MARI Raymond JamesHaven't got the note yet, but this is a snapshot from their morning roundup. Looks like they like it!
Marimaca Copper (MARI, Outperform $5.50 TP; Farooq Hamed): We are initiating coverage on Marimaca Copper Corp. (MARI) with an Outperform rating and a C$5.50/ sh target price. MARI is a copper development company focused on advancing its PEA-stage Marimaca Copper Project located in northern Chile. The Company expects to complete a feasibility study in 1H22 and commence construction in early 2023 with first production in late 2024/early 2025. The Marimaca project PEA outlines an open pit mine with heap/ROM leach and SX-EW processing producing copper cathode over a 12-year mine life. The resource starts at surface and has favorable geometry that minimizes the need for pre-stripping. Further, the project is near power, water and port infrastructure. In comparison to other projects, we believe these characteristics along with its location support our view that Marimaca is a low risk project. Further, these favorable characteristics allow for a modest development capital estimate driving low capital intensity and high project profitability.
Investment Highlights:
1. A Deliverable Copper Project - Low Political Risk, Complexity and Capex: The Marimaca copper project hosts a copper oxide resource containing over 640kt Cu in M&I and Inferred resources. The project envisions an open pit mine with heap/ROM leach and SX-EW processing producing copper cathode over a 12-year mine life.
2. Compelling Project Economics - Low Capital Intensity and High Profitability: As part of our analysis we benchmarked the Marimaca project against 23 other open-pit copper projects with a technical study published in the past four years. We estimate that the Marimaca project has a capital intensity of $7,943/t versus the comparison group average of ~$11,700/t and a ranking of 6th best out of 24 projects compared.
3. Organic Growth Opportunities - Oxide and Sulphide Targets: The company has an extensive land package surrounding the project area with near mine oxide and sulphide exploration targets as well as district-scale oxide exploration targets.
4. Significant Upside at Spot Copper Price: Our fully financed project level NAV8% based on RJL commodity price assumptions and discounted to the last reported quarter is $450 mln or $3.09/sh, assuming 35%/65% equity and debt financing of the project, with a 38% IRR.
5. Valuation at Premium to Peers: Overall, MARI trades at a premium to other copper development companies in our coverage on a P/NAV basis (0.7x versus group range of 0.4-0.7x).