Advancements of Junior Companies in Chile

During the SEG conference in October 2019, a stroll through the core shack revealed that Chile continues to offer compelling geological opportunities, despite being a mature jurisdiction with declining ore grades. Representatives from top junior mining companies operating in Chile presented their projects, but one topic dominated discussions: the struggle to secure financing for project advancement. This challenge is not new, as exploration expenditure experienced a multi-year contraction from 2012 to 2016 after reaching a record high of US$1.04 billion in 2012.

During that period, mining companies failed to deliver promised returns, leaving project financiers disillusioned and unwilling to fund further developments. This sentiment still affects project investment today, with the majority of capital invested being “stay-in-business” expenditure, primarily focused on replacing reserves through brownfield expansions. In 2017, there was a glimmer of hope as the market seemed to be turning for the better, but in 2018, Chile’s exploration budget dropped to US$576.2 million, a year-on-year decrease of approximately US$27 million based on Chochilco reporting. This positioned Chile as the sixth-largest contributor to the global exploration budget, accounting for 6% of the total.

While the drop in the exploration budget may seem insignificant, junior companies felt the funding scarcity acutely, reducing their budget by 52% in 2018, with their share of the total budget shrinking to 5% in Chile. On the other hand, major companies maintained their contribution due to ongoing brownfield projects. Dave O’Connor, chief geologist at Aethon Minerals, commented on the lack of investment in junior companies and the subsequent decrease in their activities. Raising financing on the stock markets has become increasingly difficult for juniors, and majors’ slowdown in exploration activity makes it challenging to form joint ventures.

Despite these challenges, many companies are willing to weather the soft market conditions in the short term, banking on the benefits of staying in Chile when the market eventually turns around. Currently, 110 companies are conducting exploration in the country, with 46% remaining active. Among these projects, 54% focus on copper, 25% on gold, 4% on lithium, and 3% each on silver, cobalt, and iron, according to a Cochilco study.

José Ignacio Silva, country manager of Hot Chili, an Australian junior operating in Chile, highlighted the importance of the remaining exploration projects given the lack of funding in recent years. He noted that drilling is expensive and success rates are low, making it more favorable for junior companies to seek projects with existing drilling and results rather than pursuing greenfield projects.

Some of the junior companies successfully navigating the challenging environment in Chile include Aethon Minerals, Coro Mining, Hot Chili, Los Andes Copper, Rio2 Limited, Wealth Minerals, Lithium Chile, and Revelo Resources.

Los Andes Copper leads the industry’s development with its Vizcachitas project, one of the largest advanced copper projects in the Americas not held by a major. The project is currently in the permitting process for its pre-feasibility study and is well-positioned for further development. Antony Amberg, CEO of Los Andes Copper, highlighted the project’s attractiveness and viability, demonstrating a net present value of US$1.8 billion and an internal rate of return of 20.77% at US$3.00/lb copper after tax.

Coro Mining’s Marimaca project stands out as a notable copper exploration project. It is geologically unique, being an oxide deposit hosted by intrusive rocks, contrasting with the volcanic rock-hosted manto deposits in the same region. With the scarcity of new copper exploration discoveries in Chile, Marimaca represents a new deposit type challenging accepted exploration wisdom and potentially opening up new frontiers for discoveries elsewhere in the country. The project’s coastal belt location at low elevation near Antofagasta and Mejillones is considered advantageous, offering potential for future development at a relatively modest capital investment.

Hot Chili’s Cortadera project made significant progress in 2019, with globally competitive drill results. The company’s combined resource base is estimated at approximately 236 million mt at 0.5% Cu equivalent. José Ignacio Silva noted the positive market response to their project’s results, which led to exceptional stock performance. Despite funding challenges, the exploration sector in Chile remains active and focused on promising projects. Junior companies, along with a few remaining exploration opportunities, play a crucial role in shaping the country’s mining future.


Two influential junior companies, Lithium Chile based in Calgary and Wealth Minerals based in Vancouver, are active in the lithium mining market in Chile. In 2019, Canadian lithium explorers faced challenges with declining share prices and difficulty in raising financing. To mitigate the effects of the market downturn, companies reduced drilling operations to conserve cash. Globally, data from the Mining Intelligence Data Application showed a significant drop in drilling activities for lithium and cobalt exploration and resource evaluation in Q2 2019, reaching the lowest level in two years. The number of completed drillholes decreased by over 50% compared to the peak in Q3 2018.

Despite these market conditions, Lithium Chile remained committed to advancing its lithium property portfolio, which includes 166,150 hectares covering sections of 14 salars and 2 laguna complexes in Chile. The company is the largest landholder of lithium exploration projects in Chile, excluding the government and SQM. In December 2019, Lithium Chile announced the commencement of drilling at its Turi lithium brine project, one of the high-priority projects selected for early testing.

Wealth Minerals, on the other hand, signed a memorandum of understanding with Uranium One, aiming to establish a partnership that would accelerate the development of the Atacama lithium project. This collaboration includes utilizing Uranium One’s lithium extraction technology, which could have significant implications for more efficient water usage. In August 2019, Wealth Minerals received a Pertinencia, an essential document from the Chilean Environmental Agency, allowing low impact exploration programs at the Atacama project.


Unlike copper and lithium, precious metals-focused companies have not faced the same financing difficulties, leading to a revitalized market for new exploration projects.

Rio2, led by CEO Alex Black, has the Fenix project in Copiapó Province, Antofagasta region, which is one of the world’s largest gold oxide resources. In 2019, Rio2 completed an updated pre-feasibility study, revealing a post-tax net present value of US$121 million and an internal rate of return of 27.4%. The study demonstrated the project’s profitability even at low gold prices of US$1,200/oz. Rio2 aims to develop Fenix Gold as an open-pit, gold heap leach mining operation, following a staged development strategy.

Prospect Generating

Revelo Resources operates as a prospect generator, focusing on generating prospects and seeking industry partners for joint venture agreements. The company is now considering modifying its strategy by raising private finance to fund exploration and potentially spinning out certain projects for independent operation. In 2019, Revelo Resources signed a letter of agreement with BMR Group to acquire an 80% interest in the Montezuma copper project in northern Chile. The agreement involved a cash payment of US$6.5 million and US$1.5 million in exploration expenditures, with Revelo retaining an interest in the project until the completion of a Preliminary Economic Assessment (PEA).

Private Equity

Private equity has emerged as an alternative source of financing for junior exploration companies, providing insulation from the volatility of public financial markets. Two prominent Chilean juniors, Coro Mining and Los Andes Copper, have significant private equity backing. Greenstone and Tembo Capital own 70% of Coro Mining, while Resource Capital Funds played a crucial role in advancing Los Andes Copper’s Vizcachitas project. Private equity firms have different criteria but remain flexible and adapt to market opportunities. Their investments range from exploration and pre-economic assessment stages to distressed opportunities and turnarounds in operational companies. The approach depends on the stage and mineral focus of the targeted company.

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