Filo Mining's Filo del Sol project straddles the Chile-Argentina border
The drilling results just get better and better at Filo Mining’s South American exploration site
The stock: Some weeks it’s best for your sanity, if not your portfolio’s value, to tune out the market noise and think about long-term wealth creation. That’s what the investors in Filo Mining (TSX:FIL) have been doing for the past year, during which the stock has risen more than 500 percent. (That’s even with a 20-percent plunge over the past week, to $20.13 per share as of Tuesday.)
They’re not worrying about inflation or earnings multiples—the company has no revenue, let alone earnings—but about bringing one of the world’s biggest undeveloped copper/gold/silver exploration properties into production. That, or attracting a lucrative offer from a mining major better positioned to accomplish this task, whichever comes first.
The drivers: As its name suggests, Filo is focused on developing the Filo del Sol (Edge of the Sun) project, which straddles the Chile-Argentina border in the Andes Mountains of South America. Drilling to date suggests the deposit is 4.5 kilometres long, a kilometre wide and 1.5 kilometres deep. It holds an indicated resource of 4.4 million ounces of gold, 147 million ounces of silver and 3.1 billion pounds of copper. So, big.
Fortunately for the prospects of extracting this resource profitably, the Vancouver-based company comes with a strong pedigree as an offshoot of the Lundin Group, founded by Swedish-born serial mining entrepreneur Lukas Lundin. The Lundin family owns just under one third of the shares outstanding, and Australian behemoth BHP Group has a 5-percent toehold. Based on the current share price, the company’s market capitalization hovers around $2.5 billion.
Word on the street: Scotia Capital analyst Eric Winmill hiked his share price target to $25 with a “sector outperform” rating last week on the basis of “impressive” new drill results. Haywood Securities’ Geordie Mark was even more bullish, setting his sights on $34. “We see value arising not only from the PFS [preliminary feasibility study], but also from resource expansion, and further discovery potential on the property,” Mark wrote in a note to clients. “We believe the resource base and grade potential of the system holds ample value for M&A interest.”
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