The Marimaca Oxide Deposit (MOD) has significant potential to become a low capital cost, high margin copper development within Chile’s prolific Antofagsta Region, according to its owner Marimaca Copper Corp. The TSX firm only discovered surface oxide copper mineralisation at the site in 2016 but is already on the cusp of producing a definitive feasibility study for the project, with a view to hitting first production by late 2025 or early 2026 – making it one of the only copper deposits around the globe with a chance of being developed before 2030.
“It’s a very unique development stage copper asset,” says Marimaca’s president and CEO Hayden Locke. “There’s a lack of new greenfields copper projects coming online and that’s been driven by a lack of discovery. But of those that are in development, there’s very few that have the short timelines to development that this project has and most importantly it’s financeable by us as a standalone company; that is we don’t need a large partner to help us build this project. In terms of actually getting into production and getting into the copper market at exactly the right time, there’s very few that compare to the Marimaca project,” he proclaims.
Marimaca is blessed with a low strip ratio for an open pit mine and ‘industry leading’ low capital cost to production, according to Locke. The Tier 1 nature of the location – in a low coastal mountain range but close enough to urban centres at Antofagasta and Mejillones to not require a mining camp – provides a strong socio-economic and ESG case (seawater will be sourced for the operation as opposed to freshwater from ground aquifers) for the development.
There is also significant scope for further greenfields discovery in the broader Marimaca area, including potential near mine extensions and ‘district scale’ repetitions of the MOD.
Growing the resource
Since publishing a highly encouraging preliminary economic assessment (PEA) in 2020 and advancing metallurgical testing far beyond PEA level, Marimaca has spent the last 12 months tackling the one potential weakness of the project: its scale.
A 2019 update to the mineral resource at the MOD estimated nearly 420,000 tonnes of contained copper in measured and indicated categories and close to 225,000 tonnes in the inferred category, depending on cut-off grade. In February, Marimaca commenced an infill drilling campaign to convert some of those inferred resources into indicated ahead of a mid-year mineral resource update.
Promising results from the first seven RC holes of the 22,500 metres programme were reported by Marimaca at the end of March. “The mineralised zone has been extended quite significantly outside of the original open pit,” says Hayden.
“What that means is, based on our current interpretation of the mineralisation, this project is going to get bigger; there’s going to be more copper, there’s going to be potentially a larger scale project attaching to this and so we’re excited about the results as to us becoming a more globally significant copper producing asset in the next three to four years.”
Marimaca has also been working concurrently on the recently discovered MAMIX zone, which presents another opportunity to expand the scale of the deposit. The discovery is comprised of two distinct extensions of the MOD, which are being targeted by 10,000 metres of infill drilling following a positive metallurgical review.
“Again we expect that to add significant tonnes, both in terms of ore and contained copper and recoverable copper to this project. We’re trying to get these tonnes into measured and indicated ahead of the feasibility study starting in Q3. This is really addressing the only weakness of this project, which is its scale. We think these discoveries address that.”
In addition, Marimaca last year drilled conceptual targets which could yield repetition style discovery potential; being Mercedes, Cindy and Roble to the North of the MOD. Locke stresses the greenfields nature of this exploration and hails the three remarkable discoveries as ‘reflective of the good quality work our geologists have been doing’.
The Mercedes target is a true satellite, just 1 km away from the MOD. Cindy is a further 2 km North, while Roble is a little to the East of Cindy. There are additional greenfields targets in the broader area which are also prospective for discovery.
Given this is a relatively small company with a vast amount of exploration upside, Marimaca has ranked the opportunities according to which provide the highest value at this stage. As a result, the firm’s current campaigns are focused on the MAMIX and Southern extension zones, where it has a high degree of confidence in the metallurgy and structural interpretations, as they are close to the open pit.
Having said that, Locke assures that the regional targets will be looked at in greater detail in the second half of the year, after the MOD resource update is announced.
The project’s close proximity to seawater, a power line and roads not only contribute to its exceptionally low capex of US$285 million, but also provide it with a burgeoning ‘green copper’ reputation.
Marimaca’s engagement with local energy utilities has confirmed the potential to source renewable energy for 100% of the project’s energy needs. That consumption is drastically reduced by the move to SX-EW processing, which is around 38% less carbon intensive relative to traditional concentrate refining and smelting.
The end result, as confirmed by Wood Mackenzie sponsored research, is the MOD benchmarking in the lowest quartile of global copper mine site emissions intensity, and the bottom 10% of all projects globally on a Scope 3 emissions basis.
“This focus on reducing carbon emissions of mining projects is becoming increasingly important, not just for attracting capital, but also for getting your mine permitted and into production. And then once there, it increases your chances of having a premium value product, assuming we go into a world where there are carbon taxes,” Locke says.
More generally, ESG is a very high focus for Marimaca – even at the project’s current stage. The company has convened an ESG committee to make sure all stakeholders can benefit from the project’s sustainable development.
“Our ESG profile is second to none in the industry and we have a strong focus on benefitting our stakeholders. That includes local communities and people, although there aren’t many being impacted by this project because of its location. This doesn’t diminish our focus on local communities in the much larger region, but again it speaks to the shorter timelines to development because we impact so many fewer people.”
Leveraging a supercycle?
With a resource update and feasibility study to come before the end of 2022, this could be Marimaca’s breakout year as a globally significant source of new copper production. And this supply can’t come online soon enough as the structural deficit in the global copper market deepens, based on rapidly increasing demand related to the clean energy transition.
Put simply, the goals of the Paris Agreement and various government and corporate net zero targets are unachievable without copper, and the world is facing a six million tonnes per year supply gap to 2030, according to CRU Group’s head of base metals Erik Heimlich.
Having one of the only copper development projects with production coming online inside 2030 puts Marimaca in a very unique position to leverage the increasing demand for copper, which could form part of a broader ‘commodities supercycle’ period.
“I think absolutely we are at the start of what could be a multi-decade commodity cycle, particularly for those energy transition metals, in which copper is key,” Locke reckons. “The lack of new discovery really exacerbates that in the coming five to 10 years and we see most groups predicting a huge deficit by 2030. Those are all very favourable tailwinds for us.
“We are almost the best positioned copper project globally, in a greenfields sense, because there is nearly nothing else that can be built in the short timelines we are talking about for the MOD.”
The vast majority of copper projects are large scale copper porphyries which have multi-year, sometimes decades long development horizons,” Locke explains. Compare this to Marimaca’s aggressive sub-three years – or more conservative four years – timeline to first copper at the MOD, and the opportunity to steal a march on its peers in a strong copper price environment becomes clear.
“From that perspective, you almost couldn’t get a better project than Marimaca,” Locke declares. “Previous technical studies have shown this is a low capital cost, highly cash generative project, regardless of price. The feasibility study will confirm this while adding scale to the resource. The rest of the year is about moving forward as quickly as we can with regards to getting into production.”