Cabaçal's High-Grade Surge: Meridian Mining Emerges as a South American VMS Leader

The Cabaçal project in Brazil's Mato Grosso region is rapidly evolving into a cornerstone of Meridian Mining's growth strategy, driven by a combination of exceptional drill results, advancing regulatory approvals, and a world-class Volcanogenic Massive Sulphide (VMS) deposit profile. Recent high-grade copper-gold intersections and the expansion of mineralized zones have strengthened the project's economics, while newly granted licenses and exploration progress further reduce execution risks. For investors seeking exposure to base-precious metal synergies in a politically stable jurisdiction, Meridian's Cabaçal project is now a compelling buy.

The Drill Results: High-Grade Intersections Transform DFS Modelling

Meridian's Q2 2025 drill program delivered standout results, with CD-654 intersecting a 9.9-meter zone grading 14.8 g/t AuEq, including a 0.46-meter segment at 276 g/t Au—one of the highest-grade gold veins encountered at Cabaçal to date. Such results are not merely anomalies; they reflect a broader pattern of stacked mineralization within the PFS pit shell. The Eastern Copper Zone (ECZ) and Central Copper Zone (CCZ) now show extended continuity, with CD-671 returning a 3.9-meter interval at 4.4 g/t AuEq down-dip of high-grade zones. These intersections directly feed into the Definitive Feasibility Study (DFS), boosting grade estimates and refining the resource base.

The significance lies in the AuEq grade distribution: the project's open-pit Measured and Indicated resources now total 51.43 million tonnes at 0.55 g/t Au and 0.40% Cu, with underground Inferred resources adding 0.96 million tonnes at 0.96 g/t Au. This grade diversity—where copper and gold synergies lower production costs—positions Cabaçal as a rare asset capable of thriving in both base and precious metals markets.

Regulatory Progress: Licenses Unlock Project Momentum

While drill results fuel optimism, regulatory approvals are the linchpin of execution. Meridian's submission of Environmental Impact Studies (EIA/RIMA) to Brazil's SEMA in late 2023 has advanced steadily, with public hearings completed and technical validation achieved. The Preliminary License (LP) is now anticipated shortly, a critical milestone that removes permitting risk and clears the path for construction.

The Alvorada target, part of the Cabaçal VMS belt, has also seen progress, with exploration licenses secured to advance drilling. This area, along with the Santa Helena deposit, adds 50 km of strike potential to the project's footprint. The ability to leverage existing infrastructure—such as roads and hydroelectric access—further reduces capital costs and timelines.

Exploration Upside: A VMS Hub with Multi-Target Potential

Cabaçal is not a standalone asset but the flagship of a regional VMS hub. Meridian's exploration program extends beyond the main pit to the Jaurú and Araputanga Greenstone belts, where copper-gold systems remain underexplored. The Santa Helena deposit, with its maiden resource estimate pending, could add significant scale.

The project's metallurgical studies, including mini-pilot plant testing in Canada, are another key differentiator. By refining recovery rates—copper flotation tests achieved up to 95% recovery—Meridian ensures that grades translate into profitable production. This precision reduces technical risk and strengthens the DFS's metallurgical assumptions.

Economic Metrics: High Margins, Rapid Payback

The Pre-Feasibility Study (PFS) underscores Cabaçal's financial resilience. With a base-case after-tax NPV5 of USD 984 million and a 61.2% IRR, the project's economics are robust even under conservative metal price assumptions. Under spot prices (February 2025), these metrics leap to USD 1.41 billion NPV5 and a 79.5% IRR, highlighting leverage to rising commodity markets.

Production profiles are equally compelling: an average of 141,000 AuEq ounces annually over 10.6 years, with the first five years yielding 178,000 ounces/year by prioritizing high-grade ore. The All-In-Sustaining-Cost (AISC) of USD 742/oz AuEq—among the lowest for copper-gold projects—ensures profitability even during price dips.

Investment Thesis: Buy on Reduced Risks and Metal Synergies

Cabaçal is now a low-risk, high-reward play for several reasons:
1. De-risked development: Regulatory approvals are on track, and DFS results validate the project's grade and resource assumptions.
2. Multi-metal leverage: Gold and copper prices are rising, with copper demand fueled by EV adoption and infrastructure spending.
3. Scalability: The 50 km VMS belt offers growth beyond the PFS pit, while Santa Helena and Alvorada add near-term exploration catalysts.

For investors, Meridian's stock represents a buy at current levels, especially as the DFS nears completion and licensing advances. The combination of high-margin production, diversified metal exposure, and regulatory clarity positions Cabaçal as a top-tier asset in South America's VMS space.

Final Analysis: A Premier VMS Deposit with Global Appeal

Meridian Mining's Cabaçal project is no longer just a promising exploration play—it is a fully validated, scalable operation with world-class economics. The recent drill results, regulatory progress, and multi-target exploration potential have solidified its standing as a premier VMS deposit. In a market hungry for high-grade, low-cost assets, Cabaçal checks all the boxes. Investors focused on base-precious metal synergies would be wise to take note.

Investment recommendation: Strong Buy with a price target of USD 8.00, reflecting the DFS's NPV5 and regional VMS upside.