Exceptional PEA Results for the Marimaca Project including US$524 million post-tax real NPV8 and 33.5% IRR
News Release
Exceptional PEA Results for the Marimaca Project including
US$524 million post-tax real NPV8 and 33.5% IRR
Vancouver, British Columbia, August 4, 2020 – Marimaca Copper Corp. (“Marimaca Copper” or the “Company”)
(TSX: MARI) is pleased to announce the results of the Preliminary Economic Assessment (“PEA”) for the Company’s
flagship Marimaca Copper Project (“Marimaca” or “the Project”), located in northern Chile . The study confirmed that
the Project has the potential to be a very low capital and operating cost copper producer. The Company will host a
webinar to present the results of the study on Wednesday the 9th of September 2020.
Highlights
• US$524 million post-tax NPV8 (real) assuming a US$3.15/lb flat long-term copper price
o Payback of 2.6 years
o Post-tax IRR of 33.5%
• US$640 million post-tax NPV8 (real) assuming a US$3.45/lb flat long-term copper price
o Payback of 2.4 years
o Post-tax IRR of 38.0%
• Average annual steady state EBITDA of US$169 million
• Pre-production capital cost of US$285 million
o Capital intensity of US$7,125/tonne of copper production capacity
o Assumes mining fleet is purchased via lease to own to minimize upfront capital costs
• Profitability Index (NPV/Capex) of 1.8x
• Life of mine average all-in-sustaining cash costs of US$1.29/lb of copper1
o Life of mine average C1 Cash Costs of US$1.22/lb of copper2
• Conventional open pit mining focused exclusively on oxide mineralization
o Life of mine stripping ratio of 0.84:1
o Highest grade feed materials available in first five years of production resulting in improved payback and
overall economics
• Conventional heap leach, SX-EW, processing circuit
o Projected average life of mine metallurgical recoveries in heap leach of approximately 76% of total copper
supported by data from several metallurgical testing programs
o Process makes use of readily available sea water
• Average annual steady state copper production over first 6 yrs of close to 40,000 tonnes of cathode
o Total mine life of 12 years
o Total recovered copper of approximately 430,000 tonnes over the life of mine
• Significant ongoing exploration potential for both oxide and sulphide mineralization which could substantially
extend the mine life of the Project
The Preliminary Economic Assessment is considered preliminary in nature and includes Inferred Mineral Resources that
are considered too speculative, geologically, to have the econ omic considerations applied that would enable
classification as Mineral Reserves. There is no certainty that the conclusions within the PEA will be realized. The PEA is
1 All in sustaining costs is defined as cash cost (C1) plus general and administrative expenses, sustaining capital expenditure,
deferred stripping, royalties and lease payments and is used by management to evaluate performance inclusive of sustaining
expenditure required to maintain current production levels.
2 C1 cash cost includes all mining and processing costs less any profits from by-products and is used by management to arrive
at an approximated cost of finished metal.
based on the material assumptions outlined in this document. These include assumption s about the availability of
funding. While the Company considers all of the material assumptions to be based on reasonable grounds, there is no
certainty that they will prove to be correct or that the range of outcomes indicated by the PEA can be achieved.
No mineral reserves have been estimated for the project. Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability.
Luis Tondo, CEO of Marimaca Copper commented:
“The exceptional results of the PEA have confirmed our belief that Marimaca is a development stage copper project of
the highest quality. Its pre -production capital costs place s it in the very lowest tranche of projects in the copper
development space, whi le its low operating costs, which place s it in the bottom quartile of operating copper mines
globally, means that the project will be profitable even in lower copper price environments.
“The Marimaca Project is substantially more de-risked than a typical PEA level project due, primarily, to the significant
amount of technical work we have already completed, which includes four phases of metallurgical testing, geotechnical
studies, nearly 100,000 metres of drilling over the Project and engagement with various input providers for the Project.
“In a commodity which is dominated by large, technically challenging projects in difficult jurisdictions, that carry with
them a level of development and operating risk commensurate with their size and complexity, Marimaca represents a
copper development p roject at the other end of the spectrum. Marimaca is a project, located in a tier 1 mining
jurisdiction, that can be both financed and built with lower levels of execution risk, and which provides a platform for
Marimaca Copper to become a mid-tier copper producer in the future.”
Figure 1: 2026 Projected All-in-Sustaining Cash Cost Curve
Executive Summary of Preliminary Economic Assessment
The Preliminary Economic Assessment (“PEA”) for Marimaca was completed by Ausenco Engineering in conjunction
with several Qualified Persons in various technical fields including NCL Ingeniería y Construcción SpA (“NCL”) for mining
and mine design and mineral resource estimation, and Jo Loyola Consultores de Procesos SpA (“JLCP”) on metallurgy
and process design.
The PEA was prepared in accordance with the requirements of the National Instrument 43-101, Standards of Disclosure
for Mineral Projects, (“NI43-101”) and is based on a Mineral Resource Estimate (“MRE”) completed by NCL, which
comprised 70 million tonnes, with an average grade of 0.60% total copper within the Measured & Indicated Categories
of mineral resources (approximately 420Kt of contained copper), and 40 million tonnes with an average grade of 0.52%
total copper within the Inferred Category of mineral resources (approximately 224kt of contained copper) (refer release
on 2 December 2019). The Preliminary Economic Assessment is considered preliminary in nature and includes Inferred
Mineral Resources that are considered too speculative, geologically, to have the economic considerations applied that
would enable classification as Mineral Reserves. There is no certainty that the conclusions within the PE A will be
realized. The PEA is based on the material assumptions outlined in this document. These include assumptions about
the availability of funding. While the Company considers all of the material assumptions to be based on reasonable
grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the PEA can
be achieved.
No mineral reserves have been estimated for the project. Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability.
Marimaca is amenable to bulk, open pit, mining methods and this study contemplates an owner operated fleet utilising
a leasing option to minimise upfront capital c osts associated with fleet purchase. The deposit ’s favourable geometry
provides the Project with a low life of mine strip ratio of 0.84:1 as well as higher average grade in the first five years of
mine life. This shortens the capital payback period and improves overall economics for the Project.
Due to the oxide resource, processing is via a standard heap leach and Run-of-Mine (“ROM”) leach using sulphuric acid
and seawater followed by conventional solvent extraction and electrowinning to produce an average of nearly 40,000
tonnes per annum of high grade copper cathode during steady state production. Heap leach pads are designed as
dynamic leach pads where leach residue, known as ripios, are removed after the leaching cycle and stored in a
dedicated waste facility. ROM leach pads are designed as static leach pads, with stack height increasing over the life of
the mine.
Average recovery over the life of mine for the heap leach is estimated to be approximately 76% of total copper, and
ranges from a high of approximately 82% in the pure oxide zones (brochantite / atacamite), which make up the majority
of the project, down to approximately 49% in the enriched mineral subzone, which comprises a much smaller
proportion of the overall mineable resource. Recovery over the life of mine for the ROM leach is estimated to be
approximately 40% of total copper, comprising 9% of the estimated total copper cathode produced during the life of
mine.
Summary of Economic Assumptions and Results
Copper Price Assumption US$3.15/lb flat real
Pre-Tax NPV8 & IRR US$757 million / 39.9%
Post-Tax NPV8 & IRR US$524 million / 33.5%
Payback Period from First Production 2.6 years
Pre-Production Capital Costs US$285 million3
Life of Mine Sustaining Capital US$66 million
Ave. Annual Steady State EBITDA US$169 million
Life of Mine C1 Operating Costs US$1.22/lb of copper4
Life of Mine All-in-Sustaining Cash Costs US$1.29/lb of copper5
Mine Life 12 years
Ave. Annual Metal Production (first 6 years) Approximately 40,000 tonnes
Ave. Annual Metal Production Life of Mine (incl. ramp up) 35,600 tonnes
Steady State Average Process Recovery (Heap and ROM) 76% / 40%
Table 1: Summary of Economic Assumptions and Results
Economics and Sensitivity Analysis
Copper Price
US$/lb
Post-Tax NPV8
Base Case
US$ millions
Post-Tax NPV8
Capex (-10%)
US$ millions
Post-Tax NPV8
Capex (+10%)
US$ millions
Post-Tax NPV8
Opex (-10%)
US$ millions
Post-Tax NPV8
Opex (+10%)
US$ millions
Base Case
IRR
(%)
2.85 408 434 381 455 360 28.6%
3.00 466 492 439 514 418 31.1%
3.15 524 550 498 572 476 33.5%
3.30 582 608 556 630 535 35.7%
3.45 640 666 614 688 592 38.0%
Table 2: Sensitivity Analysis to Copper Price, Life of Mine Capital and Operating Costs
3 Assumes mining fleet is financed through a lease to own contract structure to m inimize upfront capital cost.
4 All in sustaining costs is defined as cash cost (C1) plus general and administrative expenses, sustaining capital expenditure ,
deferred stripping, royalties and lease payments and is used by management to evaluate performance inclusive of sustaining
expenditure required to maintain current production levels.
5 C1 cash cost includes all mining and processing costs less any profits from by-products and is used by management to arrive
at an approximated cost of finished metal.
PRELIMINARY ECONOMIC ASSESSMENT OF THE MARIMACA COPPER PROJECT
Geology and Mineral Resource Estimate
The Marimaca Project comprises a dominant structural feature of broad zones of sheeted dykes and fracture zones,
oriented north-north-east and dipping 45-60o to the east, which host copper mineralisation at surface. The location of
the Marimaca deposit is interpreted to be controlled by a dilational structural jog and the Company believes that this
control applies both to the MOD and to its downwards continuation into the sulphide zone. There is strong evidence
that the oxide zones encountered at surface we re generated as a result of the in -situ oxidation of primary sulphide
minerals, mostly chalcopyrite.
The PEA is based on the MRE, which was released to the market in January 2020 (refer to release on 2 December 2019).
The PEA includes Inferred Mineral Resources that are considered too speculative, geologically, to have the economic
considerations applied that would enable classification as Mineral Reserves. There is no certainty that the conclusions
within the PEA will be realized. The PEA is based on the material assumptions outlined in this document. These include
assumptions about the availability of funding. While the Company considers all of the material assumptions to be
based on reasonable grounds, there is no certaint y that they will prove to be correct or that the range of outcomes
indicated by the PEA can be achieved.
No mineral reserves have been estimated for the project. Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability.
The MRE was based on 346 reverse circulation holes (“RC”) and 39 diamond holes (“DD”) for a total of 91,210m drilled
between 2016 and 2019 and was completed at a range of Cut-Off grades by independent consultants NCL Ingeniería y
Construcción SpA (“NCL”). To demonstrate reasonable prospects for eventual economic extraction, a series of Lerchs-
Grossmann pit shell optimizations was completed by NCL, utilizing appropriate operating costs, recoveries obtained
from metallurgical test work, and a long term US$3 .00/lb copper price. The resources were estimated only for oxide,
mixed, wad and enriched copper mineralization which can be processed by heap leaching (HL) and run of mine (ROM)
dump leaching followed by solvent -extraction and electrowinning to produce co pper cathode. Primary sulphide
mineralization occurring in deeper parts of the deposit, which are within the constraining pit shell, is not included in
the MRE or for the purposes of this PEA.
Cut-off
grade
(% CuT)
Measured Indicated Measured + Indicated Inferred
Mineral
kt
CuT
(%)
CuS
(%)
Mineral
kt
CuT
(%)
CuS
(%)
Mineral
kt
CuT
(%)
CuS
(%)
Mineral
kt
CuT
(%)
CuS
(%)
0.40 14,403 0.81 0.55 30,600 0.74 0.48 45,003 0.76 0.50 23,607 0.70 0.40
0.30 17,865 0.72 0.49 40,253 0.64 0.42 58,118 0.67 0.44 33,410 0.60 0.35
0.22 20,721 0.66 0.44 49,666 0.57 0.37 70,387 0.60 0.39 43,015 0.52 0.31
0.18 22,072 0.63 0.42 54,109 0.54 0.35 76,181 0.57 0.37 47,164 0.49 0.29
0.10 23,087 0.61 0.41 57,619 0.52 0.33 80,706 0.54 0.35 50,641 0.47 0.27
Table 3: NI43-101 Mineral Resource Estimate at Various Cut-off Grades
* CuT means total copper and CuS means acid soluble copper. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral
resource technical and economic parameters included: copper price US$3.00/lb; mining cost US$2.00/t; HL processing cost including G&A US$9.00/t; ROM processing
cost including G&A US$2.50/t; selling cost US$0.07/lb Cu; heap leach recovery 76% of CuT; ROM recovery 40% of CuT and a 44°-46°pit slope angle
The deposit has a significant higher-grade zone which occurs from surface in its southern extent and provides a logical
target for the early years of mine life at Marimaca. The average grade expected during the first five years of mine life
is 0.78% total copper and is dominantly comprised of the main oxide mineral sub-zones of brochantite, atacamite and
chrysocolla.
Significant potential exists to increase oxide resources within proximity to Marimaca, but also in the broader claims
packages that surround this exciting project. Furthermore, the Company has recently released the results of a high -
resolution, drone mounted, magnetic survey, which indicates substantial potential for sulphide mineralization below
the Marimaca Oxide Deposit (refer to announcement on 14 July 2020).
Figure 2: Plan View and Long Section of Mineral Resource Estimate Highlighting
High Grade Zones from Surface
Mining
The Marimaca Oxide Deposit commences at surface and its geometry means that it is amenable to bulk, open pit,
mining methods, which have been contemplated for the purposes of this study. The study considers an owner operated
mining fleet based on lease to own contracts with reputable heavy equipment providers.
The mine will utilise convention drilling, blasting and shovel loading into trucks on bench heights of 10-20 m depending
on location within the open pit. The mine plan was designed to deliver a consistent production profile of approximately
40,000 tonnes per annum of copper cathode during steady state operations.
The open pit was designed based on eight phases of development targeting the higher grade, dominantly oxide,
mineralisation in the central portion of the deposit area in the early years of the mine life and gradually expanding, and
deepening the pit, over the mine life.
Due to the higher grade of the early years of mine life, the heap leach production tonnes in years 1 to 5 are designed
to average approximately 5.4Mtpa before increasing from year 6 onwards to approximately 9.0Mtpa of material. The
ROM leach production was designed to be variable to minimize the use of stockpiles, which can add complexity to the
mine planning and management, and ranges f rom a low side of 588ktpa up to a maximum of 6Mtpa of ROM leach
material.
Figure 3: Open Pit Development Phases
The open pit has a low life of mine strip ratio (including pre-stripping) of 0.84:1. The strip ratio has decreased from the
mineral resource estimate (at a cut-off of 0.22% total copper) because, in mine planning, it was noted that numerous
areas of mineralized waste (less than 0.22% total copper) are mined in the proposed PEA mine plan. Although they
may be considere d as marginal on the heap leach, these tonnes are considered to be economic on the ROM leach,
where the additional costs of crushing and agglomeration are removed. As a result, these tonnes, which would have
previously been classified as waste, have now be en classified as mineable resource for the purposes of copper
production.