Meridian Mining: Cabaçal’s DFS Delivers Standout Economics

Trevor Hall (0:16)

All right, everybody, welcome into Mining Stock Daily from the Beaver Creek Precious Metals Summit. We do have an exclusive to begin our coverage this week with our friends, longtime friends from Meridian Mining. They do trade on the TSX and the LSE with the symbol MNO, and on the OTCQX in the US with MRRDF. The company overnight did publish their definitive feasibility study for the Cabaçal project. We're going to go over the numbers, what's changed since the PFS, and all things for people to take a deep dive in here with our friend CEO Gilbert Clark. Gilbert, first off, congratulations.

This project moved about as quickly as one could, and not that there were challenges along the way, but this DFS is a testament to what you've done with Cabaçal, the team, and just how great this project is, and it's just the beginning of this belt here. So first off, walk us through the numbers.

Gilbert Clark (1:15)

Okay, Trev, look, thanks again for coming in.

We're very happy that you're the first off the block to go through the DFS. I'm very happy too. So, look, we've always said Cabaçal is a very special project. So, base case scenario, we used, we generated a post-tax MPV5 of 2092B in US dollars. It's got an IRR of 107.6%.

It gets paid back in 0.9 of a year, so less than a year to pay it back. And on the base case, and most importantly, that MPV5 to capex ratio, it's grown to now to be 6.5 to 1 I mean, we are almost talking about some leading industry economics here. That was based on a gold price of $3,570 per ounce, copper at $5.03, and silver at $50.17. Now, look, we take it at a spot price, which we took on the 10th of September, and actually the spot price today, I think, is a bit heavy, a bit higher.

That's with $4,394 gold and $6.53 copper, 64 silver. That generates a 29B in USD post-tax MPV, with an IRR that actually grows to be 134%. The payback then, it just drops down to 0.7. And look, we've always said about this project, it's an industrial project. This is a mining project, and this is the exact type of economic returns you want to see from this emerging mid-tier producing mine. Look, some of the other numbers, you know, the life of mine, all in sustaining costs, you know, 1,056 per ounce of gold equivalent. It generates post-tax free cash flow of some 2.9 billion, this is base case, 2.9 billion US dollars. And that's first five years, it's critical for any mine, we generate on average 183,526 ounces of gold equivalent. And that first five years, our ASICS, is 715 US dollars per ounce of gold equivalent. I mean, this is what you want to see when you want to build a mine, to generate a mine. CAPEX is up a little bit, OPEX is up a little bit, but I just want to make it clear, this is being engineered to be built, this is being engineered to be financed. And our DFS, which was led by Senco, contributions by GE21, critical ones, and also Norm who did Metal Age for us, fantastic effort for World War III. They've delivered something special to the company and to our shareholders.

Trevor Hall (3:49)

I would say so. So what has changed since the DFS, as far as the technical mining scenario, reserves, resources, what is that number? What's actually, how much material there is actually going to be mined?

Gilbert Clark (4:02)

Well, we've, this is in the permitted, the primary license pit, which is the same pit as we used in the PFS. That reserve has now grown from some 40 million tons to over 56 million tons of reserve, which of 98 percent is in the proving category. Like I said, we drilled and we drilled. We did the counter cycle investment. When everyone was talking exploration, we focused on resource development to build the mine. So that's a critical one. Look, we have experienced the change in inflation in Brazil, the change in the exchange rates in Brazil. There's been additional fuel costs, additional electricity costs, but we weathered those costs because when you've got a strong economic base, a strong reserve base, this is what you want to see in a mine that can operate and be profitable in any stage of the mining cycle.

Trevor Hall (4:51)

You did mention a little bit of the capex did kind of raise a little bit, and you mentioned some of those numbers just now. Is that maybe more exclusive to the higher capex, or what else was kind of rising in cost from that PFS?