Well, joining us today is Gilbert Clark, the CEO of Meridian Mining, listed on the TSX with the ticker MNO. Also listed on the OTCQX and the Frankfurt Stock Exchange, a UK-based exploration and development company focused on becoming a mid-tier copper-gold producer in Brazil. Well, thank you very much for joining us today, Gilbert. How are you?
Oh, very well. Thanks for having me on the show today. Very pleased to be here.
Good. Well, it's good to be speaking to you. So, as I understand you, the company's only about five years old really. So, you probably, I think, you came in just perhaps during that whole exciting period we had in the early 2021. But just perhaps take us through, if you can, the high-level overview of the company, what you're all about.
Well, the company sort of was a small-cap junior exploring for manganese in Brazil, and it was part of a larger strategy, a private equity firm that I was associated with. And then in 2018 there was a change in management in the company, and I came in to do a restructure. So by 2020 we made this decision: look, we're going to focus on copper and gold. We did a very good restructure of the balance sheet, capital table, reset expectations, and then a month after, as part of this process, we got presented an investment opportunity called Cabacal in Mato Grosso in Brazil. And that was just—I looked at it and, sort of been in the industry 20-plus years, I just said, 'Geez, this looks unbelievable. How is this not being developed?' And we had in Brazil a team of mine builders, mine operators, engineers, environmental engineers, accounts, admin—this core of a mining company that I kept from the restructure. So I was able just to apply that to this project. And ever since then, we've just gone from strength to strength. We were drilling, we did the PEA, we did just recently the pre-feasibility study we published last year, and we launched straight into the DFS.
Excellent. Well, that's rapid progress then, isn't it? I mean, what was it initially? Before we talk about those PFS numbers, you said it was unbelievable. What was unbelievable about it?
Oh, look, it was—if you take a step back, what is today's mining industry? Today's mining industry is just an outcome of the oil and gas industry's investments in the 1970s and 1980s. And this was one of those projects they discovered, and then, okay, in 1991 Rio Tinto just shut it down because it was just—they acquired it as part of a global portfolio and they just shut it down. So it sat there undeveloped for 30 years. Just in the end, we acquired it out of a private company in Brazil. But you look, mining is all about expectation—balancing expectations with risk. And when I looked at this project, I had all of my geology outlined in front of me. I had all my mining attributes perfect. And in the eyes of the really dynamic mining authorities, environmental authorities in Brazil, it was a brownfields restart. So all these, you know, what do we want to achieve and what are the risks associated with achieving this have been mitigated. So for me, out of a private equity background and production background from Australia, this was just lay down the air. This is going to be a mine.
Excellent. Good, good, good. Well, let's just talk about that PFS, and that was March last year. So there's some nice numbers there, isn't there? You've got an NPV5 of $984 million US after tax, an IRR of 61.2%, initial capex of 248 million. So that's, you know, pretty modest really. So I mean, what was your reaction when you got that PFS through and looked at those metrics there?
In line with the expectations. Right. See, Brazil is a destination where the cost of building mines is very advantageous, and we have a deposit at Cabacal which has a geometry which enables us at the front end of the mining sequence to access high-grade gold and copper, which pays off the capex in 14 months in this base case, which today I think is—we use a $2,100 base case for gold and a $4.16 for copper. So think of that with $2,500 above spot for gold. So it was in line with our expectations that because of the geometry of the ore body, the topography—we're basically mining a hill—and the low-cost power, low-cost operational costs in Brazil, that we had this unbelievable opportunity to unlock wealth and really bring this to the public markets.
Good. Well, you could be in worse commodities at the moment. Copper and gold. Yeah, definitely. You could add silver in maybe, and that would also be a nice extra there. But yeah, what you've got isn't so bad. So, you've recently announced, I think it was only in the last week, you announced the expanded resources there at Cabacal. So, I wonder how that recent resource update perhaps would enhance, change the NPV, IRR, etc., and perhaps what the upside looks like now.
Well, of course, what we've done is—this is all part and parcel of the ongoing work stream of the definitive feasibility study due at the end of the year, or probably start of Q4 of this year. And what we looked at is, first of all, we could see that within the previous study there was opportunity within the ore body where we could connect up areas that for various reasons weren't kept connecting in the grade estimation process. So we infield drilled that, and at the same time we looked at the deposit and its expansions of copper, and we could see that we could actually improve this. So I think it will improve the economics. Certainly, the change—we went from, like I said, 2,100 gold, I think we're using 3,100 gold now, still very conservative, but the inputs of high metallurgical recoveries, which we also published, higher commodity prices within a defined permitted mining operation or future mining operation—I can see nothing but green sky coming from the future and when we report the definitive feasibility study.
Excellent. And of course you doubled the exploration portfolio as well. So your land package is well doubled effectively.
I think this is one of the most marvelous opportunities because our exploration land package—if you look back to the 1980s when this was first discovered, it was a giant exploration program by BP Minerals. They were the discoverer of the project, BP. And when we acquired Cabacal and we looked at the historical drill hole database, we said, this is going to draw a lot of attention to this area. What within the exploration portfolio of the 1980s is free to pick up? What can we apply now? Where can we secure the upside for our investors? So we went through, we picked all the ground we wanted, but still acquiring more ground. And today we've gone from—what, a month ago we had, well, a fortnight ago we had 40,000 hectares of exploration upside to now we've got over 100,000 hectares of exploration upside. And most importantly for a junior company, when you're doing greenfields exploration, that's ultra-high-risk venture capital. You've got to roll the dice. But what we're benefiting from is that historical investment. So we can actually see where the anomalies are. We can see what we can test. So that's a really—for our shareholders, that's a great value creation event that's already been, to some extent, partially de-risked.
Excellent indeed. So will this—the new land package presumably will be incorporated into the DFS work and progress that's going on. Is that—will that take most of this year?
