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Filo Mining Corp. (TSXV:FIL) reported results from a PEA completed for its Filo del Sol project on the border between Argentina’s San Juan province and Chile’s Region III. From the details released, we consider the PEA to be positive, with reasonable assumptions and opportunities to improve project economics. We highlight that the PEA only includes the oxide portion of the 2016 mineral resource update and considers open pit mining followed by heap leach processing in order to produce copper cathode and gold-silver doré. Despite, low-grades, the combination of a low-strip ratio (0.96:1) and low-cost processing via heap leach, the project has pretty good economics, particularly when taking into account its 15 year mine-life. At metal prices of $3.00/lb Cu, $1,300/oz Au and $20.00/oz Ag, respectively, the project has an NPV8% of $705 million and an IRR of 23.3%. The company hopes to improve project economics with optimization work (both metallurgy and mining) and the addition of higher-grade ore via exploration. In our view, this is one of the few quality copper development projects out there, and with strong backing (shareholders, management and board), is likely to trade at a premium to peers. Near-term catalysts for the company include metallurgical testwork and a planned 10,000m infill and step out drilling program to expand and upgrade the current resource. read more
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