Fitzroy Minerals Inc. (TSXV: FTZ, OTCQX: FTZFF, FSE: C3Y) announced today that it has executed a non-binding Letter of Intent (LOI) with Sociedad Punta del Cobre S.A. (Pucobre) outlining a potential joint development pathway for the Buen Retiro Copper Project in Chile. The LOI reflects the parties' shared intention to work toward a development scenario that leverages existing regional infrastructure and operating experience.
Under the LOI, Pucobre confirms its intent to exercise its 30% claw-back right (subject to continued positive technical results) for the Buen Retiro Project, including the sulphide exploration potential. Additionally, Pucobre has made a firm offer to provide processing capacity at its Planta Biocobre Electro-Win (EW) facility, representing a minimum of 80% of its nominal capacity of approximately 800 tonnes of cathode copper per month. The parties have also agreed to open-book sharing of operating cost data from Pucobre's nearby mining and processing operations to provide real-world inputs for inclusion in the Heap Leach Pre-Feasibility Study (PFS).
Merlin Marr-Johnson, President and CEO of Fitzroy Minerals, commented: “The joint Letter of Intent is a major validation of the Buen Retiro Heap Leach project and is a win for both parties. Pucobre benefits by potentially securing production from the Buen Retiro Heap Leach to fill spare capacity at Planta Biocobre for many years, and thereby significantly improve operational economics by spreading fixed costs across more production units. Fitzroy benefits by having access to an operational EW tank-house which reduces capital expenditure and simplifies the permitting process. Fitzroy further benefits by knowing that Pucobre intends to exercise its claw-back right. The terms of the claw-back mean that, upon exercise in mid-2027, Pucobre would reimburse 90% of project expenditures incurred through completion of the Technical Report, which makes the exploration and technical work we are carrying out over the next twelve months exceptionally capital-efficient for Fitzroy Minerals. We believe this alignment of interests creates a strong platform for advancing both near-term development of oxide resources and continued exploration of the broader sulphide potential at Buen Retiro.”
Sebastian Rios, CEO of Pucobre S.A, commented: “We are pleased to be working with Fitzroy Minerals to advance the Buen Retiro Project through a collaborative development approach that leverages regional infrastructure and our operational experience in the district. We believe this partnership provides a strong framework to create long-term value for both companies while supporting efficient and disciplined advancement of the project.”
The LOI recognizes a dual-track advancement strategy for the Buen Retiro Project: development of oxide resources through a heap-leach/SX-EW pathway, supported by regional infrastructure and the planned PFS; and continued exploration of sulphide mineralisation, which remains a significant longer-term value driver across the broader project area. Concurrent with publication of the PFS, Fitzroy intends to provide a separate exploration update summarizing results from workstreams and target areas not incorporated into the initial mine plan but considered material to the wider project opportunity.
Under the LOI, Pucobre offers Fitzroy access to processing capacity at its Planta Biocobre SX-EW facility, located 70 km trucking distance from the Buen Retiro Project. The EW tank house has nameplate capacity of 800 tonnes of copper cathode a month and is currently significantly under-utilized. The availability of established regional processing infrastructure is expected to reduce capital intensity assumptions, accelerate potential development timelines, and reduce execution risk relative to standalone processing scenarios. Commercial terms for tolling or alternative processing arrangements are expected to be negotiated within approximately 90 days to support inclusion in the PFS economic model. It is anticipated that a few minor additions to the existing plant will be required to rehydrate the copper sulphate concentrate.
Pucobre has also agreed to provide Fitzroy with cost information based on its operational and construction experience from nearby mines and processing facilities, including open-pit mining costs, processing costs at Planta Biocobre, transport cost benchmarks, and construction and development experience in the district. These data are expected to materially strengthen the reliability of capital and operating assumptions incorporated into the PFS.
As defined in the original mining option agreement dated January 1, 2023, Fitzroy Minerals can earn 100% of the Buen Retiro by completing four steps prior to the middle of 2028: at least 12,000 metres of drilling (already met); at least US$7 million invested in eligible expenses incurred prior to completion of a final NI 43-101 compliant technical report (due by mid-2027); delivery of a final technical report to the option holders; and payment of a US$4 million bullet payment (due by mid-2028). Fitzroy Minerals anticipates completing all four steps in Q2 2027. Upon completion, Pucobre has indicated its intention to exercise its contractual claw-back right to acquire a 30% interest in the concessions. Under the terms, Pucobre can exercise a claw-back of 30% by paying 90% of all eligible expenses (minimum US$10.2 million). On completion of the option by Fitzroy, a 2% net smelter royalty will be assigned to the option holders, with Fitzroy having the right to buy-back 1% for US$5 million prior to start of construction.
The LOI reflects a significant validation of the Buen Retiro Project and establishes a clear pathway for joint development, leveraging Pucobre's existing infrastructure and operational expertise to potentially reduce capital costs and accelerate development timelines.
