A forgotten copper treasure is creating a golden future for Meridian Mining
On-site at the Cabaçal project.
By Don Hauka
Copper has always been the red flower of recovery. When things start picking up after an economic downturn—or a pandemic—the demand for this workhorse of metals always blooms as construction booms, sales of electronics and computer goods pick up and the electric vehicle industry charges ahead.
That dynamic is at work again as the world emerges from the COVID-19 crisis and gets back to business. Copper is in big demand and its price has risen by 70 per cent from recent lows.
While demand is rising, there's a looming copper shortage on the near horizon. S&P Global Market Intelligence forecasts that "consumption will outstrip production over the period to 2024, resulting in a growing refined market deficit and increasing copper prices."
The race is on to fill the supply and demand gap and one of the hottest areas of activity is Brazil. The country's regulatory regime and abundant mineral resources make it a Tier One mining jurisdiction. The province of Mato Grosso, a historic mining area, is seeing a resurgence of interest as a known copper-producing region with pro-mining lams and excellent infrastructure.
Meridian Mining finds a copper treasure trove hidden in plain sight
With all the attention it has received, both historically and currently, you'd think Brazil would hold no new surprises, especially when it comes to copper. But TSXV-listed Meridian Mining (TSXV: MNO | Frankfurt: 2MM) has unearthed a copper treasure hidden in plain sight.
"Cabaçal has been essentially hidden in a cardboard box in the archives. It has been inactive for 30 years and off the playing field until now." — Gilbert Clark, Executive Chairman, Meridian Mining UK S.
The company's Cabaçal project is a camp scale VMS project in Mato Grosso that's underexplored and under-developed compared to other VMS Camps.
"Cabaçal has been essentially hidden in a cardboard box in the archives," says Gilbert Clark, Meridian's Executive Chairman.
"It's been inactive for 30 years and off the playing field until now."
The re-discovery of Cabaçal has Meridian poised to become the next mid-tier copper-gold developer with a portfolio of resource development and exploration assets in Brazil while growing the next copper-gold Volcanogenic Massive Sulphide (VMS) structure in the province.
The Cabaçal property was originally discovered by BP Minerals in 1983. It was mined briefly from 1987 to 1991, producing 869,279 t at 5g/t gold and 0.82 per cent copper and was sold to Rio Tinto as part of a global transaction in 1989. After the initial BP/Rio Tinto operational phase, it was acquired by a private Brazilian company in 2005. Although a great deal of exploration work was done, almost none of it was digitized and it remained an unknown treasure beyond the reach of the Internet for nearly 30 years.
In August 2020, Meridian signed an option agreement to acquire the Cabaçal project for US$8.75 million.
Exploration work at Cabaçal.
Cabaçal's geology similar to classic VMS deposits like Flin Flon, Matagami
What they found was Cabaçal, a near-surface deposit situated in pastureland with good access to infrastructure and over 30 km of open strike length. This large, historic copper-gold resource contains over 400 holes and historic metallurgical recoveries of over 90 per cent copper and 90 per cent gold.
The geology of this camp-scale project's site is similar to VMS districts like those in Flin Flon, Manitoba, and Matagami, Quebec. Mines have been operating in those areas for decades, producing copper, zinc, lead and gold as companies move from deposit to deposit in the mineral-rich zones.
Clark says there's a wealth of historic data and recent drilling results that indicate Cabaçal is similar to both the Flin Flon and Matagami VMS structures.
"There are over 400 historic holes out there and we have all the drill data from the archives, so we've created quite a database and have continued with our own program," he notes.
"They show we've got multiple deposits and a very large structure with extensive copper and gold mineralization."
The company's ongoing drilling program is geared to establishing Cabaçal's camp scale potential, identifying multiple, high-grade deposits of copper and gold. Recent results have not only proved the continuity of historic data, but they've also returned significant intervals and grades of copper, gold, and silver mineralization. They also showed the significant thickness of the copper-gold zone as well as expanding its footprint.
Results have shown strong intervals of high-grade copper and gold deposits starting at shallow levels and wide intervals. These include high-grade 10.2 m at 5.9 per cent CUEQ, within 15.9 m at 4.0 per cent CUEQ and high-grade 17.2 at 3.2 per cent CUEQ, within 49.6 m at 1.4 per cent CUEQ. The results also include large, disseminated areas of mineralization near surface, including 116.5 m at 0.7 per cent CUEQ and 58.6 m at 1.2 per cent CUEQ, which would be ideal for a potential open pit development.
Meridian's revision of the airborne electromagnetic survey (EM) showed a major, new four-kilometer-long anomaly south of the St. Helena mine as well as multiple EM plates, an indicator of a classic VMS deposit. It also showed plates with strong conductivity extending into areas untouched by mining. The results were so promising that the Company has bought its own equipment and is expanding its EM program.
The high priority Cabaçal West VTEM target, has now been linked through the EM trend to the main Cabaçal mine, the coincidental soils and geophysics expand this target to 3.7 km. This will be one of the targets to be tested with the new EM equipment, to better guide the on-going mine corridor drill program in this area, with initial results expected late June early July. "We are extremely excited about the new EM equipment testing Cabaçal West, and the potential to significantly expand the Cabaçal area" says Clark.
Mine corridor and anomalies.
Established presence in Brazil helps build Meridian's success
None of this would have been possible without Meridian having an experienced management team both corporately and on the ground in Brazil. For starters, Clark has 20 years of international experience in the natural resources industry and capital markets. His experience portfolio covers base and precious metals within investee companies in Europe, Greenland, South America, North America, Australia, Asia and Africa. He earned his Bachelor of Science Degree in Geology at Macquarie University.
CEO and President, Adrian McArthur, is another veteran of the mining sector, with over 20 years of experience in exploration, resource delineation and project generation roles for industrial minerals, gold, and base metals. McArthur holds a BSc. Hons, PhD from Monash and is a fellow of AusIMM and is the Qualified Person for Meridian.
Meridian's team in Brazil boasts some of the most experienced mining experts in South America. Joel Brandão, Resident Manager Espigão, has over 37 years of experience in the Brazilian mining industry, including project administrator, exploration, infrastructure and the operation of mines.
The company's principal Brazilian mining consultant, Vitor Belo, has been working in the mining industry since 1989. He's worked for companies such as Rio Tinto, Kinross and Yamana and for small-cap companies such as Rio Novo, Carpathian Gold and Brio Gold.
"Our team knows how to get things done because they've been doing things successfully for anywhere from 10 to 40 years," says Clark.
Re-surveying historic drill platforms.
"We have an internationally experienced board and management team that gives us solid governance and leadership. Shareholders can see we're very careful in the management of their funds and we deliver results in a timely fashion as well as continued growth."
Meridian is also firmly rooted in the communities they work in. The company's Corporate Social Responsibility program focuses on developing an open and transparent relationship with all stakeholders. There's a Health and Safety Education Program for employees and local communities. The Community Engagement Program is managed by an in-house legal and land management team.
The company also sets environmental and sustainable development goals. Among the goals for 2021 are using an in-house environmental management system to monitor water quality, rainfall, and vegetation re-growth and ensuring operational improvements are continuously monitored and upgraded to be environmentally friendly.
"We've been engaging with the Brazilian ranchers and farmers for 15 years," notes Clark.
"It's important to have that kind of relationship because if the lifespan of this resource is as long as we think it is, we're going to be there for a while, so we better be getting on with our neighbors and build consensus among all the stakeholders."
Local presence, copper prices and surprise factor put Meridian on the radar
It's that kind of strong local presence—and the sheer surprise of finding a forgotten camp-scale VMS project—that has put Meridian Mining on the radar of investment analysts like Beacon Securities, which put it in the top three of its recent report on copper companies to watch.
"One of the first things that got our attention was the underexplored nature of their claim block—this thing's been sitting idle for 30 years," says Mike Curran, Beacon Securities' Research Analyst.
"The other thing was that Meridian had already been active in Brazil for a number of years. Their Brazilian team is well-established, and they've got a good senior management group with executives who have experience with other companies."
Curran says Meridian's timing is also important with the price of copper trending up as demand grows and supply gets tighter and tighter.
"There's a basic problem in the supply situation where you've got increasing demand from various sources like infrastructure requirements and electric vehicles are also on the rise," says Curran.
"With growing demand, there's a gap on the supply side and there's not a lot of new copper mines being built, so, there's going to be upward pressure on pricing in the next three to five years."
Curran says Meridian is in a unique position being basically a junior company that owns a camp-scale project on a VMS belt. The previous drilling programs and the archival database has given the company a jump-start on its path towards becoming the next mid-tier copper-gold developer.
"The benefit we see for Meridian is that this is not just a junior explorer starting off with having 10 or 20 holes done so far. All that historical drilling has put them a year or two ahead and that bodes well in terms of development timelines," says Curran.
What to expect moving forward? "Watch this space."
Moving into the second half of 2021, Meridian is focused on unwrapping their surprise package at Cabaçal to see just how big its potential is in a methodical, step-by-step process. Gilbert says the experienced company team and board have a clear vision for the next year and take the responsibility of safeguarding their investors' investments seriously.
"Many executives in other companies don't realize that they're performing a service for their shareholders and it's their responsibility to give good governance," says Gilbert.
"In the mining industry, if you make a bad decision, it can take years to correct. What our current and future shareholders are going to see is that we will continue to make the correct decisions."
And what will the results of those correct decisions be?
"Watch this space."
To learn more about Meridian Mining and how you can get involved in the company's growth, visit their website here.
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