Freehill Mining (ASX: FHS) has achieved a fourfold expansion to magnetite resources at its flagship Yerbas Buenas project in Chile with grade increasing as well as tonnage – boosting the company’s confidence in creating a low-cost, near-term magnetite operation.
Resource drilling at the YB6 structure within the project’s Arenas XI concession has resulted in an inferred resource of 49 million tonnes at 20.4% iron. This adds to the indicated and inferred YB1 resource of 18Mt at 15.1% iron.
All-up, resources for Yerbas Buenas now total 67Mt at 19.1% iron.
Freehill chief executive officer Peter Hinner described the updated resources as “superior” in terms of grade and scale.
“It should also not be lost on shareholders that the mineral resource estimate is based on drilling of only two of the seven structures identified by geophysics across the project,” Mr Hinner noted.
He added there was “massive upside” to the resource potential at the project but the company would currently direct funds towards a feasibility study into developing a mining operation, with current resources enough to underpin sufficient initial commercial mine life.
Mr Hinner also pointed out the mineral resource would assist with securing binding agreements with potential offtake parties.
Davis Tube test work
Davis Tube Recovery test work on YB6 ore has resulted in concentrate grades exceeding 70% iron with “ultra-low” impurities.
According to Freehill, the test work suggests YB6 is capable of producing a “premium high-quality” pellet feed grading 67-69% iron, with low impurities, over many years.
Fast-tracking Yerbas Buenas
Mr Hinner said the company was now focused on “immediately advancing the feasibility study” for Yerbas Buenas.
The company anticipates it can develop the resource into an operating mine in a “relatively short period of time” due to the project’s proximity to major ports, highways and a large city only 30km away with requisite support facilities including a skilled workforce.
Freehill pointed out it already had mining experience after trial mining was carried out at YB1 between 2017 and 2019.
The trial operation included a demonstration production plant with magnetite concentrates shipped to Chile’s largest iron ore miner and pellet producer Compania Minera De Pacifico S.A Romeral pellet feed plant over a three-year period.
Freehill anticipates Compania Minera De Pacifico may be a potential formal offtake party in the future, but has firmed up other options including exporting product out of nearby ports Coquimbo, Guyacan and Cruz Grande.
El Dorado acquisition
In addition to advancing Yerbas Buenas, Freehill is in the process of acquiring the El Dorado tenements which encompass 750 hectares of ground adjacent to Yerbas Buenas’ northern boundary.
Similar to Yerbas Buenas, the new tenements are believed prospective for iron, copper and gold.
Recent reconnaissance sampling has returned peak grades of 45% iron, 4.85% copper and 22.8 grams per tonne gold.
Once the acquisition has been completed, it is expected Freehill’s footprint in the region will grow to 1,250ha.
“Freehill has multiple near-term future value catalysts beyond today’s very promising development,” Mr Hinner noted.