Filo Mining Corp. (TSX: FIL) (Nasdaq First North Growth Market: FIL) (OTCQX: FLMMF) announces its results for the three and six months ended June 30, 2022.

HIGHLIGHTS AND OUTLOOK

Filo del Sol drill program demonstrates continuity and extension of Aurora Zone and Breccia 41; Bonita Zone discovery to the north illustrates compelling exploration potential

Jamie Beck, President & CEO, commented, “Exploration results from Filo del Sol continue to stand out on a global scale and showcase the project as one of the most significant copper-gold-silver discoveries of its generation. Holes 55C, 57 and 58 have delivered exceptional results, demonstrating continuity and extension of mineralization within the bonanza-grade Breccia 41 structure and the surrounding high-grade Aurora Zone. In addition, hole 60 stepped out approximately 2km northeast of Breccia 41 and discovered a new porphyry centre, which supports our geological interpretation that Filo del Sol hosts multiple overlapping porphyry centres along a multikilometer trend.

While we are currently drilling through the South American winter for the first time in the project’s history, we are also looking forward to the arrival of spring, which will allow the Company to ramp up the rig count to expedite drilling and definition of the deposit.”

Drilling continued to be the operational focus of the Company during the three months ended June 30, 2022, with holes delivering strong results, testing continuity and expansion of the bonanza-grade Breccia 41 structure, and the broader high-grade Aurora Zone. In addition, an exploration hole, FSDH060, drilled approximately 2km northeast of Breccia 41, discovered a new porphyry copper-gold centre, now named the Bonita Zone.

Highlights include:

• FSDH055C, which is the best hole ever drilled at Filo del Sol from a grade-thickness perspective, returned 1,338m at 1.33% copper equivalent from 150m, including 126m at 5.02% CuEq from 728m in Breccia 41, within which 24m intersected at 13.30% CuEq from 728m. This interval is 40m north of the high-grade section in FSDH041;
• FDSDH057 successfully extended the bonanza-grade mineralization of Breccia 41 by 175m, with the final 11.1m returning 17.6% CuEq from 776m, ending the hole in the highest grade copper values ever discovered at Filo del Sol;
• FSDH058, collared 460m south of FSDH041 and drilled into the Aurora Zone, returned 1,252m at 0.91% CuEq from a depth of 100m to the end of the hole, including 310m at 1.40% CuEq and 6m at 398.3 g/t Ag in the silver zone, demonstrating the continuity of strong mineralization within this high-grade feature of the Filo del Sol deposit; and
• FSDH060, collared 2km north of FSDH041, discovered the Bonita Zone, which is currently interpreted as a new porphyry centre along the overall Filo trend, confirming that the Filo del Sol Project hosts a multikilometer, northeast-trending alignment of overlapping porphyry-centered hydrothermal systems.

Select assay results from these holes are summarized in the table below:

The Company’s 2021/2022 drill and field program is continuing through the South American winter season for the first time in the project’s history. The Company’s six diamond rigs have been consolidated in the area around Breccia 41, and the broader Aurora Zone, to de-risk its first its first winter operations in terms of required road clearing, transportation and logistics support. As of the date of this News Release, additional holes have been completed with assays pending, which include:

• FSDH061, located 228m northeast of FSDH057, completed to a depth of 1,093m;
• FSDH063, located 150m west of FSDH025, to investigate the southwestern extension of the Aurora Zone, completed to a depth of 1,141m; and
• FSDH066, located 1.3km northeast of FSDH060, to investigate the area under the Maranceles veins, a series of quartz-enargite veins which outcrop in this area, completed to a depth of 458m.

Assay results for these holes will be released as they are received, analyzed and confirmed by the Company.

The first winter campaign has been challenging, as the 2022 winter season at the Filo del Sol Project has been characterized by significant snowfall and extreme winds, which have hampered drilling activities. The Company is prioritizing personnel safety and maintaining road access while reducing site activities during the winter storms. Holes underway, which target the Aurora Zone and Breccia 41, will seek to improve the Company’s understanding of the geometry, extent and geological context of these high-grade sections within the Filo del Sol deposit.

The Company has also continued preliminary metallurgical testwork on the sulphide mineralization, as well as environmental and social baseline programs in support of future project permitting.

Looking ahead to the South American spring, the Company has plans to ramp up its rig count as the weather moderates, in order to expedite drilling and definition of the deposit. While drilling will continue to focus on infilling and testing extension of the Aurora Zone and Breccia 41, the Company also plans to drill test the newly discovered Bonita Zone. Such testing may prove transformational for the project, as it may increase the ultimate size of the deposit and provide opportunities to discover additional high-grade Aurora Zone or bonanza-grade Breccia 41 styled zones.

BHP exercises anti-dilutive top-up right to maintain pro rata shareholding

Jamie Beck remarked, “Recently, BHP elected to exercise its right to maintain its pro rata interest in Filo Mining, and we are pleased to receive BHP’s ongoing vote of confidence in our team and the Filo del Sol Project. There is no shortage of drill targets at Filo del Sol, and with a strong treasury balance and continued support from our key shareholders, we are planning to expand our ambitious exploration program beginning September 2022.” 

On July 29, 2022, subsequent to Q2 2022, the Company closed a non-brokered private placement to BHP Western Mining Resources International Pty Ltd, a wholly owned subsidiary of BHP Group Limited, whereby the Company issued 44,047 common shares to BHP for gross proceeds of $675,681 (the “Anti-dilution Top-Up”).

The Anti-dilution Top-Up was undertaken pursuant to the terms of the March 11, 2022 private placement, whereby BHP was granted certain anti-dilutive rights, allowing BHP to top-up and maintain its pro rata ownership interest in the Company from time to time (see news releases dated February 28, 2022 and March 11, 2022).

FINANCIAL RESULTS

SELECTED FINANCIAL INFORMATION

The Company incurred a net loss of $13.5 million during the three months ended June 30, 2022, comprised primarily of $22.1 million in exploration and project investigation costs and $1.5 million in G&A costs, which were partially offset by a gain of approximately $10.6 million resulting from the use of marketable securities for the purposes of facilitating intragroup funding transfers. For the 2021 comparative period, the Company reported a net loss of $4.8 million, consisting mainly of $9.4 million in exploration and project investigation costs and $0.6 million in G&A costs, which were partially offset by a Funding Gain of $5.4 million.

LIQUIDITY AND CAPITAL RESOURCES

As at June 30, 2022, the Company had cash and cash equivalents of $102.6 million and net working capital of $89.4 million, compared to cash of $19.4 million and net working capital of $13.1 million as at December 31, 2021. The increase in the Company’s cash and cash equivalents and net working capital is due to $99.7 million in net proceeds generated by the Private Placement and $2.5 million in gross proceeds received by the Company in relation to the exercise of stock options during the six months ended June 30, 2022. These cash inflows have been partially offset by funds used in operations, including mineral property payments and amounts used in the acquisition of equipment and facilities for the Filo del Sol project, and for general corporate purposes.

The Company will continue to deploy the majority of its treasury to fund ongoing exploration and advancement of the Filo del Sol project, and for working capital and general corporate purposes.

About Filo Mining

Filo Mining is a Canadian exploration and development company focused on advancing its 100% owned Filo del Sol copper-gold-silver deposit located in Chile’s Region III and adjacent San Juan Province, Argentina. Filo Mining is a member of the Lundin Group of Companies.

Technical Information

Copper Equivalent is calculated based on US$ 3.00/lb Cu, US$ 1,500/oz Au and US$ 18/oz Ag, with 80% metallurgical recoveries assumed for all metals. The formula is: CuEq % = Cu % + (0.7292 * Au g/t) + (0.0088 * Ag g/t).

Details on assay procedures and the drill intersections provided above can be found in the Company’s news releases dated April 19, 2022, May 12, 2022, May 23, 2022 and June 9, 2022.

Qualified Persons

The scientific and technical disclosure for the Filo del Sol Project included in this news release have been reviewed and approved by Bob Carmichael, P.Eng. and Jamie Beck, P. Eng. Mr. Carmichael is Filo Mining’s Vice President of Exploration and a Qualified Person under National Instrument 43-101 Standards of Disclosure of Mineral Projects (“NI 43-101”). Mr. Beck is Filo Mining’s President and CEO and is also a Qualified Person under NI 43-101.