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. The Yerbas Buenas Project spans over 398 hectares and is in close proximity to existing infrastructure including ports, highways, and power. In addition, Freehill is focused on the exploration of other metals in the tenement.
Catalysts: Freehill Mining is on track to achieve positive operating cash flow at its operations at Yerbas Buenas, having substantially increased production over the past six months to over 10,000 tonnes per month in July, a fivefold increase compared to the March quarter. Delivery is supported by a commercial sales agreement with Chile’s largest iron ore miner. Plans are now underway to formalise an exploration target and commence a maiden drilling program to appraise the technical and economic merit of expanding the existing trial operations into a larger scale mine. Existing mining operations have the potential to fast-track future reserve delineation and feasibility studies, while a recent placement alleviates balance sheet pressure.
Hurdles: The Company remains reliant on external capital and there is no guarantee it can procure the additional funding required to develop its exploration assets. Operating the mine without a JORC compliant mineral resource or engineering study is a risk and considerable further capital and technical investigations are required to establish the feasibility and 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. Rising production levels, near-term cashflow opportunities, and scale of targets quantified at Yerbas Buenas are attractive qualities. Risks include capital demand, balance sheet, and operating the mine without a certified resource. Delineation of JORC compliant resources and reserves is a major catalyst, which may be fast-tracked by current mining activities. As production levels increase, upcoming drilling activities are designed to highlight the commercial merit to further expand Freehill’s operations. Seeking to monitor the release of an exploration target and Freehill’s efforts to unlock value from the Yerbas Buenas Project, we are initiating coverage with a neutral view.
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.