MARI - significant copper oxides at Cindy, thoughts ...Again, from the same contact. Some useful commentary.
Good luck,
B
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Hello,
Yesterday (June 14th) Marimaca Copper announced exploration results showing 'significant near surface copper oxides at Cindy'. This is in relation to the drill programme undertaken at the Cindy exploration target. For the full news release
Click Here.
Drill results summary - Hole CIR-03 intersected 70m with an average grade of 0.39% CuT from 24m, including 44m @ 0.51% CuT. Hole CIR-02 intersected 124m with an average grade of 0.22% CuT from 8m including 20m @ 0.33% CuT from 8m.
Some thoughts:
- Negative : the results do not indicate a deposit that will match the scale or grade of the Marimaca oxide deposit (MOD).
- Positive : the initial drill holes did however hit broad zones of oxide mineralisation from near to the surface, with grades above the cut-off grade used at the MOD. (The cut-off grade for the MOD resource was 0.22% Cu. If one runs a copper price of $3.50 the cut off grade would approach 0.15%). My expectation is that this target will deliver additional ore to the mine plan, but due to its grade profile it will be ore mined towards the end of the mine plan. This will increase the mine life, but it will not change the current mine sequencing.
- Positive : We have previously discussed the importance of targeting additional oxides. These results are a further validation of Marimaca's geological model and understanding of the regional control structures. This should help to further improve hit rates of exploration at Cindy, Mercedes and Robles going forwards.
- Positive : drilling is currently underway at the Mercedes target. I hear that the number of holes the Company plans to drill has been meaningfully increased. This would indicate a positive start to that programme.
- Note : it is worth highlighting that all this exploration work is outside of Marimaca's existing deposit at the MOD, with its peer-group leading economics - which the August PEA showed, with a $4.00 copper price, gives a post tax NPV8 of C$1.06bln, and an IRR of 46%. Or an NAV of C$12.00 / share.
Summary - at Cindy we haven't uncovered another Marimaca deposit, but I believe this area will deliver additional ore to the mine plan, and this at the very least will add meaningfully to the mine life. In terms of both prospectively and scale Cindy was always the 3rd ranked target out of the three targets (Cindy, Mercedes and Robles) in this wider exploration programme. Drilling is ongoing at Mercedes, from where we will move on to the largest target Robles. We have an exciting couple of months ahead of us.