The Company had another milestone year in 2018, which centered on the support and undertaking of a pre-feasibility study ("PFS") at the Filo del Sol Project (the "Project") managed by Ausenco Engineering Canada Inc. The PFS was completed shortly after year end, with an effective date of January 13, 2019, and the results support the Company's ongoing assertions that the Filo del Sol Project holds considerable size, robust economics, and even further upside potential, particularly when considering that the PFS only incorporates the oxide portion of the current mineral resource, excludes any impact of the sulphide material beneath, and is based on exploration of less than 20% of the Project's vast area.
Highlights of the PFS include:
a US$ 1.28 billion after-tax NPV using an 8% discount rate and an IRR of 23% at US$ 3.00/lb copper, US$ 1,300/oz gold and US$ 20/oz silver;
average annual production of approximately 67,000 tonnes of copper (including copper as copper precipitate), 159,000 ounces of gold, and 8,653,000 ounces of silver at a C1 cost of $1.23/lb CuEq.;
pre-production capital cost of US$ 1.27 billion (excluding costs prior to a construction decision);
14 year mine life (including pre-stripping) producing almost 1.75 billion pounds of copper as cathode, and 1.92 million ounces of gold and 104 million ounces of silver as doré over the 13 year leach feed schedule. Additional copper is also recovered as a high-grade copper precipitate; and
a low strip ratio of 1.5:1 (waste:ore).
The PFS also introduced an initial Mineral Reserve estimate for the Filo del Sol project, which, at a 0.01 US$/tonne Net Value per Tonne ("NVPT") cut-off, is as follows:
Total Proven and
Notes to accompany Filo del Sol Mineral Reserves table:
Mineral Reserves have an effective date of 13 January 2019. The Qualified Person for the estimate is Mr. Jay Melnyk, P.Eng. of AGP Mining Consultants, Inc.
The Mineral Reserves were estimated in accordance with the CIM Definition Standards for Mineral Resources and Reserves;
The Mineral Reserves are supported by a mine plan, based on a pit design, guided by a Lerchs Grossmann (LG) pit shell. Inputs to that process are:
Metal prices of Cu $3.00/lb, Ag $20/oz, Au $1300/oz;
Mining cost of $2.00/t;
An average processing cost of $9.73/t;
General and administration cost of $2.02/t processed;
Pit slope angles varying from 29 to 45 degrees, inclusive of geotechnical berms and ramp allowances;
Process recoveries were based on rocktype. The average recoveries applied were 83% for Cu, 73% for Au and 80% for Ag, which exclude the adjustments for operational efficiency and copper recovered as precipitate which were included in the financial evaluation;
Dilution and Mining Loss adjustments were applied at ore/waste contacts using a mixing zone approach. The volumes of dilution gain and ore loss were equal, resulting reductions in grades of 1.0%, 1.3% and 1.0% for Cu, Au and Ag respectively;
Ore/Waste delineation was based on a Net Value Per Tonne (NVPT) breakeven cut-off considering metal prices, recoveries, royalties, process and G&A costs as per LG shell parameters stated above;
The life-of-mine (LOM) stripping ratio in tonnes is 1.52:1;
All figures are rounded to reflect the relative accuracy of the estimate. Totals may not sum due to rounding as required by reporting guidelines.
Due to the timing of completion of the PFS in January 2019 relative to the start of the Project's 2018/2019 field season in October 2018, the Company's design of the current field program was double pronged: begin addressing certain anticipated informational requirements for a future feasibility study, such as hydrogeological testwork and ongoing environmental assessments, and secondly, test the extensive exploration potential of the Project. With respect to the latter, the Company began drilling in November 2018, with a focus on drilling deeper diamond core holes to test the prospectivity of a potential copper porphyry system below the current resource. Assay results of the first two holes completed were released on March 18, 2019, and confirm the existence of significant porphyry copper-gold mineralization beneath the current Mineral Resource to depths of over 1,000 metres. The holes, which both end in mineralization and are open to depth and laterally, are summarized in the table below:
Remarking on the year, Adam Lundin, President and CEO, commented, "The Company set an ambitious plan for the advancement of the Filo del Sol Project in 2018, and we are proud to present the completed PFS as a result. The PFS improves upon previous project economics and continues to showcase the project's remarkable potential. What's more, our current exploration program has recently yielded some exciting results, which confirm the presence of significant porphyry copper-gold mineralization beneath the oxide resource and the Company's long-time speculation that the oxide material on which the PFS is based is only the tip of the iceberg at the project. The Company is looking forward to another exciting year as we continue to build shareholder value at Filo Mining."
The Company is now analyzing the results and recommendations arising from the PFS to assess its next steps with respect to advancing the project, which may include the undertaking of a feasibility-level study, as appropriate. That being said, the Company also remains cognisant of the fact that all studies and economic analyses completed to date on the Filo del Sol Project incorporate only the oxide portion of the current resource. With a largely undefined sulphide resource underlying the oxide material, as well as the Company's considerable land package, of which less than 20% has been explored to date, the Company elected to simultaneously dedicate some resources to test the exploration potential at the Filo del Sol Project during the 2018/2019 field season currently underway.
Accordingly, diamond core drilling began at the Filo del Sol Project in November 2018, with a focus on evaluating the sulphide mineralization, which sits below the oxide layers of the current deposit. The first batch of assay results related to the first two holes of this drill campaign were received and released on March 18, 2018, and confirm the existence of a much larger copper-gold porphyry system underlying the current Mineral Resource as incorporated into the PFS. The first two holes, which end in mineralization, are highlighted respectively by 1,025 metres at 0.30% copper, 0.22 g/t gold, and 1.6 g/t silver, and 613.9 metres 0.39% copper, 0.34 g/t gold, and 1.6 g/t silver.
Assays are in progress for a third completed hole, and diamond drilling continues at the Filo del Sol Project with four additional diamond holes as part of the 2018/2019 field campaign, scheduled for completion by the end of March 2019. Additional assays will be released as they become available.
(In thousands of Canadian dollars, except per share amounts)
Three months ended
Exploration and project investigation
General and administration ("G&A")
Basic and diluted loss per share
The financial information in this table were selected from the Company's consolidated financial statements for the year ended December 31, 2018 (the "Financial Statements"), which are available on SEDAR at www.sedar.com and the Company's website www.filo-mining.com.
SELECTED FINANCIAL INFORMATION
(In thousands of Canadian dollars)
Working capital (deficit)
The financial information in this table were selected from the Financial Statements, which are available on SEDAR at www.sedar.com and the Company's website www.filo-mining.com.
The Company incurred a net loss of $28.9 million during the year ended December 31, 2018, comprised of $24.1 million and $5.0 million in exploration and project investigation costs and G&A costs, respectively, compared to a net loss of $18.7 million for the year ended December 31, 2017. The variance is primarily due to relative nature and levels of exploration activity undertaken during the respective periods. Specifically, the larger net loss incurred during 2018 is due to the higher costs associated with the undertaking of a PFS study on the Filo del Sol Project during the period, which is a more advanced, detailed and costly study as compared to the preliminary economic assessment that was in progress during 2017.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2018, the Company had cash of $2.4 million and a net working capital deficit of $0.6 million, which includes $2.2 million drawn and outstanding against a short-term credit facility (the "Initial Facility"), compared to cash of $2.4 million and net working capital of $1.5 million, as at December 31, 2017.
Despite having raised net proceeds totaling $24.4 million during 2018 from tandem equity offerings, as at December 31, 2018, this cash inflow has been more than offset by funds directed towards advancing the Filo del Sol Project through the PFS as highlighted above, funding of the current 2018/2019 field program which began in October 2018, and to a lesser extent, $0.5 million spent in relation to the annual option payment made for the Tamberias property in June 2018 and funds spent for general corporate purposes.
On January 12, 2019, the Company obtained an unsecured US$ 5.0 million credit facility (the "Replacement Facility"), which replaced the Initial Facility, and into which any outstanding balance owed by the Company under the Initial Facility was transferred. In addition, on February 28, 2019, the Company obtained an additional unsecured US$ 5.0 million short-term credit facility (the "Additional Facility"). As a result, the Company has secured access to a total of US$ 10.0 million in funds, which will provide the Company with financial flexibility to fund ongoing activities at the Filo del Sol Project and for general corporate purposes. Nonetheless, the Company continues to evaluate potential additional sources of financing. Historically, capital requirements have been primarily funded through equity financing, joint ventures, disposition of mineral properties and investments, and the use of short-term credit facilities. Management is confident that additional sources of funding will be secured to fund planned expenditures for at least twelve months from December 31, 2018.
ABOUT FILO MINING
Filo Mining is a Canadian mineral exploration company which holds a 100% interest in the Filo del Sol Project on the border of Argentina's San Juan Province and Chile's adjacent Region III. Filo del Sol is located between the prolific Maricunga and El Indio Gold Belts, two major mineralized trends that contain such deposits as Caspiche, La Coipa, Veladero, and El Indio. The region is mining-friendly and hosts a number of large-scale mining operations. The project area is covered under the Mining Integration and Complementation Treaty between Chile and Argentina, which provides the framework for the development of cross border mining projects. Built on a foundation of experienced management and focused on advancing exploration projects in Chile and Argentina, Filo Mining is well positioned to build shareholder value through discovery and resource development.
The scientific and technical disclosure for the Filo del Sol Project included in this news release have been reviewed and approved by Bob Carmichael, P. Eng. (BC) and/or James Beck, B.A.Sc., P.Eng. Mr. Carmichael is Filo Mining's Vice-President of Exploration and a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI43-101"). Mr. Beck is Filo Mining's Vice-President of Corporate Development and Projects and is also a Qualified Person under NI43-101.
The technical information relating to the PFS is based on a technical report titled "NI 43-101 Technical Report, Pre-feasibility Study for the Filo del Sol Project" dated February 22, 2019, with an effective date of January 13, 2019 (the "Technical Report"). The Technical Report was prepared for Filo Mining by Ausenco Engineering Canada Inc. ("Ausenco"). The Qualified Persons, as defined under NI 43-101, responsible for the Technical Report are Scott Elfen, P.E., Ausenco, Robin Kalanchey, P.Eng., Ausenco, Bruno Borntraeger, P.Eng., Knight Piesold Ltd., Fionnuala Devine, P.Geo., Merlin Geosciences Inc., Ian Stillwell, BGC Engineering Inc., Neil Winkelmann, FAusIMM, SRK Consulting (Canada) Inc., James N. Gray, P.Geo., Advantage Geoservices Limited, and Jay Melnyk, P.Eng., AGP Mining Consultants, all of whom are independent of Filo Mining. The Technical Report is available for review under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.filo-mining.com.
The Company's consolidated financial statements for the year ended December 31, 2018 and related management's discussion and analysis are available on the Company's website at www.filo-mining.com or under its profile on SEDAR at www.sedar.com.
Filo Mining is listed on the TSX-V and Nasdaq First North Exchange under the trading symbol "FIL". Pareto Securities AB is the Company's Certified Adviser on Nasdaq First North.
This information was submitted by Filo Mining Corp. for publication, through the agency of the contact person set out below, on March 19, 2019 at 4:30 p.m. Pacific time.
On behalf of the board of directors of Filo Mining,
Certain statements made and information contained herein in this press release constitutes "forward-looking information" and forward-looking statements" within the meaning of applicable securities legislation (collectively, "forward-looking information") concerning the business, operations, financial performance and condition of Filo Mining. The forward-looking information contained in this press release is based on information available to the Company as of the date of this press release. Except as required under applicable securities legislation, the Company does not intend, and does not assume any obligation, to update this forward-looking information. Generally, any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance, (often, but not always, identified by words or phrases such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "projects" , "estimates", "budgets", "scheduled", "forecasts", "assumes", "intends", "strategy", "goals", "objectives", "potential", "possible", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events, conditions or results "will", "may", "could", "would", "should", "might" or "will be taken", "will occur" or "will be achieved" or the negative connotations thereof and similar expressions) are not statements of historical fact and may be forward-looking statements.
All statements other than statements of historical fact may be forward-looking statements. Forward-looking information is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding mineral reserve and resource estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, unanticipated resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment, timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental impact on operations as well as other risks, and uncertainties and other factors, including, without limitation, those referred to in the "Risks and Uncertainties" section of the Company's most recent MD&A and/or Annual Information Form, under the heading "Risks Factors", and elsewhere, which may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information.
The Company believes that the expectations reflected in the forward-looking information included in this press release are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon. Information contained in this press release is as of the date of this press release. In particular, this press release contains forward-looking information pertaining to the assumptions used in the PFS for the Filo del Sol project, the assumptions used in the mineral reserves and resources estimates for the Filo del Sol project, including, but not limited to, geological interpretation, grades, metal price assumptions, metallurgical and mining recovery rates, geotechnical and hydrogeological conditions, as applicable; ability to develop infrastructure; assumptions made in the interpretation of drill results, geology, grade and continuity of mineral deposits; expectations regarding access and demand for equipment, skilled labour and services needed for exploration and development of mineral properties; and that activities will not be adversely disrupted or impeded by exploration, development, operating, regulatory, political, community, economic and/or environmental risks. In addition, this press release contains forward-looking information pertaining to the undertaking of and timing for the completion of a Feasibility Study or a feasibility-level study; potential results of further metallurgical testwork; ability to secure additional financing and/or the quantum and terms thereof; exploration and development plans and expenditures; the timing and nature of studies and any potential development scenarios; opportunities to improve project economics; the success of future exploration activities; potential for resource expansion; potential for the discovery of new mineral deposits; ability to build shareholder value; expectations with regard to adding to mineral reserves or resources through exploration; expectations with respect to the conversion of inferred resources to an indicated resources classification; ability to execute planned work programs; estimation of commodity prices, mineral reserves and resources, costs, and permitting time lines; ability to obtain surface rights and property interests; currency exchange rate fluctuations; requirements for additional capital; government regulation of mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on insurance coverage; and other risks and uncertainties.
Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that the current price of and demand for commodities will be sustained or will improve, the supply of commodities will remain stable, that the general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed on reasonable terms and that the Company will not experience any material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove to be accurate, as the Company's actual results and future events could differ materially from those anticipated in such statements, as a result of the factors discussed in the "Risk and Uncertainties" section of the Company's most recent management's discussion and analysis and elsewhere and in the "Risk Factors" section in the Company's most recent Annual Information Form, which are available under the Company's profile on SEDAR at www.sedar.com. All of the forward-looking information contained in this document is qualified by these cautionary statements. Readers are cautioned not to place undue reliance on forward-looking information due to the inherent uncertainty thereof.
Statements relating to "mineral resources" are deemed to be forward looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the mineral resources described can be profitably produced in the future.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
SOURCE Filo Mining Corp.
For further information: Michelle Fyfe, Investor Relations at +1 604 689-7842.