Filo’s longest copper cuts in Argentina boost takeover appeal

Filo Mining’s (TSX: FIL; OTC: FLMMF) “impressive” drill results showing the longest interval yet from its Filo del Sol project in Argentina’s high Andes could make the company a buy-out target, according to Haywood Securities.  

Vancouver-based Filo drilled two holes 275 metres apart into the Aurora zone at the site near the Chilean border about 1,300 km northwest of Buenos Aires and 140 km southeast of Copiapó, Chile.  

“Another set of impressive holes,” Haywood mining analyst Geordie Mark wrote on Friday in a note, which also lauded the project’s 2019 prefeasibility study and its further discovery potential. “We believe the resource base and grade potential of the system holds ample value to warrant M&A interest from larger scale operators.”  

Drill hole FSDH068A cut 1,776 metres grading 0.7% copper equivalent from a depth of 18 metres, Filo said in a news release on Thursday. The hole included 1,120 metres at 0.9% copper equivalent from 394 metres and 724.2 metres at 1.1% copper equivalent from 574 metres. 

Hole FSDH069A cut 1,296.5 metres grading 1% copper equivalent from a depth of 138 metres including 31 metres at 127 grams silver per tonne from 404 metres, 598 metres at 1.5% copper equivalent from 498 metres and 94 metres at 3% copper equivalent from 792 metres. 

“An almost 1.8-km intersection in hole 68A sets a new record at Filo del Sol for the longest interval to date,” Jamie Beck, Filo president and chief executive officer said in the release. “Even at those depths, we intersected discrete high-grade sections and will learn from this result as we target future drilling.”  

Filo plans to drill large and small step-outs to the north and south of the current Aurora zone, as well as resource definition drilling within it, Beck said. 

With the prefeasibility study as a guide, Haywood forecasts a US$1.5 billion open-pit mine could produce 175,000 oz. gold, 10.5 million oz. silver and 185 million lb. copper a year over 12 years. Average cash costs would be US$736 per oz. of gold equivalent with all-in sustaining costs of US$808 per oz. of gold equivalent, analyst Mark said.  

Construction of the mine and a conventional processing plant handling 22 million tonnes a year may start in 2026 and take two years, with life-of-mine sustaining capital costs of about US$225 million, Mark said.  

BMO Capital Markets noted the drill results increase the potential to expand the project.  

“Drilling further builds upon the ability to highlight continuity, delivers on long intervals of mineralization and details that additional opportunities could be available at depth,” mining analyst Rene Cartier said in a note on Friday. “Both holes were outside the current mineral resource pit shell.” 

The project, Filo’s primary asset, stretches across the border into Chile some 3,800 to 5,400 metres above sea level in the desert-like Andes where cold, snow and wind can hamper operations during the southern hemisphere’s winter months, Filo says.   

The Filo del Sol orebody has a complex geological history with zones of high-grade copper, gold and silver mineralization within a large envelope of more homogeneous, lower-grade mineralization, the company says.  

The high-sulphidation epithermal deposit is associated with one or more large porphyry copper-gold systems and includes structurally controlled and breccia-hosted gold, manto-style high-grade silver, copper and high-grade supergene enriched copper, according to Filo.