EXPLORATION & DEVELOPMENT

Lundin's Vicuña moving into the spotlight

The Lundin Group has pitched the Vicuña copper district in Argentina as one of the world’s foremost undeveloped copper districts as it offers the rare blend of scale, deposit clusters and big geological faults.

Josemaria Resources' Josemaria in San Juan, Argentina

Josemaria Resources' Josemaria in San Juan, Argentina

The Group, which has ownership stakes in junior explorers Filo Mining (34%), Josemaria Resources (39%) and NGEx Minerals (35.7%), said the 400km2 region collectively hosts some 17 million tonnes of contained copper within the three juniors, including 13Mt in measured and indicated resource categories, with potential to keep growing.

The three juniors are exploring in the Andes a pronounced gap, now called Vicuña, between the Maricunga and El Indio Belts, a region which historically had few discoveries before the arrival of the Lundin Group companies. The Group says Vicuña is comparable in scale to other notable copper districts including Escondida, Chuquicamata and El Teniente in Chile, as well as Oyu Tolgoi in Mongolia and Tenke Fungurume in Democratic Republic of Congo.

"With each company focused on its assets there was no one responsible for promoting the overall district concept. The district is still there so this effort by the Lundin Group gives us the opportunity to zoom out and see the size and scale of the district that is worthy of interest," Wojtek Wodzicki, president and CEO of NGex Minerals told Mining Journal.

With copper exploration taking significant time and funding, following initial success at Los Helados in Chile, Lundin's strategy has been to spin out assets into separate vehicles to focus management and investor attention on specific areas, to limit dilution while advancing discoveries and seeking to generate shareholder value. This process saw NGEX Resources spin out the Filo del Sol deposit into Filo Mining in 2016 and the Josemaria deposit into Josemaria Resources in 2019, while NGex and its Los Helados deposit became NGex Minerals.

Each company now has sizeable mineral resources. Josemaria hosts reserves of 6.7Blb copper, 7Moz gold and 31Moz silver, Filo hosts an indicated resource of 3.1Blb copper, 4.4Moz gold and 147Moz silver, while Los Helados hosts an indicated resource of 17.6Blb copper, 10.1Moz gold and 92.5Moz silver.

"Each company is at a different stage of development and has its own goals. Lukas [Lundin, group patriarch] pushes each company hard," Adam Lundin, president and CEO of Josemaria Resources told Mining Journal.

While the analogue districts are in the hands of major mining companies, the Lundin Group highlights the fact that no major miner yet has a significant stake in any of the three juniors, nor is there the intention to fold any of them into the Lundin Group's copper company, Lundin Mining. "Lundin Mining has been great at buying assets and this is a district that any copper producer should be interested in," said Lundin.

Josemaria is set to be the first company into production with a construction decision pencilled in for mid-2022 pending the completion of fiscal stability agreements. The company has reached an agreement over how much revenue can be kept offshore and is working on other fiscal aspects. "Through decree 234 we can now keep 60% of revenue offshore rather than 20% before. The next stage is the 4.5% export tax. There is a precedent [to remove this to promote industrial growth] in the automotive sector. We would also like a direct agreement with the government of Argentina [to shield the company] from any temporary taxes that may pop up," said Lundin.

The Josemaria feasibility details an open pit operation feeding a conventional process plant at 152,000 tonnes per day over a 19 year mine life, with average annual metal production of 136,000 tonnes of copper, 231,000 ounces of gold and 1.2Moz of silver. In 2022, the company also plans to continue exploration of the Las Pailas area about halfway between the Filo-Los Helados trend and the Josemaria-Caserones trend, the two major structural elements in the district.

While Josemaria will be the first deposit in the district into production, Filo Mining grabbed the headlines earlier this year after reporting several kilometre long drill intercepts including hole 41, which returned an interval of 163m grading 2.31% copper, 2.07g/t gold and 183g/t silver within a broader interval of 858m grading 0.86% copper, 0.70g/t gold and 48.1g/t silver.

In addition to expanding the overall mineralisation footprint, 2022 will also see Filo follow-up on hole 41. "We are going to follow-up on 50m step outs from the high-grade zone to see how big it is," said Lundin.

While NGEx has been somewhat overshadowed over the past year or two by the progress of its siblings, the company raised C$25 million in November to continue exploration, including at the Valle Ancho target.

Shares in Josemaria Resources are trading at C$1.23,valuing the company at $468 million.

Shares in Filo Mining are trading at C$11.78,valuing the company at $1.3 billion.

Shares in NGex Minerals are trading at C$1.64,valuing the company at $256 million.

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