Advanced Marimaca project still in the ‘early stages of discovery,’ says CEO

Marimaca Copper (TSX: MARI) is confident its namesake discovery in northern Chile near Antofagasta is still in the discovery phase despite a feasibility study forthcoming by year-end and a construction decision looming in 2023.

President and CEO Hayden Locke tells The Northern Miner the company had a smooth start to infill drill work at the Marimaca Oxide Deposit (MOD) in January. Planning is advancing on a parallel MOD depth extension (called MAMIX) drill campaign to start soon as the company works to understand the size potential of the deposit better.

“We are now very focused on the upside potential at Marimaca,” Locke tells The Northern Miner in an interview.

“Our internal work indicates the MAMIX presents a compelling opportunity to increase the deposit scale, both in terms of contained metal tonnes and potential annual production, which will be used as the basis for the feasibility study,” he says.

The 22,500-metre infill drilling program aims to convert the existing inferred resources to the measured and indicated categories for a planned mid-year mineral resource estimate. The new resource will form the basis for a feasibility study planned for the second half of 2022 and a first-phase construction decision early in 2023.

The company bills itself as having made the only copper discovery of substance in the past five years.

As of the December 2019 MRE, Miramaca hosts 420,000 tonnes of copper in the measured and indicated categories in 704 million tonnes of material grading 0.6% copper. It also has an inferred resource holding 225,000 tonnes copper within 43 million tonnes grading 0.52% copper.

Sergio Rivera, Marimaca’s VP of exploration, made the initial discovery in 2017. His hunch that this area could be a significant project was confirmed only a few months later when a one-in-a hundred-year rainfall washed the Atacama dust away to reveal the green-coloured mountainside at Marimaca.

The company has made three more discoveries on the district-scale land package. They entail Cindy, Mercedes and Roble, which are just three of many other regional targets that could ostensibly become, with more drilling, satellite deposits to the initial Miramaca development.

At Mercedes, which had seen the most drilling, Miramaca encountered significant oxide copper mineralization from the surface. An initial area of interest measured 400 metres along strike and 300 metres width.

Still, there are lower-hanging fruit closer to the main deposit, says Locke. Recent MAMIX drilling encountered broad zones of mixed oxide and secondary sulphide mineralization immediately below the preliminary economic assessment (PEA) open-pit shell limits.

“The discovery of the MAMIX zone offers outstanding potential to increase the overall scale of the Marimaca project,” says Locke.

“We recently released an exploration target to quantify the potential size of this opportunity, and we intend to test it as part of the expanded MOD infill program. If we can get another 30 to 40 million tonnes grading between 0.4% to 0.5% copper, that could add another 30 to 50 tonnes of metal to our profile,” says Locke.

He says the MOD shows “excellent continuity” of near-surface copper oxide mineralization. So much so, recent drill pad construction has exposed green copper oxides in the southern portion of the MOD in areas that were previously interpreted to be barren in the 2019 resource estimate.

“We look forward to drilling from these newly constructed platforms and believe there may be upside to our current MOD resource model. We believe we are still in the early chapters of the discovery process at Marimaca and anticipate further growth of the deposit during 2022,” says Locke.

In the company’s view, the new MAMIX area immediately below the pit shell represents a compelling opportunity to increase the deposit scale, both in terms of contained metal tonnes and potential annual output.

It plans to add more drill rigs for the MAMIX infill campaign, which will be increased from 2,500 metres to 10,000 metres. The ongoing review of the MAMIX target even highlights the potential for more extensions outside of the exploration target area.

The company also undertakes a district-scale exploration programme to evaluate whether the project is part of a larger emerging copper district. The mineralization differs from other established mines in the region. It entails an easier to process iron oxide copper-gold (IOCG) deposit instead of the more common manto or porphyry-style of mineralization.

This is a crucial differentiator for the project. According to the 2020 PEA, the Marimaca development has a low capital intensity at US$285 million. Operating costs also fall in the bottom 15% of the all-in sustaining cost curve at US$1.29 per lb. over the mine life, which provides a cash margin of 65% at US$3.70 copper.

Locke also notes the project is further advanced than a typical PEA-level asset, with four rounds of metallurgical testing pointing towards recoveries of 76%. The company is undertaking another phase of the study.

The PEA outlined a 12-year mine life with strong potential for extension. The project is close to infrastructure and utilities.

The Marimaca project will produce on average 40,000 tonnes per annum of copper cathode via a solvent-extraction electrowinning process. Locke notes the operation would aim to reduce environmental impacts such as water, opting for using seawater for the process while using ample solar exposure as potentially beneficial for the mine’s energy and ESG needs.

Meanwhile, Marimaca is advancing several multidisciplinary technical workstreams supporting the feasibility study. These initiatives will also form the basis for project permitting and are expected to be finalized before feasibility-level engineering starts.

“The company is also in the final stages of the Phase V metallurgical program, which will be released when available and the water supply engagement and permitting preparation are progressing well,” says Locke.

Locke says ‘green copper’ is a subject of deepening market interest and benefit to the Marimaca narrative. “The copper industry will need to change its approach to producing the metal when viewed through the full carbon cycle, including Scope 3. This gives rise to new ‘technology plays’ in the space, which could turn the industry on its head,” hints Locke.

The company has commissioned various external consultants, including Wood Mac and Digbee ESG, to evaluate its carbon footprint once in production. Marimaca’s copper intensity from Scope 1 and Scope 2 emissions of 822 kilograms carbon dioxide equivalent per tonne of copper equivalent places it in the first quartile of the global copper mine carbon emission curve.

“When you factor in Scope 3 emissions, in this case, the additional emissions associated with the smelting of copper concentrate used to make most of the world’s copper, Marimaca will be potentially in the bottom decile for carbon intensity,” says Locke.

Marimaca Copper remains tightly held, with only about 88 million shares outstanding. Among the board count experienced members such as former First Quantum Minerals (TSX: FM) executive Clive Newall.

The company entails a rare combination of low upfront capital and bottom-quartile operating cost. With an event-rich catalyst profile through to 2023, Marimaca has the makings of a new copper producer. It comes when some analysts expect copper to be heading into supercycle territory in the medium term.

At C$3.84 apiece, shares in the company are up about 11.3% over the past 12 months, having tested a top of $5.85 in April last year. It has a market capitalization of about C$337 million.