All right, everybody. Welcome back into Mining Stock Daily. Listen, the one thing I've always loved about the mining and exploration sector is that I'm a continuous student of this industry. There's always something I need to learn, or it's thrown out in front of me that I just do not know or I've never seen before. And even after 10 years, it still surprises me when that hits. But last week, we got news from Meridian Mining announcing blister copper smelter returns from the Cabacal project. I don't know what blister copper is. So we've got to hammer this down here with CEO Gilbert Clark. Once again, Gilbert, what the [expletive] is blister copper? Talk to me like I'm five.
Well, I'm always happy to be on the show and happy to continue to be part of it. I think before we say what it is, you've got to ask yourself, why do you do it? And that's your first question to the investor: why did you do this? Well, I'd say 99.99% of the junior market retail and some institutional guys have never seen a PR like this. And the reason you do it is, everyone's got a copper mine. And as I've said many times across the years, if you don't have good metallurgy, you don't have good cash flow. It just doesn't work.
And one of the key things with any copper concentrate, copper sulfide concentrate, is when it goes to the smelter, if it's got impurities, you're going to get a discounted price. If it — you know, just dirty copper concentrates, you're going to get smashed. They're going to make deductibles. They're going to say, 'Well, this is going to hurt the internal kiln bricks of the smelter.' So over these years, Trevor, we've always talked about how clean the mineralization is at Cabacal. You can promise in joint ventures, and it's gone into all of our — the PEA, the pre-feasibility study, and now shortly to DFS.
So what we wanted to show — and this leads into the ongoing project finance discussions in relation to off-take — is not only do we produce one of the cleanest copper concentrates coming to the market, with incredibly high precious metal credits, gold and silver, but that when you convert this sulfide concentrate, the first step to producing anodes and cathodes, is that when you smelt it, when you melt it down and you produce that basic copper matte, okay, then you blow air through it, air and oxygen, and with that it burns away some of the iron and excess sulfur, and then you pour that out and you produce a blister copper.
And you can then analyze that. And within that blister copper, you can say, 'Okay, there's no impurities.' Generally, it's somewhere around 90% for a blister copper, plus or minus. Ours is — what is it? It was, I think, 98.9% from blister copper. So that means we're going to produce, when you convert that into an anode, either for flash melt or so, it's going to be incredibly high quality and very pure. Most importantly, in our sulfide concentrate, there's nothing like fluorine or large quantities of penalty elements. So what we telegraphed to the investor or to the end consumer is that shortly a very high quality copper concentrate is coming onto the market.
And if you've got long-term supply contracts with low sulfur concentrates or very impure copper concentrates, you can buy millions — contract to buy millions of tons of copper concentrate, blend it, either resell it or use it yourself at the smelter, but you've then got something that can make the minimum grade, potentially even a very good grade, smelter feed for decades to come. And that's the key message from this. So often you'll see a junior company, they just don't do this because they know fundamentally copper concentrate is trash, but ours is premium. The Cabacal project produces a premium copper concentrate.
It all sounds very impressive. I mean, the title 'high-grade blister copper' itself is impressive, but it sounds like it does materially reduce technical risk heading into the DFS, but also improves your commercial confidence. Is that really kind of the gist of this whole thing? Is that what this test work has done?
I wouldn't — I would say that what it's done is confirmed all of the historical data and correspondence on how well this concentrate performed, and it was produced back in the 1980s in the Carajas mine. And when you look at the commerciality of that, say there's a couple of copper concentrates out there and it's just, you know, low sulfur. Okay, everyone talks about sulfur. You need sulfur. You need the fuel in the furnace. And the byproduct of that furnace is acid, sulfuric acid.
So we can say now that — if you've got a Western, even the Chinese smelters have very strict emission standards — the quality of this concentrate can be mixed with another concentrate that has poor emission standards. Mix it and you make the minimum cutoff. So for desirability, commerciality, well, what we wanted to do is confirm when we go into these off-take agreements and project finance discussions that this is a readily — a very easy to sell copper concentrate.
Do those off-take agreements kind of come in hand with some sort of written agreement or MOU prior to the DFS here, Gilbert? Is that something that the company needs to tackle?
The off-take agreement — yeah, it's kind of curious. Sometimes it's better to do an off-take agreement closer to production because that's when it's worth more. Some project finances actually want you to have the off-take agreement as part of the financial package. What we have in the benefit for our shareholders and potential shareholders, this gives us the flexibility to decide how we're going to do it.
We've had some great supporters who have been very interested in the off-take. They actually are shareholders of the company on the basis of wanting to be at the table for discussion when it comes. The lawyer said, if you've got no equity in the company, I've got no interest to discuss off-take. You know, if they don't like that deal, they can go pound sand. When we go to the next stage of commercial discussions, it's always going to be the most optimal off-take discussion in the interest of the shareholders and their equity. Because as always, the executive of this company, we're the stewards of our shareholders' equity, so we have to get the best deal out of it. And it's always good to put some news in the market a few weeks prior to when we have to have the final discussion, so the off-take groups or smelter groups can sharpen their pencil.
So, the last time you and I spoke here, Gilbert, I think it was back mid-June. You had mentioned that meetings had begun with banks and potential project finance groups for that final investment decision for Cabacal. But with this new blister copper results, the smelter test results, does that meaningfully change those finance conversations much further down the road here?
It gives confidence to the lenders that there's going to be no problem to sell the product, which is always very key for any discussion. So we can say, 'Look...' You know, we looked at what we've done over the years; it's always about building the mine, getting production, creating a big deal company. This focus has never changed. So what we're able to do now is, look, we produce concentrate samples, we've actually produced concentrate samples, and we've sent them out to various groups to analyze, and they've replicated our own data.
And now we've got samples of the blister copper that we can then send out to various people, groups who are interested. And they can then say, 'Yeah, we confirm everything.' And the ability is that then allows us to have discussions with the off-take, the project finance groups, the plethora that are there today, that they know that we're quite advanced in that commercial obligation, which is so important. But when you look at the overall picture of commerciality, we go to project finance. The net free cash flow, which is going to come from selling these concentrates, is so significant, as outlined in the DFS and the PFS. And the resource tail that goes with that, which is the amount of resource remaining after you've paid off your project finance, Cabacal has just got such strong commercial fundamentals and resource fundamentals that negotiations can be made. And anyone who's in project finance can look at these basic criteria and say, 'Well, this is readily financeable.'
