Meridian Mining (MNO) - Turnaround Complete, Soon to be Drilling Hard!

February 11 2021, 16:13 GMT

Meridian Mining

  • TSX-V: MNO
  • Shares Outstanding: 103.7M
  • Share price C$0.20 (10.02.2021)
  • Market Cap: C$17M

Meridian Mining is focused on becoming the next mid-tier Copper-Gold developer with a focus on Brazil. The Company’s priority is on the Cabaçal project, an advanced VMS district-scale Cu-Au project located in the state of Mato Grosso. Meridian’s Board and Management team has a track record of development, financing and operating natural resource projects in Brazil and internationally.

We met with Gilbert Clark, Exec. Director of Meridian Mining which is a new story for us.

Company Overview

Meridian Mining is a TSX-V listed company focused on Copper and Gold development in Brazil. Recently they acquired a project that was initially developed by BP Minerals, the mineral exploration arm of BP. The project was subsequently acquired by Rio Tinto, and has been hidden for about 25-years from the public markets. Meridian negotiated the transaction to bring it into the public markets and they are looking forward to developing it.

Meridian Mining (MNO) - Turnaround Complete, Soon to be Drilling Hard!

The Foundation & History: Solving Legacy Issues Since 2018

Gilbert Clark joined the company in 2018 when it was having a difficult time. It had a failed investment philosophy, an unwieldy capital structure and a balance sheet that was in disarray so was totally unsuited to the public markets. Clark was brought in to address the issues in the company and make it attractive to equities and general investors on the public markets of the TSX.

The company was producing Manganese in a semi-industrial manner and it was not commercially viable with the cost of transport, the price of the commodity, a large workforce of 180 people and a location that was unsuited to that bulk commodity. Clark had to ensure that the company honoured all of the existing contracts and terminate the ones that were unviable to bring it all under control.

They had a good asset in the Espigao project at the time, but that Manganese operation was shutting down, and it was put on care & maintenance in December 2019. 

The Turn-around Process: Big Moments & Ambitions for 2021

Meridian completely restructured the board and went through a stability phase where they brought in a well-known legal form from Toronto. They went through a corporate restructuring phase over the last 12 months and now they are looking to the future of resource expansion and resource development. Clark has come in as executive chairman to work with the CEO, Dr Adrian McArthur, with the focus on Cabaçal Gold.

Meridian looked at what was in the Brazilian Market and liked Copper and Gold, which have basic capex and opex scenarios, then identified the Cabaçal South project. The team are all very experienced investors and are looking at bringing Cabaçal into the public market.

Meridian Mining (MNO) - Turnaround Complete, Soon to be Drilling Hard!

Clark has worked in private equity for the last 10 years involved in due diligence. McArthur has been working in Brazil for 7 years and has the operational experience to understand the timelines, legislation, the timeframes and how they're executed. He's experienced in Gold exploration and he has a PHD in volcanic systems.

Cabaçal was structured as a private equity deal to decrease the risk and increase the value. They acquired the project which had been predefined by one of the mining majors so the historical data had been done to a high standard. They have a lot of data: 600 diamond drill holes, 70,000m of drilling, but it is not compliant, so Meridian Mining is going through a process of making that data and information compliant to be able to calculate the resource. 

Not for Rio or BP: Asset Potential, Data & Plan  

Cabaçal is not a project for a major but a real opportunity to develop a mid-tier company. When the project was shut down, it was just focused on Gold with a 3g/t cut off. It’s a VMS project and perfect to develop as a mid-tier Copper-Gold producing company.  

The Cabaçal Goldmine is a Copper-Gold mine and a historical resource with 21Mt of 0.5% Copper, 0.5% Gold. The base layer of this deposit is also quite high grade in Lead, Zinc and Silver so there upside on this project. Meridian has predefined targets and they are in the process of confirmation on the drill hole database and they have already released some statistical information. It is a project with no metallurgical risk. Of the concentrates produced, about 60% of the Gold is through gravity and the balance has gone into a Copper-Gold-Silver 25-26% concentrate. 

Meridian Mining (MNO) - Turnaround Complete, Soon to be Drilling Hard!

Options for Financing it All

A VMS project tends to require a lot of money and drilling. Meridian raised CAD$4.3M, and has about USD$5.1M in total. The majority of the financing (about USD$4M) will focus on the 10,000m drill programme at the Copper-Gold deposit. Meridian needs to advance their resource confirmation and hope to start infill drilling as an expansion programme in March. 

The company has a small market cap of USD$18M so needs to get the message out to the market. The international market is not really aware of the project yet so they need to get drilling underway to be able to get some information out to the market before they raise any more money.   

Drill Programme Overview

There are the historic results and Meridian has released some of the drill holes. They already have that information but need to complete that conformational infill drilling. There are 600 holes across the project and 400 holes through the main deposit with historic data. With the infill drilling, the existing mineralised envelope will hopefully become a compliant resource.

Next Steps: New Focus, New Strategy 

Meridian will focus on building a significant resource and once they have defined that, they can do the 43-101 statement, then the PEA. They have put out the ESCG and are engaging with their stakeholders. They are investing in local communities and the reception with local communities has been great as they need the employment and other benefits.

Meridian has let go of the artisanal Manganese operation and that complex corporate structure. Now they're focusing on just Copper and Gold at the Cabaçal deposit. It’s a Copper-Gold story which is easy to understand. They’re not complicating the story with the polymetallic component of Silver, Lead and Zinc but are saying that there will be a by-product which may add value for the company.

It's early days, but in some ways, they're ahead of the game in terms of risk due to the amount of historic data available. They have a good, experienced, local team and the bulk of their management team is Brazilian. 

This is a new story to us so we are looking forward to hearing some more news when they have made some progress. There are some unusual advantages, albeit starting from a low base, which I guess for people looking for leverage, might be appealing.

Meridian Mining (MNO) - Turnaround Complete, Soon to be Drilling Hard!To Find out more, go to the Meridian Mining website

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