Flagship sweetens Chilean copper deal with 50% price cut

Flagship Minerals has just honed a sharper edge on its option to acquire the high-grade Rosario copper-silver project in Chile by renegotiating its deal with vendor Sociedad Minera Rajo SpA. The revised agreement extends the purchase option to October 2028 and halves the final exercise payment to just US$1 million (A$1.42M), giving it a cheaper path to securing 100 per cent ownership of the project.

The company has already made a US$100,000 payment for the current year and has another US$100,000 (A$142,450) payment due later this month, before making the final exercise payment in 2028.

Flagship says it retains the flexibility to make the payments in either cash or shares and can exercise the final option early, thereby waiving any outstanding annual payments. The deal also includes a one per cent net smelter royalty, which the company can buy back at an agreed price.

The Rosario project is the cornerstone of Flagship’s Chilean copper strategy. It sits at an altitude of 2500 metres in the commune of Diego de Almagro, within the Chañaral Province of the Atacama region, 125 kilometres east of the coastal port city of Chañaral. Most notably, it sits in a highly active mining district, 160km north of the major mining city of Copiapó and just 10km north of state-owned mining giant Codelco’s massive 2.2-billion-tonne El Salvador copper mine, which contains 9Mt of the red metal.

‘Flagship’s strategy is to advance the Isidora Gold Project toward development.’

Flagship Minerals managing director Paul Lock

The Rosario ground is considered highly prospective and underexplored, despite its prime real estate and strategic location. Previous exploration has defined three prospective trends with an estimated combined strike length of 15 kilometres.

Surface rock-chip sampling has delivered some eye-watering results, with assays returning up to 8.9 per cent copper. Among the rock chip samples, those exceeding 0.75 per cent copper averaged an impressive 3.15 per cent copper and 18 parts per million silver.

The renegotiated deal allows Flagship to keep its foot on the high-grade copper asset while prioritising capital for the company’s main game – its advanced Isidora gold project, also in Chile’s northern Atacama region, 120km east of Copiapó.

Isidora hosts a JORC-compliant mineral resource of 115.2 million tonnes at 0.56 grams per tonne (g/t) gold for a whopping 2.1 million ounces of gold. The company is targeting a low-cost, heap-leach operation and is pushing towards a prefeasibility study.

Flagship Minerals Limited managing director Paul Lock said: “The updated Rosario option agreement reflects the strength of the relationship that we have built with Sociedad Minera Rajo SpA, the counterparty to this agreement. Flagship plans to conduct further work at Rosario once key milestones have been achieved at Isidora, ensuring the Company’s capital is applied where the most value per dollar spend will be generated.”

The move comes as deal-making in Chile’s world-class copper belts continues to run red hot, highlighting the strategic value of established copper assets in the tier-one jurisdiction. Underlining that investor appetite, Lundin Mining recently agreed to pay US$215 (A$306) million for an additional interest in the nearby Caserones copper-molybdenum mine.

Flagship’s portfolio also includes the Whipsaw copper project in British Columbia, Canada, which boasts a massive JORC exploration target ranging from 0.51 to 1.02 billion tonnes at a grade of 0.2 to 0.4 per cent copper-equivalent. Management says it’s weighing up a potential spin-out of the sizeable project into a separately listed ASX vehicle, a move that could unlock value from the massive target and hand existing shareholders a direct stake in the new company.

By renegotiating more favourable terms at Rosario, Flagship has bought itself valuable breathing room to advance the sizeable Isidora gold resource towards development, while keeping a promising copper play firmly in its portfolio on far more manageable payment terms.

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