The Company completed two key programs during the third quarter of 2017: an update to the Mineral Resource estimate for the Filo del Sol Project and completion of the second phase of metallurgical testwork. Filo Mining incorporated the results of these two programs into an internal concept study of development options for the Project, which ultimately supported the undertaking of a formal preliminary economic assessment (“PEA”) on the Project. Details on these various third quarter developments are provided below.
Update to Mineral Resource Estimate (see news release dated August 21, 2017)
Following the successful completion of an 8,616 metre drill program in March 2017, the Company reported a significant increase to the Filo del Sol Project’s Mineral Resource estimate. With an effective date of July 1, 2017, the overall Mineral Resource was increased by 61% to 373 million tonnes Indicated, plus 239 million tonnes Inferred, containing 2.8 billion pounds of copper, 4.0 million ounces of gold and 109.9 million ounces of silver in the Indicated category, and 1.4 billion pounds of copper, 2.5 million ounces of gold and 60.0 million ounces of silver in the Inferred category.
With respect to the conversion of Inferred material to the Indicated category, the Company achieved a conversion ratio of 98%, resulting in 61% of the updated Mineral Resource falling within the Indicated category, matching the overall increase to the Mineral Resource itself. Most of the increase in the Mineral Resource comes from the Tamberias zone, which is included in the Mineral Resource estimate for the first time. Tamberias is located 1 kilometer south and is contiguous with the main Filo deposit. In addition, drilling this past season has greatly expanded both the size and grade of the oxide gold mineralization in the Filo deposit to the point where it is now significant enough to report on its own.
More importantly, based on metallurgical testwork completed to date, the Mineral Resource has now been divided into four distinct zones based on metallurgical characteristics, around which process designs have taken place within the scope of the PEA. The uppermost strata is a gold oxide (AuOx) zone, followed by a copper-gold oxide (CuAuOx) zone, both of which may be amenable to heap leach processing. The third layer is a silver (Ag) zone, and lastly, there is an underlying copper-gold sulphide zone.
Details of the updated Mineral Resource estimate are summarized in the following table:
||0.20 g/t Au
||0.15 % CuEq
||20 g/t Ag
||0.30 % CuEq
Completion of Second Phase of Metallurgical Testwork (see news release dated September 25, 2017)
Subsequent to positive bottle roll leach results from late 2016, a comprehensive second phase metallurgical testwork program was conducted throughout 2017 by SGS Canada Inc. in Lakefiled, Ontario on behalf of the Company, which was completed during the third quarter of 2017.
The program focused on the testing of gold oxide and copper-gold oxide material collected from the main Filo deposit during the 2016/2017 exploration season under column leaching conditions, as well as material gathered from the silver zone. Testing was conducted separately for each of these three types of mineralization, and highlights are as follows:
Gold Oxide Zone:
||Two cyanide column leach tests on material crushed to 1.5” and ¾”
||- Gold: 92.8%
- Silver: 69.8%
||- No significant impacts from varying crush size
- Rapid leach kinetics, with over 90% gold recovery within first 15 days
||Seven coarse bottle roll tests (minus 10 mesh) averaged:
- Gold: 92.8%
- Silver: 39.0%
Copper-Gold Oxide Zone:
||Two sequential column leach tests on material crushed to 1.5” and ¾”
||- Copper: 81.9%
- Gold: 86.7%
- Silver: 70.8%
||- Copper leaching required minimal sulfuric acid; copper in test material often water soluble
- Rapid leach kinetics, with over 80% copper recovery within first 15 days of acid leaching, and over 80% gold recovery within first 15 days of cyanide leaching
|Variability Testing Results
||Five sequential coarse bottle roll tests (minus 10 mesh) averaged:
- Copper: 92.2%
- Gold: 88.2%
- Silver: 59.9%
||- Sequential bottle roll test1 (minus 10 mesh)
||- Copper: 60.8%
- Gold: 63.5%
- Silver: 72.8%
1 Silver zone material for metallurgical testing was collected from reverse circulation drill cuttings, which were not coarse enough for column testing, and for which only sequential bottle roll testing could be performed.
Undertaking of PEA (see news release dated September 19, 2017)
Supported by the positive milestones achieved during the quarter, as discussed in the preceding sections, the Company commissioned the undertaking of a formal, independent PEA of the Filo del Sol Project. The Company hired SRK Consulting (Canada) Inc. to lead the PEA, which is based on the updated Mineral Resource estimate and contemplates open-pit mining and heap leach processing of the oxide portions of the Resource. The PEA is now substantially completed, and the Company expects to release the results of this independent assessment shortly.
Guided by an experienced board of directors and management team, Filo Mining is focused on advancing the Filo del Sol Project. The Company has now substantially completed a PEA on this flagship asset, and the results of this independent assessment will be released shortly.
In addition, the Company has recently begun its next work program for the 2017/2018 field season at the Filo del Sol Project, which coincides with the South American summer. This program, as currently designed, will collect the data anticipated to be required to support the undertaking of a Pre-Feasibility Study (“PFS”) for completion by as early as the end of 2018, should it be decided that such a study be undertaken. The current design of the field work program includes reverse circulation and diamond drilling for resource conversion, metallurgical sample collection and geotechnical information, as well as infrastructure site investigations and ongoing metallurgical and environmental studies. The actual undertaking of a PFS, and the nature and amount of data that would be collected during the 2017/2018 field season to support a PFS, if undertaken, is contingent upon the analysis of, and the recommendations arising from, the PEA.