Lundin backs Filo del Sol project in Argentina by joining $75m placement

Site of the Filo del Sol copper-gold project on the border of Argentina and Chile. Filo Mining photo

Filo Mining (TSX: FIL; NASDAQ) is making a non-brokered private placement of approximately 4.7 million common shares at a price of C$21.10 per share for gross proceeds of C$100 million ($75m). The net proceeds will be used for exploration and development at the Filo del Sol project copper-gold project in San Juan region, Argentina, and Region III in Chile.

The Lundin Family Trusts will subscribe for up to C$70 million of the shares, and the BHP Group will subscribe for up to C$30 million. Considered a “related party transaction,” the arrangement is exempt from the formal valuation and minority shareholder approval. Closing is subject to the approval of the Toronto Stock Exchange.

Filo has outlined an 18-km2 alteration zone at the project with near-surface of high-grade copper, gold, and silver. Oxide resources in the indicated category are 362.2 million tonnes grading 0.34% copper and 0.33 g/t gold, plus 132.7 million tonnes at 0.25% copper and 0.30 g/t gold in the inferred category. Using a cut-off of 0.30% copper, the sulphide resources are 70.4 million tonnes at 0.31% copper and 0.35 g/t gold in the indicated category, plus 78.9 million tonnes at 0.31% copper and 0.33 g/t gold in the inferred portion.

A prefeasibility study done earlier this year for Filo del Sol gave the project an after-tax net present value (8% discount) of $1.31 billion and an internal rate of return of 20%. The figures were calculated using metal prices of $3.65/lb copper, $1,700/oz. gold, and $21/oz. silver. Average annual production would be 145.5 million lb. of copper, 168,000 oz. of gold and 9.3 million oz. of silver.

A pre-production capital cost of $1.8 billion, excluding costs prior to a construction decision, will create a project with a mine life of 13 years (including pre-stripping). The investment would be paid back in 3.4 years.