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Palamina Corp. (TSX-V: PA) President Andrew Thomson on Following Up Encouraging Chip Samples with a Heliborne Geophysical Survey at the Coasa Gold Project in Peru

August 22, 2018

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President of Palamina Corp. (TSX-V: PA)(OTC: PLMNF), Mr. Andrew Thomson. Andrew, how are you this morning?

Andrew Thomson: Very good, Gerardo. How are you?

Gerardo Del Real: I'm doing great. I'm looking forward to the summer doldrums coming to an end. We have little league for the boys starting soon. The kids are back in school and hopefully people get back to their desk and get back to work. Tough markets in the junior resource space, but a great time to get some work done.

Andrew Thomson: Absolutely. We've just started flying our Coasa property. It's sort of our flagship and the purpose of the flight – we're flying at 125 meters spacings – is to really get a handle on the structures. In our last press release, we announced a series of chip samples that were fairly good results. And again with chip samples, we had 39 grams per tonne gold and 4.2 meters of 7 grams. Again, these are samples where we're chipping quartz in a series, so we're not really establishing any volume in the sense that we're just chipping away at the exposure to see if we can find mineralization and those are as good as it gets.

And so now we've done a channel sampling program across those and we're just compiling results. But again, they're looking encouraging. Where the flying of the property gets interesting is the gold occurs with pyrrhotite. So we should be able to layer these things and see structure. We've already got a fairly good idea because we're above the tree line. I really feel that we're at the cusp of a major discovery here, in the sense that Crucero, which is the deposit within the shear zones that we're looking at, demonstrates volume. And again, that deposit we feel is sub-economic and will require a higher gold price. But really what it amounts to is nobody's flown this property and I think it can get exciting relatively quickly.

Gerardo Del Real: You mentioned the discovery at Coasa and I'd like to get into a little bit more detail about how your following that up. I know drilling is still a bit away. We're probably looking early next year, but there's a lot of very important field work between now and then, including the fact that you're flying it right now. What else is going to go into delineating targets, because you have these five district-scale land packages. Coasa appears to be the flagship right now. Can we talk about the work going into the projects to outline targets?

Andrew Thomson: Well, at Coasa the one thing we have initiated is environmental permitting and drill permitting. And again, there's the rain season coming up, so we expect to see drill permitting and environmental permitting completed in next six months. We're also going for a DIA, which is a more extended permit. It allows us 40 drill pads from which we can drill as many holes as we like. With the rainy season we realize that it makes sense to go for the more complete permit. It's a little bit more expensive, but in the long run we feel it's the proper way to go so we don't have any stops and starts. At the end of the day we're also doing a 43-101. So we expect to put the channels, chips, and flight information into that, so that we have a cohesive report where people can see what we've done to date and where it's going in terms of leading to discovery.

But really, all the systems that we're looking at are structurally controlled. At Coasa, we have visible gold. There's visible gold discoveries that have been made. Again, these have not been mined by Incas, Spanish, Peruvians to date in terms of the new areas we're looking at and they're starting to show some size. The latest chip sample’s almost 300 by 400 meters. That could be an entire district if we can get the right results at depth. Again, we have no clear dimension at this stage, so it's very early stages. So we're really going to spend the next six months building our database and doing more sampling to see how big we can make it. In this latest round of channel sampling we've actually gone into a new zone that we acquired, that we're looking at. So we'll have results from that.

And then also the Phusca Zone. So we've been talking about the Veta Zone, which is veins in Spanish. But the Phusca Zone, which is in the main shear on the property, the guys are out there now expanding the channel, sampling there to get a better idea of what's going on there. So once we've covered these two areas, we've got a total of nine anomalous zones off the main shear zone, the Phusca shear zone that looks pretty exciting.

So really, when we get the airborne data we'll be able to follow some of these trends. It really is a matter of, at this point, of pinpointing the best areas for drilling. But up until the most recent channel sampling, we still weren't certain whether we wanted to go drilling. Now we've sort of concluded that we do. So this is the reason for the 43-101 and all the permitting.

Gerardo Del Real: Excellent. Now, having five district-scale land packages, I have to imagine that you're going to entertain the possibility of maybe joint venturing a few of these projects. Would that be accurate, Andrew?

Andrew Thomson: Yeah, we've got a fair amount of interest. The recent press release we also announced that we're flying our Gaban and Cori properties. And those are aligned in the sense that we feel that they're in the same structure and they just sit above Madre de Dios. And we're flying at different line spacings on those particular properties. But again, at Gaban we've got alluvial gold in the main stream where we control 85% of the watershed. And at Cori there's 1,200 informal miners mining over a 3 kilometer strike length, so we've both got alluvial and hard rock miners on both properties as part of what I call the Peruvian Gold Rush. Those groups are out there mining as we speak. So again, by flying that area – again it's around 37,000 hectares – we'll get a very good idea of what the structures are, based on the fact that the gold is associated with pyrrhotite.

So again, we're the first to fly it. None of that area's been drilled. There's active mining taking place and it sits about 700 square miles of alluvial deposits that feed it. The feeder system, a portion of it at least, is from these areas. We're very excited and that's drawing a lot of attention, because there are all sorts of companies doing geophysical programs, where they're looking at, I would say anomalous values or structures that should contain gold or models that work. Here we've actually got the physical gold being mined, so it's pretty unique. As I like to say, “We're doing shadow headframe exploration without the headframe.”

Gerardo Del Real: Well I know that with the geophysical surveys, you're downloading the data at frequent intervals, so you're not actually having to wait till the survey's complete. So that's got to help with target delineation, especially if you're entertaining conversations with potential suitors on the property. How are you able to make that work and how often are you downloading this data? Is that a daily thing?

Andrew Thomson: Well they just started flying yesterday so we just got the login to look at the data and I haven't had a chance to go on. So it's pretty new for me. But the concept really, from a macro point of view, is it’s pretty exciting. It's a bit like getting one or two assays and if they're positive it becomes more exciting. But really, we've got our own ideas as to where these structures occur and with the guys in the field we can direct them to different areas using satphone or even just cell phone. So we're in a position now where we can structure some of the sampling that's going on to try and follow up on some of these new areas. Again, as I put in my quote, the pace of discovery changes and we've had good results. So it's one of these rare situations where when you have good results and you get data in that can be used, it's really more about energizing the troops.

So we're finding that our guys are really quite encouraged by the results we're seeing. It's nice to have good results and to be able to move it forward in a more responsible way, probably is what I would say, in terms of the scientific data that we're getting. So, the fact that these guys already found a deposit at Ollachea, understand the mineralogy, understand do they need kilometers of drilling. I think with the airborne it will really add to it. The other thing that we're doing is we've got a camera mounted on the helicopter so we're getting video feed as well. It may sound a little silly but when you get that aerial view, even over Google Earth, it gives you a different perspective.

Again, I have yet to log in, but this is again, game-changing stuff in terms of what modern day exploration offers. As I like to say, "Your next big deposit might be over the next hill." And if you can see it with geophysics and a camera you might find it faster. So that's what it really what it amounts to.

Gerardo Del Real: Absolutely. You got to do the work before the discovery so it's good to hear that there's a lot of progress on that front. Andrew, I look forward to having you back on as some of those results start trickling in. I appreciate the time. Anything else that you'd like to add today?

Andrew Thomson: No, I think just that Peru is starting to show some signs of life. The new President is pro-mining and again, he was up in Canada so he's a known entity in the sense that we have a good idea of what he's all about. And we think that the boom that's going on in Ecuador is going to extend itself into Peru and we're starting to see real signs of it.

Gerardo Del Real: Good stuff, Andrew. Thanks again.

Andrew Thomson: Okay thank you, Gerardo.

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