MARI - significant mineral extensions to MOD, thoughts ...From the same source. Good overview. Interesting thought on copper.
Good luck,
B
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Hello,
On Wednesday Marimaca announced drill results showing significant mineral extensions to the Marimaca Oxide Deposit (MOD). For the full new release
Click Here.
Some thoughts:
- Put simply, it looks likely that the MOD has just meaningfully increased in size. As the news release describes, these drill results show "significant down dip and along strike extensions of mixed oxide-secondary sulphide mineralization immediately below the limits of the PEA defined open pit". The key here is that there is a very good chance that these mixed oxide-secondary sulphides have favourable leach mechanics. If they do then I would expect the size of the MOD mineral resource to increase, and potentially the scale of initial production to increase with it.
- In rough terms this drilling seems to be pointing to around c.20m tonnes of additional mixed oxide-secondary sulphide material. But interestingly, from the first phase of MOD drilling I believe there is actually a further additional 30m tonnes of mixed material that did not make it into the in-pit mineral resource. This seems mainly due to a lack of data, which is now partially being filled in. That is a total of 50m tonnes of possible additional ore. How much could fall into an extended pit? Hard to say yet. But against a current in-pit resource of 116m tonnes of ore, that is a very significant, and possibly exciting number.
- When will we know if this additional mixed material leeches favourably or not ? - the Company will now conduct 'sequential copper analysis' on samples from the drill results. This will give a clear indication of the "leaching potential and potential metallurgical recoveries via heap leach". We should have those results in 3 weeks or so. It is worth noting that the mixed material we already have in the mineral resource leaches very well. So we have reason to be hopeful on these upcoming results.
- The market's initial reaction on Wednesday to the news was interesting - it traded down sharply on the open before recovering by the close to a small gain on good volume. I can only guess that some investors were hoping to see drill results showing a new large primary sulphide leg to the orebody, and when confronted with new extensions of mixed oxide-secondary sulphide mineralization they didn't know what to make of it. This is more than fair. Everyone will have different drivers. But personally I think I have always been clear that I believe additional leachable material is the key here (be that more oxides or mixed material). If eventually sulphides are found, that will be interesting, but it is a whole different game. Sulphides require a different processing route, and often large amounts of capex. One of the main drivers of the MOD's peer-group leading economic returns is the leaching processing route via SXEW, and a closeness of the required infrastructure and inputs.
- Finally, and importantly, drilling on the first of the additional oxide targets (Cindy) is underway.
Summary - these results indicate that the Marimaca Oxide Deposit could meaningfully increase in scale. There is more work to be done, but this would be a very big positive. It would certainly mean an immediate increase in fundamental value.
p.s. Quick thought on copper forecast price etc - there is continued excitable forecasting re the copper price from various corners ... the latest is Bank of America predicting $20,000/t ($9.07/lb) by 2025. It's hard to know what to make of these price targets, but I think it is worthwhile looking back at what happened in the last big metals cycle. At the beginning of that cycle in 2001 Copper was $0.61 / lb ... this hit $3.95 in 2008, and eventually a cyclical peak of $4.58 in 2011. So that is a x7.5 increase over the 10 years. The price point for the beginning of this new cycle seems to be around $2.00. Spot prices out into the future are, and always will be, hard to predict ... but the past cycle definitely gives some food for thought in relation to the seeming outlandish predictions we are starting to see.