Mitsubishi invests $20M in Marimaca Copper for 5% stake
Marimaca Copper (TSX: MARI) has secured a $20-million investment from Mitsubishi Corp. that will give the Japanese firm a 5% stake in the junior. Proceeds of the investment, which comes via a private placement, will be used to accelerate the development Marimaca’s flagship copper project located in the Antofagasta region of Chile.
Shares of Marimaca Copper rose 2.2% by 12:15 p.m. EDT Wednesday on the news. The company has a market capitalization of $361.2 million.
“We are pleased that Mitsubishi shares our view that the Marimaca copper project is a unique, very high-quality, development-stage project,” said Hayden Locke, CEO of Marimaca in a release. “Its location affords it several advantages including an expectation that it will be among the lowest carbon intensity copper producers in the industry.”
Locke added the investment will help the company accelerate progress towards a feasibility study and permitting.
Since its discovery in 2016, Marimaca has more than doubled the deposit’s resource, most recently estimated at 200 million tonnes grading 0.45% copper for 900,000 tonnes of metal in the measured and indicated category. It also contains an inferred resource of 37 million tonnes grading 0.38% copper for 141,000 tonnes.
A preliminary economic assessment published in 2020 gave Marimaca a post-tax net present value (at an 8% discount) of US$640 million and a 38% internal rate of return, assuming a US$3.45 per lb. flat long-term copper price. The payback period is estimated at 2.4 years.
During the first six years of mining the high-grade core, the open-pit, heap-leach project is expected to deliver 40,000 tonnes of copper cathodes annually. Total recovered copper over the entire 12-year mine life is approximately 430,000 tonnes.
In a note to clients, BMO Capital Markets mining analyst Rene Cartier said the positive development could help open up financing opportunities down the road.
“In our view, a financing does not come as much of a surprise. Indeed, we flagged our expectations that Marimaca would likely look to raise funds by the middle of the year. Positively, the investment comes at a premium, as compared to the discount we assumed, resulting in a slight uplift to our NAVPS estimate,” he wrote.
“The strategic investment is seen as a positive endorsement of the project with the prospects of collaboration for further enhancements. Bigger picture, the strategic investment could open additional opportunities come time for project financing and development.”
Mitsubishi is a major investor in the Latin American copper industry with a portfolio of existing investments including Escondida, Los Pelambres, Antamina, Los Bronces and Quellaveco.
“We look forward to working together with the Marimaca team as it moves into the next phase of studies and permitting with the hope we can fully utilize our deep experience in the Chilean copper industry to further enhance this project,” Taro Abe, general manager of Mitsubishi’s base metals department, said in the release.
