CIBCEQUITY RESEARCH
February 11, 2022 Flash Research
LUNDIN MINING CORPORATION
New Copper-Gold Discovery At Chapada
Our Take: Positive
Lundin Mining announced a copper-gold discovery called Sava
approximately 15km north of the Chapada mine, in Brazil. With an
exploratory drill program initiated in Q3/21, 47 holes have been completed, with assays returned for 29 holes. The mineralized area tested thus far measures approximately 750m by 650m and remains open in all directions. We view the exploration update positively, while the discovery remains early stage, it has positive implications for the Chapada expansion scenario. Chapada expansion studies were held off in 2021, in light of the company’s conviction in Sava. As such, we view continued exploration success to bode well for the overall Chapada expansion studies, providing potential mid- to long-term production growth. Near-term potential catalysts for the company continue to include continued improvements in Candelaria’s operations (mine to mill recoveries, and mill throughput bottlenecks), as well as a revised feasibility study for Josemaria in mid-2022, pending deal closure, EISA approval and commercial and fiscal stability agreements with the Argentinian government.
Key Points
Formiga: This exploration target was initially identified in 2015, and following additional testing including a mineral inventory range analysis, Lundin Mining acquired 37 new exploration concessions in H1/21. After these acquisitions, Lundin’s Chapada land position increased 120% to 58,048 hectares. This increased land position included ground west of Formiga. In September 2021, two discovery holes identified the Sava prospect including shallow high-grade mineralization.
Sava: Currently, there are three drill rigs turning, testing areas to the
northeast and west of the discovery area, with $10 million budgeted for
exploration in 2022. Additional rigs are planned, with a goal of 50 drill holes to be completed as part of a plan to complete step-out drilling, mainly to the north east along strike between the Sava and Formiga targets. Roughly 13km have been drilled as of December 2021.
Sava Highlight Drill Results:
0.88% Cu and 1.15g/t Au over 55.48m
0.61% Cu and 0.70g/t Au over 65.45m
0.90% Cu and 1.52g/t Au over 43.25m
0.79% Cu and 1.06g/t Au over 57.31m
0.81% Cu and 3.61g/t Au over 19.39m