Magnetite explorer Freehill Mining (ASX: FHS) has reported a “transformational quarter” for the three months to June, highlighted by a fourfold increase in the total resource at its flagship Yerbas Buenas project in Chile.
Completion of a JORC mineral resource estimate last month at the YB6 magnetite structure in the recently-acquired Arenas XI concession to the project’s south was recorded as 49 million tonnes grading 20.4% iron.
The estimate increased the project’s total resource to over 67 million tonnes averaging 19.1% iron and 24.2% mass recovery.
The increase has been considered a material expansion in terms of grade and tonnage on an estimate of 18.4 million tonnes at 15.1% iron (inferred plus indicated) reported for the nearby YB1 structure 12 months ago.
YB1 represents one of the smaller geophysical footprints within the Yerbas Buenas area and was initially selected over the remaining six structures as it contains a trial mining pit and was drilled as the company’s maiden resource in 2019.
Chief executive officer Peter Hinner said the project could be developed into an operating mine in a relatively short period of time, given its proximity to major ports and infrastructure.
“We believe Yerbas Buenas has a very long way to go in terms of potential resource expansion however the fourfold increase achieved this quarter has given us the scale to confidently push forward with a feasibility study and onto commercial start-up of our first stage mining operation,” he said.
El Dorado acquisition
The resource expansion at Yerbas Buenas was supported by a strategic move to acquire the highly prospective and contiguous El Dorado tenements, which adjoin the northern boundary of Yerbas Buenas.
In June, Freehill’s wholly-owned subsidiary San Patricio Mineria SpA signed a binding agreement with local vendor Minera El Dorado SCM to acquire the tenements, spread over 750 hectares of highly-prospective exploration acreage.
As part of the due diligence process, Freehill’s geological personnel have carried out preliminary surface sampling on the southern portion of the El Dorado tenements, focusing on artisanal mining areas which have demonstrated encouraging gold mineralisation at surface.
Results of that program included multiple iron samples grading more than 45%, as well as gold grades up to 22.8 gram per tonne and 4.85% copper.
Additional detailed surface sampling is scheduled to be carried out as soon as the transfer of the concessions is completed.
Once the acquisition is finalised, it is expected El Dorado will grow Freehill’s landholding in the region to 1,250ha, providing the company with a significant footprint in Chile’s premier iron ore-copper-gold address.
During the quarter, Freehill’s financial position was strengthened through $665,000 of debt conversion; $281,000 in proceeds from the exercise of options; and a $700,000 share placement to sophisticated investor Gavin Ross.
Mr Hinner said the capital raisings have placed Freehill in the strongest financial position in its history and positioned it to execute on future development plans.
“Until such time as we are achieving operating revenues, it is incumbent on the board to be continually seeking appropriate sources of capital to enable the creation of value for all shareholders,” he said.
“The board is grateful for the support and implicit validation it has received from the financial backing provided to the company.”