RE:RE:RE:RE:RE:RE:RE:RE:RBC Initiates Coverage On Marimaca Copper; Outperform Marimaca Copper Corp.
Company description
Marimaca Copper Corp. is a TSX listed base metals developer with
its flagship asset, the Marimaca Copper Project, located in Chile’s
Antofagasta region. The company is working towards developing the
asset to production by undertaking exploration, metallurgy and other
engineering studies.
Investment summary
We believe Marimaca offers compelling value via its Marimaca Copper
project, which is a scalable, low capital intensity project that is easily
accessible and located near infrastructure. The project’s relatively short
permitting and construction timeline is also attractive compared with the
typically long lead time to bring new mines into production and aligns with
our forecast for growing copper deficits starting in 2025.
Marimaca could also be a take-out candidate in our view given its
attractive economics, short timeline to production and favorable location
for potential synergies with other producers.
We see potential risks around the project and the shares due to the
project's scale. The Marimaca Copper Project in its current form is a
~42Ktpa copper producing mine, which is relatively small. The smaller
scale increases risk to the economics of the project in our view due to cost
overruns and could be deemed too small for acquirers who would want
a more meaningful contribution to their production profile from adding a
mine site to the company portfolio.
There is potential to grow the deposit and mine production profile through
exploration which we view as an opportunity to mitigate the issue with
scale; however, exploration risk remains.
Potential Catalysts:
• Q4/22: Resource update (MOD, MAMIX extension)
• Q1/23: Resource update (MOD resource conversion)
• Mid-2023: Definitive feasibility study
• 2023/24: Project financing and construction decision