Meridian Delivers Strong Economics for Cabaçal’s PEA: After-Tax NPV5 of USD 573 million, 58.4% IRR & 10.6 Month Payback
6th Floor, 65 Gresham Street | London EC2V 7NQ | United Kingdom
Meridian Delivers Strong Economics for Cabaçal’s PEA: After-Tax NPV5 of
USD 573 million, 58.4% IRR & 10.6 Month Payback
LONDON, United Kingdom, March 6, 2023 Meridian Mining UK S (TSX: MNO),
(Frankfurt/Tradegate: 2MM) (OTCQB: MRRDF) (“Meridian” or the “Company”) is pleased to
announce the positive results of the Preliminary Economic Assessment led by Ausenco
Engineering Canada Inc. (“Ausenco”) for the Cabaçal gold -copper deposit in Brazil (“Cabaçal” or
the “Project”). The PEA study confirms the economic potential of the project, positioning it as a
promising growth opportunity for the company.
Cabaçal 2023 PEA Highlights: (All amounts are in United States Dollars unless otherwise stated)
• Base case after-tax NPV5 of $573M (CAD1 $778M) and 58.4% IRR using $1,650/oz gold,
$3.59/lb copper, and $21.35/oz silver (Table 1);
• Spot case after-tax NPV5 of $745M (CAD1 $1.01B) and 69.7% IRR using3 $1,841/oz gold,
$4.13/lb copper, and $21.35/oz silver;
• High-grade year 1 mill feed of 2.3 g/t gold and 0.29% copper which generates high after-
tax first year free cash flow of $204M, leading to capital repayment in 10.6 months;
• Average grade of 0.64 g/t gold and 0.31% copper over the life of mine - which
demonstrates the efficiency of the flowsheet in recovering the gold, copper and silver;
• Average annual gold equivalent production of 131,100 ounces at AISC of $670.70/oz
AuEq2 for years 1-5;Total LOM (22.3 years) production of 1.02M ounces gold, 353 Mlbs of
copper and 1.76M ounces of silver;
• Pre-production CAPEX of $179.6M (CAD1 $244.1M);
• Low life-of-mine strip ratio of 2.1:1;
• After tax NPV5:CAPEX Ratio of 3.2:1; and
• Significant potential for future economic optimization and project upside remains through
engineering optimizations, increased throughput and additional resources that could be
identified through the ongoing drill programs.
1 Exchange Rate USD/CAD of 1.35889.
2 See technical notes for gold equivalent equation.
3 Spot prices on London close on 1st March, 2023.
Meridian will host a Live Webcast to discuss the Cabaçal PEA Results on March 6, 2023 at 10:30am
EST (7:30am PST). A presentation by management will be followed by Q&A.
Conference Call Webcast and Dial in Details:
Webcast URL with Audio: https://www.webcaster4.com/Webcast/Page/2958/47803
Telephone Numbers: US/Canada Free: 888-506-0062 ; International: 973-528-0011 ; Access Code: 624154
Dr. Adrian McArthur, Meridian’s CEO commented, "The PEA demonstrates Cabaçal's exceptional
potential as a sustainable, low -cost open -pit mining operation capable of supplying both
industrial and precious metals to the global market. The PEA study has shown exceptionally high-
margin and meaningful returns, confirming both the quality of the asset and the expertise of our
technical team. Within just two years of acquiring Cabaçal, we have produced our first economic
study, outlining an after -tax NPV5 of $573m, which is a testament to our commitment to swift
and effective progress.
"The PEA lays a solid foundation for expansion, as the Company anticipates that optimization
studies will confirm the potential for superior economic returns by increasing annual throughput
from 2.5Mt to ~4Mt after year four, while still using the same resource. What excites us even
more is the potential for further growth, not only at Cabaçal, but also at our other satellite
targets, including the nearby St Helena mine within truckin g distance. This presents a genuine
opportunity for us to advance Cabaçal, as outlined in our PEA, and to systematically develop a
cornerstone asset in a significant new gold and copper camp over time."
"We are pleased to have a team of mining professionals already stationed in Brazil to advance
Cabaçal through feasibility following the completion of the PEA. We extend our gratitude to
Meridian's team, as well as Ausenco and GE21, for their role in delivering this report and
contributing to the revival of the Cabaçal gold and copper mine."
Table 1: Summary of Cabaçal PEA’s NPV5 and IRR sensitivities to metal prices
PEA RESULTS SUMMARY
Table 2: PEA production summary
Item
Plant Feed Mined Mt 55.6
Waste Mined Mt 118.1
Total Mined Mt 173.7
Strip Ratio Waste:Mineralized Material 2.1
Milled tonnes Mt 55.6
Mill Throughput Mt/annum 2.5
Item
Total gold production ounces 1,021,320
Total copper production tonnes 159,926
Total silver production ounces 1,758,923
Average metallurgical recovery - Gold % 89.7%
Average metallurgical recovery - Copper % 92.4%
Average metallurgical recovery - Silver % 75.2%
Item Year 1-5 LOM
Average annual gold production (AuEq) 000 Ounces 131.1 81.2
Recovered Gold (AuEq) 000 Ounces 655.3 1,811.2
Total Cash Cost USD/oz 644.3 804.4
Sustaining capital USD/oz 26.4 61.8
All in Sustaining Costs ("AISC") USD/oz 670.7 864.2
Table 3: Project economics at base case and spot prices
Item Base Case Spot Case
Life of mine Years 22.3 22.3
NPV5 USD million 572.5 745.2
IRR % 58.4% 69.7%
Payback Days 321 279
Initial Capital Expenditure USD million 179.6 179.6
Sustaining Capital Expenditure USD million 108.0 108.0
Item Average Year 1-5 Total LOM Average Year 1-5 Total LOM
Revenue USD million 208.6 2,882.1 234.9 3,254.1
Operating Costs USD million 67.7 1,181.2 67.7 1,181.2
Free cash (After Tax) USD million 107.3 939.8 128.7 1,216.4
Table 4: Cabaçal PEA model inputs
Item Base Case Spot Case
Gold Price USD/oz 1,650 1,841
Copper Price USD/lb 3.59 4.13
Silver Price USD/oz 21.35 21.35
Exchange Rate BRL:USD 5.3
Corporate Tax Rate % 25%
Social Tax % 9%
SUDAM Tax Reduction % 75%
SUDAM Tax Reduction Years 10.00
Gold Royalty Rate % 1.5%
Copper Royalty Rate % 2.0%
Silver Royalty Rate % 2.0%
Figure 1: Cabaçal project annual and cumulative cash flow
Table 5: PEA capital cost breakdown
Cabaçal Initial Capital Costs Cabaçal Sustaining Capital Costs
Item USD Item USD
Equipment & Packages 39.9 Process 30.5
Materials 9.7 Indirect Costs 7.8
Construction And Erection 36.5 Owner Costs 3.9
Other 32.1 Contingency 18.0
Indirect Costs 31.4 Mine Closure 23.4
Contingency 29.9
Total Initial Capital 179.6 Total Sustaining Capital 83.6
Table 6: PEA operating cost breakdown
Cabacal Operating Costs Breakdown
Item USD/t milled USD/oz
Mining Costs 9.31 296.43
Labour 1.63 51.78
Power 2.07 65.80
Reagents & Consumables 2.61 82.96
Maintenance 0.97 30.72
Water/sewage 0.00 0.07
Access maintenance 0.06 1.96
Laboratory 0.38 12.13
Dry stack 2.12 67.33
G&A 2.11 67.06
Total Operating Costs 21.25 676.25
Figure 2: NPV5 Sensitivity to costs and metal prices.
Figure 3: IRR sensitivity to costs and metal prices.
Figure 4: Payback sensitivity to costs and metal prices.
STUDY CONTRIBUTORS
The PEA team was led by Ausenco, a global provider of consulting and engineering services for mining
projects. Ausenco were supported by H&S Consultants Pty Ltd (resource estimation), GE21 Mineral
Consultants Ltd (mine plan and schedule), SGS Lakefield Canada (metallurgy), Sete Soluções e Tecnologia
Ambiental Ltda (environmental studies) and Hidrovia Hidrogeologia e Meio Ambiente Ltda (hydrological
studies).
CABAÇAL RESOURCE ESTIMATE1
Table 7: Cabaçal Mineral Resource (Effective Date August 21st, 2022, 0.3 g/t AuEq cut-off)
Estimates are based on the Technical Report titled, “Independent Technical Report, Mineral Resource
Estimate for the Cabaçal VMS deposit, Cabaçal Project, State of Mato Grosso, Brazil”. The Mineral
Resource estimate in the table above was prepared by specialist group, H&S Consultants Pty Ltd (“H&SC”)
and announced by Meridian on September 26, 2022. A technical report was filed on the Company’s
website and SEDAR within 45 days of this disclosure.
• Mineral Resources are not mineral reserves and do not have demonstrated economic viability; and
• Minor variations may occur during the addition of rounded numbers.
Significantly, the Mineral Resource is near-surface, and extends over 1.9km along strike with a prominent
high-grade shallow gold zone in the Cabaçal Northwest Extension. Ongoing drilling on the margins of the
Mineal Resource has intercepted significant zones of copper-gold mineralization. Further drill results are
pending.
The Mineral Resource estimate included in the PEA is reported according to the classification criteria set
out in the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards for Mineral
Resources and Reserves (“CIM Definition Standards”). These standards are internationally recognized and
allow the reader to compare the Mineral Resource with that reported for similar projects.
The PEA is preliminary in nature. The PEA mine schedule and economic assessment includes numerous
assumptions and is based on both Indicated and Inferred mineral resources. Inferred resources are
considered too speculative geologically to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves, and the re is no certainty that the project economic
assessments described herein will be achieved or that the PEA results will be realized. Mineral Resources
are not Mineral Reserves and do not have demonstrated economic viability. Additional exploration will
be required to potentially upgrade the classification of the Inferred Mineral Resources to be considered
in future project evaluation studies.
MINING
➢ 22.3-year shallow open pit mining operation proposed at with total feed inventory of 55.6 Mt;
➢ High-grade year 1 mill feed of 2.3 g/t gold and 0.3% copper with average grade of 0.64 g/t gold
and 0.31% copper over the life of mine; and
➢ Low life-of-mine strip ratio of 2.1.
Cabaçal will be mined using the open pit meth od in 3 alternating shifts, operating 24 hours a day, 365
days a year. The mining movements were designed to produce enough ROM to feed a mineralized
material processing plant with a nominal capacity of 2.5Mtpy and LOM of 22 years and 4 months.
The mining will operate with block model of 10x10x5m and slope angle in the hang wall of 48º and
following the mineralized material slope in the foot wall.
Mining will be fully outsourced in the operations of mechanical blasting, loading and haulage. With a soft
mineralized material - average WI of 11.8 - blasting will be carried out with a load ratio of 350g/t for
1 See Meridian news release September 26, 2022 https://meridianmining.co/press-releases/
mineralized material and 280g/t for waste. A dilution factor of 3% and mining recovery of 97% were
considered. The transport distance from the mine to the ROM yard varies from 1.49Km in the pre-stripping
to a maximum of 2.50Km in year 18. For the waste the transport distance will range from 1.02Km t o
4.02Km in year 18.
The transport of the mineralized material and waste will be carried out by 42t trucks manufactured in
Brazil, a fact that contributes to the reduction of CAPEX and OPEX costs. For work associated with these
trucks, 8.1t hydraulic excav ators were dimensioned, which means 4.7 passes per truck loaded with
mineralized material and 5.1 passes per truck loaded with waste.
Trucks will transport the mineralized material for discharge directly into the crusher or to the ROM
stockyard. When necessary to recover mineralized material from the ROM stockyard, a 13.7t wheel loader
will be used. The waste will direct to the 3 projected waste dumps, each trip being directed to the pile
closest to the pit region in mining activities at that time. From the 16th year onwards mining in the
northwest extension of the pit will have been completed, thus permitting the return of waste material to
this area and thereby reducing costs and environmental impacts.
The table below shows annually, since pre -stripping, the mining plan (0.3 g/t AuEq. Cut -off) and the
mineralized material feeding plan in the beneficiation plant. A mining plan was adopted that allows the
plant to be fed with mineralized material of high gold content equivalent in the first years of production,
storing low -grade mineralized material (LG) to be fed later. This allowed the elaboration of a plan
optimizing the economic model of the project. The mining strip ratio results in an average value of 2.12.
Table 8: Cabaçal mining schedule
ROM (Mt) Au (g/t) Cu (%) Ag (g/t) Waste (Mt) Total Mov
(Mt)
LG Stock
(Mt) Au (g/t) Cu (%) Ag (g/t) Plant
Feed (Mt) Au (g/t) Cu (%) Ag (g/t)
Pre-Stripping 0,45 3,22 0,10 0,32 2,32 2,77 0,04 0,41 0,11 0,34
1 2,32 1,87 0,32 1,23 5,90 8,22 0,27 0,17 0,22 0,67 2,50 2,30 0,29 1,13
2 4,85 0,67 0,32 1,03 9,86 14,72 2,63 0,16 0,24 0,71 2,50 1,16 0,40 1,33
3 2,55 1,07 0,38 1,41 12,30 14,85 2,68 0,16 0,24 0,71 2,50 1,09 0,39 1,43
4 2,68 0,76 0,41 1,65 11,89 14,56 2,86 0,16 0,23 0,71 2,50 0,81 0,43 1,72
5 2,51 0,57 0,42 1,73 10,15 12,66 2,87 0,16 0,23 0,71 2,50 0,57 0,42 1,74
6 2,43 0,99 0,45 1,75 4,59 7,03 2,81 0,16 0,23 0,71 2,50 0,96 0,44 1,71
7 2,43 0,60 0,31 1,27 4,59 7,03 2,74 0,16 0,23 0,71 2,50 0,59 0,31 1,25
8 2,44 0,47 0,25 0,97 4,61 7,05 2,67 0,16 0,23 0,71 2,51 0,47 0,25 0,97
9 2,41 0,41 0,20 0,92 4,55 6,96 2,61 0,16 0,23 0,71 2,48 0,41 0,21 0,92
10 2,43 0,42 0,24 1,09 4,59 7,03 2,54 0,16 0,23 0,71 2,50 0,42 0,24 1,08
11 2,20 0,61 0,29 1,18 4,99 7,19 2,24 0,16 0,23 0,71 2,50 0,56 0,29 1,14
12 2,21 0,82 0,31 1,37 5,00 7,21 1,95 0,16 0,23 0,71 2,50 0,74 0,30 1,32
13 2,20 0,66 0,24 1,01 4,99 7,19 1,66 0,16 0,23 0,71 2,50 0,60 0,24 0,98
14 2,20 0,64 0,15 0,62 4,99 7,19 1,36 0,16 0,23 0,71 2,50 0,58 0,15 0,61
15 2,20 0,52 0,15 0,69 4,99 7,19 1,07 0,16 0,23 0,71 2,50 0,48 0,15 0,68
16 2,32 0,21 0,26 1,29 2,60 4,92 0,89 0,16 0,23 0,71 2,50 0,20 0,26 1,24
17 2,32 0,46 0,30 1,36 2,59 4,91 0,71 0,16 0,23 0,71 2,50 0,44 0,30 1,31
18 2,32 0,52 0,30 1,19 2,59 4,91 0,53 0,16 0,23 0,71 2,50 0,49 0,29 1,15
19 2,32 0,30 0,38 1,71 2,59 4,91 0,35 0,16 0,23 0,71 2,50 0,29 0,37 1,64
20 2,32 0,46 0,53 2,53 2,60 4,92 0,18 0,16 0,23 0,71 2,50 0,44 0,51 2,41
21 2,43 0,32 0,34 1,53 2,13 4,56 0,12 0,16 0,23 0,71 2,49 0,32 0,34 1,51
22 2,43 0,24 0,26 1,31 2,13 4,56 0,06 0,16 0,23 0,71 2,49 0,23 0,27 1,31
23 0,61 0,19 0,39 2,25 0,53 1,14 - - - - 0,67 0,18 0,35 2,05
LOM 55,59 0,64 0,31 1,31 118,08 173,68 55,59 0,64 0,31 1,31
Plant Feed
Year
Mining Schedule Low Grade Stockpile Balance
Figure 5: The final pit shell of the Cabaçal mine.
METALLURGICAL TESTING
• Testwork supports production of a high-grade copper concentrate of 28.4% with payable gold
and silver;
• High metallurgical recoveries of 87.39% for gold and 92.4% for copper;
• Circa 30 % of gold recovered via a gravimetric circuit;
• Copper flotation is effective;
• Rougher concentrate is reground to 40 microns prior to cleaning to enhance grades and
recoveries; and
• Waste rock and mill tailings projected to be non-acid generating.
In 2022, Meridian selected samples from seven metallurgical drill holes to confirm historical Cabaçal
process performance in a testwork program at SGS Lakefield, Canada. The holes provided samples from
the four known main VMS systems at Cabaçal and most of the samples were within the expected head
grade range for the deposit. A key feature of the Cabaçal mineralization is the low S:Cu ratio, which implies
low pyrite/pyrrhotite content. The average feed would be expected to be ~ 1.5 S:Cu which confirms the
historical mineralogy, suggesting that chalcopyrite is about 65% of the sulphides in the sulphide
assemblage. Comminution tests were conducted. The average Bond Work Index was 11.2 which is
considered to be relatively soft and not atypical for VMS deposits. The average Abrasion Index was 0.28
which suggests moderate abrasion. Samples were considered to be of medium to hard competency for
SAG milling (average SMC A x b was 44.5). A three stage Gravity Recoverable Gold (“GRG”) test was
conducted on the Master Composite sample. The final GRG number is 64.3, which is considered quite high
and is an indication that this material is amenable to gravity gold recovery. It is anticipated that gold not
recovered in the gravity circuit will be picked up in the downstream flotation circuit. Rougher conditions
for flotation testwork used natural pH, potassium amyl xantha te (“PAX”) collector and Methyl Isobutyl
Carbinol (“MIBC”) frother. Sulphur recovery was typically around 95% leaving a non -acid generating
tailing, which was typically less than 0.1% in sulphur content. Mass pull for the Master Composite was
around 5 to 6 percent by weight. The rougher flotation was conducted mostly in solids percent around
35%. The slope between recovery and concentrate grade is quite flat, which indicates that the Cabaçal
mineralization could produce higher grade concentrates. A 24.8 % copper concentrate was produced with
94.4% copper recovery, 87.2% gold recovery (gravity + float) and 81.9% silver recovery (gravity + float).
The recoveries achieved are in line with the historic metallurgy. A pyrite concentrate was produced from
the cleaner tailings to remove the acid generating minerals. The concentrate assayed 44% of sulphur with
notable levels of gold and silver which could have market potential.