Chile-focused explorer Marimaca Copper holds the distinction of making one of a handful of (or perhaps the only) new copper discoveries around the world since 2015. While this paucity of new discoveries speaks to a growing problem in the balance of supply and demand for the dynamic ‘red metal’, Marimaca’s namesake project was unearthed in 2016 by the TSX-listed company’s VP of exploration, Sergio Rivera, when a one-in-a hundred-year rainfall washed away decades of Atacama dust to reveal a green hue on a mountain side in an area of Chile’s prolific copper mining centre in Antofagasta. Having said that, the Marimaca deposit was not completely unknown prior to the rare weather event; there was outcropping mineralisation at surface that had been walked over and identified by numerous geologists, but generally accepted wisdom for the area dictated that there would be nothing new to uncover of sufficient scale for a mine. “I think it’s been a story of challenging the generally accepted wisdom about what sort of copper project could be in the belt of rocks we have there in Northern Chile,” says Marimaca’s president and CEO Hayden Locke.
“Our geologists challenged that wisdom and decided it was worth drilling. What they found was significant extensions North and South along strike and also at depth. As a result, it is one of the most significant new oxide discoveries in Chile in the last decade and certainly one of the most exciting development stage copper projects in the world today. It also has a very short timeline to get into production in what is a fantastic copper environment for us.
“Marimaca’s discovery of a surface oxide copper deposit with significant depth potential not only contradicts the once-held views of many experts in the field, it also creates a low-risk, low-cost mine development scenario for the company.
“It is quite a unique project in that there is oxide mineralisation at surface, a low strip ratio for an open pit mine with very low capex relative to most of the new copper development stories in the world. We’re excited to have this project in our control.”
Location, location, location
The location of the deposit is a huge part of Marimaca’s attractive story, according to Locke, who cut his teeth mostly developing projects in African mining jurisdictions, where infrastructure has been at times poor, and mine locations often remote.
Good locations have existing infrastructure in place and access to a highly skilled workforce; things which have a knock-on impact in terms of execution risk and capital costs. “The location we have at Marimaca is absolutely outstanding,” Locke proclaims.
“We’re in the low coastal range of the Chilean mountain range, so fairly low altitude compared to being in the high Andes. We have access to power, roads and communication is incredible. There’s an international airport 45 km away, we have a very large, highly skilled workforce that is generally working in the mining industry or some derivative of it.
“All of that adds up to much lower execution risk, but also much lower capital cost for the overall project. It [the location] is a huge benefit for us and one that we are very happy with.” He highlights access to water – a key input in the copper mining process, but a scant resource in one of the most arid parts of the world – as the single biggest locational advantage.
Marimaca will use seawater at its operation, which crucially means it won’t have to tap into local freshwater aquifers that are vital for drinking, agriculture and the general environment. From an ESG standpoint, this is absolutely essential to the project’s successful development in a region where political and social objections have blocked the progress of mining projects in very recent memory.
Publishing the PEA
The low upfront and all-in sustaining costs (AISC) nature of the Marimaca project was confirmed by the August 2020 preliminary economic assessment (PEA). The study calculated the upfront capital cost at US$285 million, while the AISC of $1.29 per pound of copper is in the bottom 15% of the curve.
Hayden explains that the low-cost nature of the project comes down to three key attributes: “First, it’s a very simple open pit mine. As a result, there is virtually no pre-strip, very little up front capital costs to get this project into mining and start taking valuable ore and putting it on the leach pads.”
The presence of a high-grade core in the first five years of mining is an added advantage which means the company can move lower material tonnes and hence use a smaller fleet of equipment during the first stage.
The second low-cost attribute is the ability to use SX-EW leaching as the process method. On a per tonne of copper produced basis, the capital intensity for an SX-EW plant is much lower than a concentrator, notes Locke.
Locational advantage, predominantly Marimaca’s access to a power line 7 km away, is the third contributor to the low-cost project estimates. Roads and the seawater pipeline are already in place and there is no need for a mining camp as there are two urban centres (Antofagasta and Mejillones) within 45 km of the site.
The PEA also calculated a post-tax NPV of $524 million for the project (assuming a $3.15 per pound flat long-term copper price) and an IRR of 33.5%, with annual copper production at approximately 40,000 tonnes in the first six years, over a total 12-year life.
Marimaca actually went above and beyond with certain elements inside the PEA advanced to an even higher degree of confidence. For instance, the metallurgical recoveries are supported by four phases of testing.
“The fifth phase is really about making sure we are completely bankable, but also preparing ourselves for operational readiness and making sure we have a really robust geo-metallurgical model,” Locke declares.
A round of infill drilling will also be required to shift the remaining 30% of the Marimaca resource from inferred to measured and indicated (M&I). The project currently contains nearly 420,000 tonnes of contained copper in M&I, according to a December 2019 mineral resource estimate.
“We’ll probably do a bit more extensional drilling to add some more to the overall resource ahead of the feasibility study, which we’ll hopefully start in the second half of this year with the goal to deliver that in the early part of next year.”
Lifting the lid further
Marimaca is also pursuing a dual-track exploration strategy after identifying the potential to add resources at depth and across the coastal copper belt district. While the company has reported good visibility on a couple of years of oxide resource around Marimaca, it is focusing its near-mine exploration on the potential at depth.
“We know the oxide has to have been fed by a sulphide system at depth somewhere. We’re looking at whether or not there is an economic extension of that sulphide orebody below the Marimaca deposit. We are currently on-site drilling deeper drill holes right now and trying to understand what’s going on in that all-important feeder zone at depth.”
The second phase of exploration will look for repetitions of Marimaca in the surrounding area, using a mixture of geophysics and on-ground mapping reconnaissance work, including geochemical analysis and soil sampling.
“These days there is much less outcrop at surface, which means there are less obvious reasons to go out and drill a target, so we’re creating those targets using a multitude of methods, including magnetism,” Locke explains. “This is an IOCG belt with a strong preponderance of magnetite and so we believe that a magnetic response is a good way for us to start targeting areas to look for potential repetitions of Marimaca style deposits.
“We believe we now have a good geological exploration model to target repetitions of Marimaca-style mineralisation and hopefully add significant oxide tonnes close to our current project but also find some larger sulphide deposits at depth as well with our ongoing exploration.
The company has developed a cluster of five regional targets over the last 12 months and is beginning to test those as we approach the middle of the year. “We should have a fairly good idea of whether there’s something there by the end of first half of 2021.”
To conclude, the significance of the Marimaca project is not its potential scale per say, but the fact that it is a copper discovery that has arrived at a time when the supply-demand equation is tipping drastically in favour of the latter, as the electrification of the global economy begins to gather speed.
“Copper is going to become more important and we’re excited to be part of that important demand shift with a project that can be brought into production in a short timeframe,” Hayden summarises.