Meridian Mining's Next Big Catalyst: Financing Cabaçal

0:18Trevor Hall: All right, welcome back in Mining Stock Daily as we continue our coverage here during the London Metals Exchange week in London and no trip to London would be complete without running around town hunting down Gilbert Clark of Meridian Mining. They do trade on the LSE and the TSX with the symbol MNO and on the OTCQX in the U.S. with MRRDF. This is our first update, Gilbert, since we kind of broke the news of that definitive feasibility study back launching the Beaver Creek Precious Metal Summit. It's well received that it was a catalyst for your stock and all things moving forward here with next steps for Cobasol.

0:59Trevor Hall: But as we kind of digest the last month of this information of the economics of Cobasol, give me a rundown how it's kind of been digested by everybody. And I'm sure your phone's been ringing off the hook. Hi, Trevor. Look, it's always good to catch up here and have a coffee in your hotel. Yeah, look, LME Week has been the response and the engagement by the traders and smelters here at LME Week, it's the same vibe, the same excitement that we received at Beaver Creek Conference, sorry, LME Week. So no, it's been really good. We have, as our shareholders and followers know, we've had a structured approach over the last three, four years to get to this point.

1:44Particularly in July when we put out the blister copper results. We're here, we're showing the blister copper to the incident parties. We give them the press release, the data. So with Cabo Sale, as we know, we're into that advancement on the civil works, and we hope to be into pre-construction next year, we are going to produce the world's best copper concentrate for blending. It is sensational, and that's what's the attraction at the moment.

2:10Trevor Hall: So you feel like you have a competitive advantage here? Absolutely. When copper is in a deficit, the demand is increasing. And when you have something that can be used to blend with inferior quality concentrates of a quantity that is of some importance, that really gives Meridian the upper hand in what the negotiations and how our shareholders are going to benefit from this. We're really talking about medium to long-term commercial agreements. You actually have your blister copper sample in your hand here, a beautiful specimen. So you actually have something tangible here. Not very many development stage companies have something tangible to show.

2:53Trevor Hall: But how significant is this physical blister copper piece in your hand right now? Well, I kind of put it on the table. I kind of just tap my fingers on it as we have these discussions. Because it is exactly what the smelters groups want. They want to be able to blend this, what the trading houses want to blend it. When I explained to them that, we could, in a smelter, we could probably get this blister copper above 99 % purity. It can go 2, 3 ounces of gold. It can go 10, 12 ounces of silver. The sulfur's clean. It is what you want in the industry today. Okay. So when you look back to the economics here for people who maybe have forgotten, Kaba Sol's feasibility study did come with an after-tax NPV of just over$2 billion and an IRR of 108%.

3:47Trevor Hall: That was a base case here. We take those economics here. And since then, obviously, it was well enjoyed by the market. Your stock was up, I think, 20%, 30 % on the day after that. It still hovers around those levels. What's been the hardest question you've had to ask here in the last 30 days? The hardest question posed to me?

4:15How soon can you get to cash flow?

4:17Trevor Hall: How soon can you get to cash flow? We'll be in dry ramp up by the end of 2028 with wet ramp up soon after. And we'll be generating free cash flow in 2029. And then, of course, we've now got to have offtake agreements settled. Debt discussions are well advanced. And now I think in the medium term, almost certainly next year, the executive and the board will sit down and start talking about dividend policy. This is what mining companies do and this is what they should do. And that's very much where we're going in the near term. You know, a lot of those institutions that provide financings don't really look at anything until a definitive feasibility study.

4:56Trevor Hall: How many doors have been opened in the last 30 days since you announced this report? Well, we actually, pre the report, we probably had canvassed over 30, 35 people and groups interested in the... We'd done an initial discussion. Since the DFS has been published, it's probably increased to 40. There are many additional smelter trading groups. And we've been selecting some subsequently closed off the offer date. One or two have dropped out. but overall the strength of the groups and the robustness of what they're proposing is meaning it's what you would love to see if you're i know an established mid-tier but an emerging producer like us to be offered these terms is a reflection very much of the ability for us to execute brazil the quality of the asset and the economics that it delivers okay i can't remember if you and i chatted about the potential makeup of what a financing deal looks like for cabosol But I have had a few of these conversations, really, and that would be the attractiveness of debt over equity right now, just based on the margins of these proposed margins of these studies and economics.

6:09Trevor Hall: And it almost seems like, you know, especially with Cabosol, the payoff is super, super quick at current levels. Is it what you're seeing right now? Is it something where from your seat is debt more attractive than dilutive equity? we will have a combination a combination of debt or equity

6:31what we have to look at you've got the project finance you have a cost overrun facility which you may or may not draw working capital needs and we really want to start arcing up lifting that expenditure for exploration and at the moment the market's in a little bit of a dip we're seeing some buying coming back into the stock which is of course what we expected I'm not too concerned about how we're going to structure the finance because fundamentally at the end of the day the structure of the project finance has to be in the interest of the shareholders so it may not be the cheapest it certainly won't be the most expensive but we want to make sure that we get the right partner

7:12Trevor Hall: On the side of Cabasol you also have Santolina what's the latest going on there while you continue to move forward with the Cabo Sal decisions? We've got a couple of rigs down there drilling at the moment. It's gone quite handy. We've got some scout exploration works going on at Espigone, so we're pretty happy about that. Really, when you think about it, the last five years we're averaging less than a million Canadians in exploration. We'll focus on Cabo Sal. And essentially there's a lot of criticism. and I saw people saying, expiration, expiration. Exploration doesn't give you an MPV of$2 billion.

7:51That's complete nonsense. It's risk. So what we're doing now is ensuring that as we spend the money, we do it methodically so we don't waste and take too much risk in exploration. So a lot of ground mapping, geophysics, structural drilling is always important. We have to understand the subsurface. And then next year, the year after, I can see a double, a treble in expenditure and expiration.

8:17Trevor Hall: One development that's kind of peaked itself, you know, outside of Cabo Sal, obviously, is the political makeup of Brazil right now with the preliminary election results coming in. It sounds like we've got a final election vote coming up in the next couple of weeks. Bolsonaro obviously has made lead way there, and Brazil seems to be back on the table as a great place to allocate capital based on those results. What are you seeing from the political makeup of Brazil and potential to shift, and how does that implicate a project such as CaboSol and a company like Meridian? Look, both the candidates are bipartisan on their interest in mining.

8:58It's part of the economy. Lulu is a preference not to go bulldoze the Amazon jungle. Fair enough, that's what the electorate votes for. For us in Matagrosu, which has been fantastic, the governor got passed on the first tour, so that's great. And the senator, the senator we know quite well, he got elected. So where we are in Matagrosu, our relationship's not only the small communities 20 kilometres away from us or the capital, We have exceptional relationships, so for us it's not going to impact it. However, for some of our emerging market funds and speciality funds, this is really interesting for them because you're going to see a lot of interest come into Brazil, a lot of interest in copper gold, so where do you go for that emerging equity multiple?

9:46It's Meridian mining.

9:48Trevor Hall: What are we going to see here next here, Gilbert? What other news is kind of on the horizon for Meridian? Of course, we've got the publication of the Definition Feasibility Study. It's due here pretty soon, eh? Yeah, within 45 days. We've also got what we hope to announce where we've got to in the project finance, exploration updates from Cabasal and Espigón, all of these things. One of the things we've said to all the project finances is as we go through the build, we're not stopping exploration. Sometimes they'll say you've got to stop. Now, we've got the preeminent copper gold VMS portfolio for South America.

10:26We've got one of the significant VMS deposits in South America coming into production in the near term. So you're going to see execution of the construction, dry ramp up, wet ramp up, declaration of production, at the same time, expiration, discovery, resource definition, delineation.

10:46Trevor Hall: Does a financing decision provide ample capital to continue exploration? Will there be some padding in there? Absolutely. We will have a fully funded package, and we want to ensure that we've got the cash on hand as a buffer for anything for the Cabo Salboros to continue and expand that exploration activity. What would exploration budget look like out of that package? Oh look I'd like next year to be somewhere around 15 million USD in exploration. That would be a good target for us and maybe in 2028 we might do 20. When we get into cash flow we could be doing 30 million USD a year. We've got the extent of this exploration portfolio.

11:29If we were in Canada, the US, Australia, you'd have 60 companies on these belts and it's all within one company. So currently that exploration value is not factored into our valuation. We'll retwin another Cabasol deposit. Well, it's going to be an interesting ride.

11:49Trevor Hall: All right, we'll leave it at that. Gilbert, we'll see you, talk to you again here in the next couple of weeks and months throughout the rest of 2026. And then obviously 2027 is going to be a huge year for the company as it seems Cabasol gets off the ground here. But info at Meridian Mining. Always email me. check because you go straight to them always email me always respond to these inquiries just they've got shareholders stakeholders so we're just there to you know we are as i've always said we're a steward of other people's interest and we are very concerned that we execute as we deliver as we have in the past we're now focused on delivering in the future and the growth of the company all right gilbert thanks have a great rest of your week thanks thanks joe the information presented should not be considered investment advice.

12:35Trevor Hall: Mining Stock Daily Yents affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.