert on corporate governance with project finance experience. 

As the global supply chain inflation and material shortages continue, Meridian Mining is looking to locally source its engineering and sheet-metal work at competitive international rates. The company is using equipment manufactured in Brazil. Local sourcing enables the company to sidetrack the high import taxes in Brazil, which in turn, improves the project's overall economics. 

Since the copper separation requires a frother to achieve material separation, the company doesn't need to import any special chemical reagents. Meridian Mining has accounted for potential supply shortages, by devising a stockpiling strategy to prevent operational slowdowns. 

Assay Results

Due to the presence of massive quantities of high-grade gold, the company decided to alter its assay protocol. The company is carrying out screen fire assays for the coarse gold within the VMS copper-gold system. Meridian Mining is currently looking to allocate capital, build teams and expand the teams and deploy the capital within a set timeframe. It has also set an allowance of capital to carry out additional testing. 

The Cabaçal mine was originally stepped out at 750m towards the north. Since then, the company has stepped 500m south. The gold reserves continue past the current drill sites, indicating an open system. Towards the north, the company has an additional 4km of VMS sequences that are planned for testing. However, the company is prioritizing its adherence to the option agreement. 

Asset Ownership

Meridian Mining's final payment to acquire 100% ownership of the Cabaçal asset will be in 2024. Following the last payment, the company is looking to secure project finance. The asset's permits are currently being transferred under the company's name. 

By mid-2022, the company is looking to revisit the compliance of data for the payment terms. Following this, shares will be allocated towards payments. The company plans to make payments upon reaching each milestone, for instance, the completion of the PEA. 

The options agreement features a clause that enables the company to extend timelines in an event of a statuary delay. So far, the company hasn't faced any delays and the project is advancing as per the schedule. 

In 2021, the company successfully drilled 11,000m. It recently announced the extension of the drill program by 15,000m. The company is looking to carry out infill drilling of the entire northwest and southeast high-grade zones to complete the certification of historical data. The company has initiated metallurgical studies. 

Meridian Mining is hiring personnel that have a past working relationship with the company. The company has hired Falconbridge, Canada, an experienced company with decades of experience for the concentration and floatation work, further de-risking the project.

‍To find out more, go to the Meridian Mining Website