Meridian Mining reveals strong economics for Cabaçal gold-copper project

A preliminary economic assessment (PEA) for Meridian Mining’s (TSX: MNO) Cabaçal gold-copper deposit in Brazil has confirmed its “exceptional potential”, with a base case after-tax net present value (NPV) of US$573 million (C$778 million).

Following a pre-production capital expenditure of C$179.6 million, the open pit project is expected to demonstrate a 58.4% internal rate of return (IRR) using commodity prices of US$1,650 per ounce gold, US$3.59 per pound copper and US$21.35/oz silver.

The spot case after-tax NPV was determined to be US$745 million with and 69.7% IRR using prices of US$1,841/oz gold, US$4.13/lb copper and US$21.35/oz silver.

This assessment was led by Ausenco Engineering Canada Inc and confirms Cabaçal’s strong economic potential, positioning it as a promising growth opportunity for the company.

High-grade mill feed

Also evaluated within the PEA was a first-year high-grade mill feed of 2.3 grams per tonne gold and 0.29% copper, which was estimated to generate an after-tax first year free cash flow of US$204 million, leading to capital repayment in 10.6 months.

Average annual gold equivalent production is expected to hit 131,100oz at an all-in-sustaining-cost (AISC) of US$670.70/oz over the first five years, while production over the proposed 22.3 year life of mine will be approximately 1.02Moz of gold, 353Mlb of copper and 1.76Moz of silver.

Meridian could expect an average grade of 0.64g/t gold and 0.31% copper over the life of mine – demonstrating the efficiency of the project’s flowsheet in recovering the gold, copper and silver.

The study reported future economic optimisation and project upside remains through engineering improvements, increased throughput and additional resources identified through ongoing drilling.

Low-cost operation

Meridian chief executive officer Dr Adrian McArthur said the PEA demonstrates Cabaçal’s potential as a sustainable, low-cost operation supplying industrial and precious metals to the global market.

“Within just two years of acquiring Cabaçal, we have produced our first economic study, which has shown exceptionally high-margin and meaningful returns and confirms the quality of the asset and the expertise of our technical team,” he said.

“The PEA lays a solid foundation for expansion, as we anticipate that optimisation studies will confirm the potential for superior economic returns by increasing annual throughput from 2.5Mt to around 4Mt after year four, from the same resource.”

Meridian expects further growth from satellite targets including the nearby St Helena mine within trucking distance.

“This presents a genuine opportunity for us to advance Cabaçal and to systematically develop a cornerstone asset in a significant new gold and copper camp over time,” Dr McArthur said.

Open pit mine

Cabaçal will be mined as an open pit in three alternating shifts, operating around the clock every day of the year.

Mining movements have been designed to produce enough run-of-mine ore to feed a mineralised material processing plant with a nominal capacity of 2.5Mt per year.

Mining activities (including mechanical blasting, loading and haulage) will be fully outsourced while transport of the mineralised material and waste will be carried by 42t trucks manufactured in Brazil.

Local manufacture has been cited as a contributor to lowering the project’s capital and operating expenditures.