Marimaca announces the conversion of a loan of 12 million dollars at the level of its subsidiary Toronto Stock Exchange: MARI
VANCOUVER, British Columbia, July 02, 2020 (GLOBE NEWSWIRE) – Marimaca Copper Corp. (“Marimaca Copper” or the “Company”) (TSX: MARI) is pleased to announce that Greenstone Resources II LP (“Greenstone”) has exercised its conversion option (the “Conversion”) under the US $ 12.0 million convertible loan facility associated with certain of the subsidiaries of Marimaca Copper, Sociedad Contractual Minera Berta (“SCM Berta”) and Rising Star Copper Limited (“RSC”). These subsidiaries hold an interest in the Nora project, which includes a processing plant and certain mining concessions, which are not linked to the Marimaca deposit. The conversion took place at the RSC level, allowing Greenstone to now own a 75% stake in the Nora project and Marimaca Copper to hold the remaining 25%.
Following the conversion, Marimaca Copper no longer controls RSC or SCM Berta and will deconsolidate these transactions from its financial position and operating results as of June 30, 2020. In the future, Marimaca Copper’s interest in RSC and SCM Berta will be accounted for under the equity method, which should result in a strengthening of the Company’s financial position since the majority of the outstanding debt presented on the Company’s balance sheet is associated with SCM Berta. As at March 31, 2020, approximately $ 19.2 million of the Company’s outstanding debt was related to SCM Berta.
The conversion is in line with the company’s press release of April 19, 2018 which announced the company’s strategic decision to focus exclusively on the Marimaca project, and to finance the Berta unconnected mine and the Nora processing plant. at the project level without recourse or additional dilution of Marimaca Copper. In February 2019, the Berta mine was sold to Santiago Metals Proyecto 4 Ltda. (see press release of February 19, 2019).
The convertible loan facility was approved by minority shareholders in June 2018, with Greenstone being a major shareholder of Marimaca Copper with a current 24.9% stake. As part of the conversion, Greenstone and Marimaca Copper entered into a shareholders’ agreement and management services agreement with RSC and SCM Berta to manage the Nora project in the future.
Michael Haworth, Executive Chairman of Marimaca Copper, commented:
“We have made significant progress in our corporate restructuring efforts as part of broader initiatives for Marimaca Copper. The objective of these initiatives is to focus attention on our flagship Marimaca project and to rationalize the structure of the company and the capital in order to better position us for its successful future development. The deconsolidation of approximately $ 19.2 million of SCM Berta’s debt from Marimaca Copper’s balance sheet is a further step in this process.
“The PEA for Marimaca is progressing well and we continue to believe that it will show that Marimaca will be an outstanding copper development project, with low initial investment costs and competitive operating costs that have the potential to deliver. compelling savings at a variety of copper prices. “
Overview of the Marimaca copper project
Marimaca Copper has released an updated Mineral Resource Estimate (“MRE”) for Marimaca of 70 million tonnes, with an average grade of 0.60% total copper, in the measured and indicated categories (approximately 420Kt of contained copper) and 40 million tonnes, with an average grade of 0.52% of total copper, in the presumed category (approximately 224 kt of contained copper) (see press release on December 2, 2019). This represents an increase of almost 100% from the MRE published in April 2018 and makes the project one of the most important copper oxide discoveries in Chile in the last decade.
The company is currently undertaking a PEA for the project, which is expected to be completed in July 2020. The project is expected to benefit from low initial capital development costs and, due to the favorable geometry of the deposit and the relatively straightforward processing of oxides via SX – EW, management believes that the project will have very competitive operating costs, providing compelling economic benefits in PEA.
Overview of the transaction and deconsolidated debt
SCM Berta installation
In June 2018, RSC entered into a US $ 12 million convertible loan facility under which Greenstone provided a convertible loan to RSC and Minera Coro Chile SpA, both wholly owned subsidiaries of Marimaca Copper. The facility was convertible into a 75% stake in RSC, the UK parent company of SCM Berta. As at March 31, 2020, the outstanding balance consisted of $ 12.0 million in principal, $ 3.6 million in interest and $ 0.2 million in arrangement fees.
Greenstone has given notice to convert all of the outstanding principal of US $ 12.0 million into fully paid common stock of RSC representing 75% of the issued share capital of RSC.
SCM Berta working capital loan
In September 2018, SCM Berta entered into a credit facility with Greenstone for a secured loan facility of US $ 10 million. As at March 31, 2020, the outstanding balance consisted of $ 2.0 million in principal, $ 0.9 million in accrued interest and $ 0.2 million in arrangement fees.
Under the terms of the SCM Berta Facility and the SCM Berta Working Capital Loan, upon conversion of the SCM Berta Facility, all unpaid interest and accrued charges on such facilities become payable on demand by RSC. It is important to note that this outstanding debt is only payable at the level of SCM Berta and has no recourse on the Marimaca project.
In the Principal’s Notice of Conversion under the SCM Berta Facility, Greenstone elected not to apply this obligation at this time. As part of the conversion agreements, it has been agreed that an outstanding balance of approximately US $ 7.4 million remains, which includes:
- US $ 4.2 million in accrued interest on the SCM Berta facility; and
- US $ 2 million in principal and US $ 1.2 million in interest and accrued charges for the SCM Berta working capital loan.
These elements are without recourse to Marimaca Copper and are limited to RSC and its subsidiaries. As RSC is now only 25% owned by Marimaca Copper, these debts will no longer be consolidated in Marimaca Copper’s financial accounts as of June 30, 2020.
The SCM Berta facility was conditional on the acquisition by the company of a 35% minority interest in the Berta mine. This purchase price was structured into an upfront payment and three future payments. ProPipe’s liability is also without recourse to Marimaca Copper and is limited to RSC and its subsidiaries. As of March 31, 2020, ProPipe’s liability balance was US $ 0.5 million. This amount will also be deconsolidated from the Marimaca Copper balance sheet as of June 30, 2020.
The technical information contained in this press release, including information relating to geology, drilling and mineralization, has been prepared under the supervision of, or has been reviewed by Sergio Rivera, Vice President of Exploration, Marimaca Copper Corp, a geologist over 36 years old. of experience and member of the Colegio de Geólogos de Chile and the Institute of Mining Engineers of Chile, and who is the Qualified Person for the purposes of NI 43-101 responsible for the design and execution of the drilling program.
The qualified person for the content, other than geological information, of this press release is Luis Tondo, CEO and Director of Marimaca Copper, a mining engineer with over 30 years of experience and a member of the Australasian Institute of Mines and metallurgy, which is the qualified person for the purposes of NI 43-101.
All qualified persons confirm that they have visited the project area, reviewed relevant information about the project, allowing correct technical judgment in their respective areas of expertise, in turn used in drafting and reviewing the content of this press release.
Marimaca Copper and the Marimaca Project
Marimaca is quickly becoming recognized as one of the most important copper discoveries in Chile in recent years as it represents a new type of deposit that challenges accepted exploration wisdom and promises to open new frontiers for discovered elsewhere in the country. Marimaca is hosted by intrusive rocks while the many manto deposits in the same region are hosted by volcanics. With a lack of new copper exploration discoveries in Chile, the growing Marimaca resource is a high-level development project as it is located in the low-lying coastal belt near Antofagasta and Mejillones. This prime location could allow its future development at a lower capital cost than many other copper developments. Marimaca will benefit from the existing infrastructure nearby, including roads, power lines, ports, a sulfuric acid plant, skilled labor and seawater and relatively low environmental impact.
For more information, please visit www.marimaca.com or contact:
+44 (0) 207 920 3150
Jos Simson / Emily Moss
This press release includes certain “forward-looking statements” under applicable Canadian securities laws. These statements relate to future events or the future performance of the company, business prospects or opportunities. Forward-looking statements include, but are not limited to, the impact of a rebranding of the company, future development and exploration potential of the Marimaca project. Actual future results may differ materially. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements reflect beliefs, opinions and projections as of the date the statements are made and are based on a number of assumptions and estimates which, while considered reasonable by Marimaca Copper, are inherently subject to important activities, economic, competitive, political and uncertainties and social contingencies. Many factors, known and unknown, could cause actual results, performance or achievements to differ materially from the results, performance or achievements which are or may be expressed or implied by these forward-looking statements and the parties have made assumptions. and estimates based on or related to many of these factors. These factors include, but are not limited to: risks related to share price and market conditions, risks inherent in mining, exploration and development of mineral properties, uncertainties related to the interpretation of drilling results and other geological data, fluctuations in metal prices, the possibility of project delays or cost overruns or unforeseen excessive operating costs and expenses, uncertainties related to the need for funding, the availability and costs of funding required in the future as well as the factors disclosed in the Company’s documents filed from time to time with the securities regulatory bodies of the provinces of British Columbia, the Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. Therefore, readers should not place undue reliance on forward-looking statements. Marimaca Copper assumes no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of new information or future events or otherwise, except as required by law.