The Lundins focus on Chile is continuing today, this time with more news from portfolio company, NGEx Resources (NGQ:TSX).
“Chile’s biggest new copper-gold camp” is posted all over NGEx’s website and the company believes that they not only have large deposits (3 of them to be exact), but that they are sitting on an entire district down there.
NGEx holds the Los Helados (Chile), Josemaria (Argentina) and Filo del Sol (Chile/Argentina) projects which are each owned 60% by NGEx and 40% by Asian partners (Pan Pacific Copper and JOGMEC). Combined, they hold total resources of 28 billion pounds of copper and 19 million ounces of gold.
NGEx’s net interest in this district just increased as they announced they would be acquiring the remaining 40%-interest in the Filo del Sol project, which straddles the Argentine/Chilean border, from their project partner Pan Pacific Copper which gives them a 100% interest in the project.
This announcement comes just days after NGEx released the maiden PEA on their Los Helados project which was also the first economic study ever done on any of the company’s assets.
NGEx will pay a total cash consideration of $7 million which is payable in two installments: $3.5 million payable immediately and $3.5 million by the earlier of November 1, 2015 or upon completion of an administrative restructuring of certain exploration licenses.
This means Pan Pacific values Filo del Sol at $17.5 million on a 100% basis.
Pan Pacific originally got involved in both Los Helados and Filo del Sol in September 2012 when they were granted the JV interest from JOGMEC who was NGEx’s original partner on the projects.
Wojtek Wodzicki, President and CEO of NGEx stated: “We are pleased to increase our interest in Filo del Sol where we see excellent exploration potential. Today’s agreement allows us to explore the earlier stage Filo del Sol project, while focusing the work with our partner PPC on further developing the Los Helados project which is located closer to PPC’s newly commissioned Caserones Mine. The ownership of the Los Helados project will remain the same with NGEx holding a 60% interest and PPC holding a 40% interest.”
The company says it is planning an aggressive 6,000 metre drill program in early 2015 which will focus on step out drilling designed to extend and define the Filo del Sol mineralization.
A maiden mineral resource estimate is also planned on the project within the next few weeks.
As we noted in an article earlier this week, the Lundins (who control NGEx) have turned to Chile in a big way (read: The Lundins Look to Chile for Copper’s Next Run).
Lundin Mining is in the process of acquiring 80% of the Candelaria mining complex from Freeport-McMoRan for $1.8 billion which includes substantial local infrastructure including a desalination plant and power. This will turn Lundin Mining into one of the predominant copper producers in the area.
Although the earliest-stage of all of NGEx’s assets, Filo del Sol represents a focus of the company given its relatively higher copper grades along with significant gold and silver mineralization. It also represents the largest alteration zone in the area. 2014 drilling returned copper grades in excess of 5.80% over decent widths in a high-grade copper-gold-silver core of mineralization that is surrounded by lower-grade bulk tonnage material.
The company says Filo del Sol is geologically very similar to Pascua Lama and Veladero which are two of the largest mines in all of South America. With an imminent maiden resource estimate pending on Filo del Sol, this investment of $7 million for 40% could prove very profitable in the long run, especially in a rising copper price environment.
These assets are rare and will only become more desirable in the future as copper resources become depleted.
Shares closed at $1.50 per share, down $0.02 on 32,600 shares traded. The 52-week low is $1.26.
As of Q2/14, the company had $35 million in cash.
Note – Veladero was a Lundin Group discovery that they sold to Homestake (now Barrick) in 1999 for $300 million, representing over 1,000% return on their investment.
Disclosure: Author owns shares in NGEx. This is not investment advice. Always do your own due diligence.