Overview: Freehill Mining Ltd (“Freehill Mining”, “the Company”) is an Australian minerals company focused on iron ore mining in Chile. The Company’s primary asset is the Yerbas Buenas Project situated 30 kilometres north of La Serena in the Coquimbo region, Chile. The Company has conducted pilot-scale iron ore mining operations since 2014 supported by an offtake agreement with Compania Del Pacifico S.A. (“CAP”), Chile’s largest iron ore producer. Since we initiated coverage in October 2017 at $0.095, Freehill has expanded its trial operations, appointed new key personnel, and achieved record revenues in January 2018.
Catalysts: Freehill Mining has made substantial progress at fine-tuning its trial operations at Yerbas Buenas, resulting in increased revenues, improved cash margins, and higher iron grades. As Freehill’s funding position improves, free cash flow will be used to accelerate the progression of a feasibility study for expanded mining operations. The appointment of a new Chairman adds significant experience to the Board as the Company prepares to validate the commercial viability of Yerbas Buenas. Exploration activities across the Company’s magnetite deposit offer significant upside if successful.
Hurdles: Despite increasing revenues, Freehill remains reliant on external capital to fund its operations and there is no guarantee it can procure the required funding to expand its mining operations. Considerable further capital and technical investigations are required to progress the feasibility study and confirm the long-term economic merit of continued mine development at Yerbas Buenas.
Investment View: Freehill Mining offers speculative exposure to iron ore markets through an operating mine in Chile. Recent leadership changes and operational progress at Yerbas Buenas are positive developments that deserve attention. Risks include capital demand, balance sheet, and operating the mine without a certified resource. Freehill is focused on fine-tuning its trial operations to accelerate the delivery of the required studies to expand its mining operations. The Company’s ability to scale quickly and effectively is an attractive quality and a leaner capital structure and stronger management team could help drive further improvements over the coming months. As the Company accelerates the progression of a feasibility study, we continue to monitor its turnaround potential.
THE BULLS SAY
THE BEARS SAY
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this report is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its reports. As a result, investors should be aware that the S3 Consortium may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making any investment decision. The publishers of this report also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this report.
The information contained in this report is current at the finalised date. The information contained in this report is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.