Fredonia Mining’s flagship project is the El Dorado Monserrat (EDM), a 100%-owned gold-silver project in the Deseado Massif of Santa Cruz, Argentina, about 17 km west of AngloGold Ashanti’s Cerro Vanguardia mine. EDM is a low-sulphidation epithermal system they want to develop as a bulk tonnage open pit heap leach operation. In this conversation, I asked about the August PEA, the resource model, metallurgy, financing, permitting, the RIGI regime and the road to a PFS.
TL;DR
The PEA (US$3,800 gold, US$45 silver) shows about 146,000 oz AuEq a year over 17 years at 12,000 tpd, roughly US$350M capex and an after-tax NPV of about US$1.5B with a 65% IRR. It uses only the Main Veins and La Herradura. Monserrat West is excluded because of its strip ratio. They just closed C$11.5M at C$0.65 with no warrant, and both said it is “just enough,” “very tight,” to reach a PFS targeted for around the end of H1 2027. The full PEA report goes on SEDAR+ in about a week, with an updated PEA possible before year end. At that point, the team said discussing metallurgy and the resource model would be easier. The PEA assumes 85% gold recovery while 2018 bottle rolls showed around 50%, and new test results are due in one to one and a half months. Insiders hold 30 to 35%, about 80% of that with the Auriemma family.
What have they done for shareholders lately?
They told me they raised C$7M in February, added roughly 30,000 hectares (including ground bought from Pan American Silver for about US$250,000 cash plus a 1.5% NSR), and delivered the PEA on the target they set. Drilling at La Herradura returned strong intersections. Estanislao said recent deeper holes in the south hit 8 m at 6 g/t and 3 m at 12 g/t, and a northern zone gave 6 m at 9 g/t at around 150 m depth, which they read as grade improving below 200 m. They also strengthened the team with Gustavo Gomes for development, Constantine Karayannopoulos for production experience and Waldo Pérez for study work.
How much money do they have and what are they spending it on?
The latest raise was C$11.5M at C$0.65 with no warrant. There are about 82.5M shares out and roughly 106M fully diluted (close to 20M warrants and 4M options), with about C$30M raised over the company’s life and one 1-for-5 rollback. G&A runs at about C$200,000 a month. I asked about marketing and was told it has historically been under 3 to 5% of spend, with a dedicated IR budget of around $200,000 a year still awaiting board approval. The money goes to infill and step-out drilling, metallurgical and geotechnical work, permitting and the PFS. Ali said the next raise will likely be straight equity unless a strategic partner or JV comes in. On the US$350M capex, he said it will not all be equity, but the structure isn’t set. Estanislao believes they qualify for RIGI (threshold over US$200M), which would let them import equipment tax-free.
Upcoming catalysts
Technical: more drill results, with about 1,000 m at the lab and news expected next week. Metallurgical and geotechnical results are due in roughly one to one and a half months, they are testing a westward extension of the southern body, an updated PEA is possible before end of 2026, and the PFS is targeted for around the end of H1 2027.
Operational: drilling continues into the new year during the southern summer, and construction permit and RIGI applications go in over the next couple of months, with management expecting approval in three to four months against a typical year.
Corporate: the full PEA technical report will be filed on SEDAR+ within about a week, and talks with potential strategic partners are ongoing.
Risks
If the new met tests come in well below the 85% gold recovery the PEA assumes, the economics could shrink. The resource is the other. The 2024 model used 5 m blocks without closed wireframes on veins that average about 1 m at surface, and they are moving to 3 m blocks. Management says it doesn’t see infill shrinking the M&I, but that hasn’t been shown yet. Funding is tight to the PFS, and there is no financing plan yet for the capex. RIGI eligibility and permits are not yet in hand, including water, where the current provincial permit covers only about 20,000 L a day. Lab backlogs in Argentina, Chile and Peru already delayed work once. The CEO also acknowledged the budget leaves little room for exploration beyond the PFS path.
Fredonia Mining CEO Interview
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