MARI : bigger resource?, indigenous rights, market vol ...Same source.
Good luck all,
B
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Hello,
I just wished to put some thoughts down on a few topics that I have discussed with several friends and colleagues this week :
- Marimaca news release, Drill plan & Exploration targets - Last week (Jan 20th) Marimaca Copper announced a new exploration plan for early 2022 (Click Here for the full announcement), which will look to deliver additional significant tonnes of contained copper into the company's overall mineral resource base. At present the Marimaca Oxide Deposit contains a resource of 114.1mt of ore, containing 650,000 tonnes of contained copper metal. In last week's new release, the company presented a table of 'resource targets' for a variety of exploration areas. It should be noted that all these exploration areas were drilled last year, so I believe the stated 'resource targets' are figures the management feel confident about delivering into. If one takes the mid points of both the grades and tonnages from all the 'resource targets' presented in the announcement, one comes to a combined figure of +500,000 tonnes of copper metal that could be added by the end of H1 2022. Against the current resource this would obviously be a massive uplift. It should also be noted that it is expected that all of these additional tonnes will be leachable, and therefore treatable via the currently designed process route. Therefore I'm confident that any such uplift in treatable resources will point to both a larger production scenario, as well as a longer mine life. Both of which will significantly enhance value.
- Chile, bill presented focused on indigenous rights vs mining concessions - as part of the planned re-drafting of the Chilean constitution, yesterday the commission in charge of proposing new laws put forward a bill which would in effect annul mining concessions that were granted without the prior consent of the local indigenous communities. The first thing to mention is that for any proposal to proceed it requires the approval of 66% of the constitutional assembly, and as things stand this seems very unlikely. Second, the Antofagasta region where Marimaca is based, has one of the lowest levels of local indigenous population (less than 2%, see Map 1 at the bottom of email). It is in the regions further south that this bill will focus attention. Finally, the historically low levels of indigenous population that do live in the Antofagasta region are the Changos people, who live on the coast in fishing communities (see Map 2 at the bottom of email). and therefore away from the inland mining areas. This situation once again goes to show the simplicity of the Marimaca's project ... which goes a long way to making it so attractive - there are no indigenous groups in their land area, there is very mineral flora and fauna, and there is no requirement to access ground-water. All problems other projects have to contend with.
- Market volatility - early this week we saw high levels of volatility across global equities. Part of this is certainly the rotation we are seeing out of speculative technology, and back towards the old world economy. But whatever the reason, macro volatility will inevitably have a knock on effect to junior and more liquid markets. We certainly saw this in the mining markets this week, and with the excesses of the pandemic years starting to unwind I believe further volatility should be expected. In itself, I don't believe heightened volatility is a concern. It does not change the structural metals market I believe we are now in. But it can make the ride uncomfortable for some. For those with the means and ability it can also be an opportunity.
Summary - amongst the volatility that we see, I believe there are several things we can be close to certain about. We know that the Marimaca Oxide Deposit has outstanding, and peer group leading economic returns - The PEA, with a US$3.15 copper price, returning a NPV8 of US$524m / C$700m, IRR 34% post tax, cap ex US$285m, (at $4.00 Cu price, post tax NPV8 of C$1.06bln, and an IRR of 46% post tax. NAV of C$12.00 / share). We know that a big part of the project's attraction is it's simplicity. I believe we can be very confident that by the end of H1, the project's mineral resource base will have grown meaningfully - potentially lifting the envisaged production scenario from 40,000 tonnes of copper per year, up to as much as 60,000 tonnes per year.
I believe volatility will remain, but I am also very confident that the supply and demand dynamics that have led to the beginning of this structural copper bull market remain in place, and only continue to build in our favour.