Hannan Metals (TSX-V: HAN) CEO Michael Hudson on the Recently Staked Sediment-Hosted Copper-Silver District in Peru

January 17, 2019

Sign up for the free RSD newsletter to get the latest
news and interviews delivered to your inbox.

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the Chairman and CEO of Hannan Metals (TSX-V: HAN)(OTC: HANNF), Mr. Michael Hudson.

Mike, how are you this afternoon?

Michael Hudson: Very well. Thank you, Gerardo.

Gerardo Del Real: I appreciate you taking the time. You had some news here recently. You just staked claims in an unexplored sediment-hosted copper-silver district – not a project, a district – in Peru. This is a bit of a pivot from Ireland. I want to start there, I want everybody to be absolutely clear about the direction that you're taking in Ireland. Then I want to talk about this project, because it sounds exciting and I know you have a lot of details to share.

Michael Hudson: Hit me straight between the eyes first up, and it is the question to ask. Thanks, Gerardo. We're still committed to Ireland, we have a project there that is a big, significant project that took 30 years of earlier workers to combine a very good start with the resource there, hundreds of drill targets literally from the millions of dollars we've spent on seismic work, unpealing the new search space below 200 meters in Ireland, and we still have aims to drill there. We're just going through final permitting on the Kilmurry project and we're looking to extend a hole there that has all the right characteristics.

But the reality is that zinc had its moment. It's a very fickle metal in the market and it's very hard to fund zinc projects today. So, a simple rule is you only spend money in the ground if you can fund those dollars that you're spending and it's not an easy exercise today in zinc.

We're explorers, we're generators of prospects and we've had a long time in Peru in the past. I lived there from entering the 1990s until the early 2000s and we've had association there ever since. So it was a natural shift to go back to a place we know well in a commodity that has a lot more legs in the short to medium term, I believe, in copper than zinc alone.

Gerardo Del Real: Excellent. Well said. So, to be clear, the project is in good standing. We're still hoping for drilling as soon as permits allow. And I know that you have options. This is a project, frankly, that has seen over nine times Hannan's current market cap allocated to it, historically. Right? I think you carry a market cap approximately of about $3.5, $3.6 million dollars, I believe. How much of it has been spent on this project, Canadian, approximately $32, $33 million?

Michael Hudson: Exactly.

Gerardo Del Real: To be clear, the project's in good standing. You move forward with that, you’re considering several options and we should know more within the next month or two. Yes?

Michael Hudson: Absolutely. Lots of options and one that we've made our expenditures well and truly and have time to advance it but not without having to spend millions of dollars in maintaining it.

Gerardo Del Real: Excellent. Peru. Copper-silver. District. I like all three of those. Peru, obviously, is going through some changes. There's parts of Peru that are easier to work in than other parts. Tell me about this copper-silver district. What attracted you to it and then what it looks like moving forward? Three different questions there.

Michael Hudson: You might have to repeat those questions if I don't hit every key point. In brief, there is a strong history. I worked, with my colleagues in Hannan, in Peru in the ‘90s. We purchased a database of the major company we were working for, which was called Pasminco in the day, of South America. Commercialized that. It still is one of the best databases today commercially available. But we had the run on it, and of course we had a database of a major in the hands of a junior, if not a few people, back in the ‘90s. And we've been able to leverage that database.

That database led to the discovery of Tinka Resources’ project where we hold a royalty ourselves, personally, from those days. But we've been able to use our knowledge in Peru to leverage back there again. And this is a project that we've known a little bit about, it's been staked for different commodities over the years, primarily salt, actually, in the high Selva of Peru. The high Selva being the high jungle of Peru, where we're talking about 800 to 1,600 meters. So still mountainous, but not the high Andes. It's one of the forgotten places, actually, of Peru in many respects. There's been a lot of exploration, of course, since the Spanish times in the highlands, and we've seen that over the last 20 or 30 years in the highlands itself.

But, being a little bit more difficult to access, not as obvious to get into. It's all the same rock sequences out through there in the jungle, and this is a district-scale copper-silver project. We heard about some evidence of some prospectors who'd found some evidence there in the past and we sent a team in. We sent a community team in first, very important. It's not about the rocks anymore. Mission critical is all about the people. And spoke with the locals, and they were very relaxed about us coming in there and that gave us confidence to stake these areas.

Then we put a team in, just a reconnaissance team, and bang, 15 kilometers through the rivers of green rocks. And we went and sampled them and they were a great surprise. We got some very good grades. Up to 8% copper, 100 grams silver, those sort of numbers at the high end. But averaging 2.8% copper and nearly an ounce silver.

So, early stage samples, but the scale is big. It's across multiple corridors, structural corridors, so these are repeats. It's up to 6 to 7 kilometers wide, and this is just a very early start to this project. But it has all the hallmarks, again, of a new search space like we've done in Ireland but in a different way to really create some value.

Gerardo Del Real: And this is in north-central Peru, correct?

Michael Hudson: This is in north-central Peru, absolutely. So, it's 80 kilometers west of Yanacocha, but it's another world and very different communities, and it hasn't seen the history of mining in the jungle areas. A lot of petroleum exploration a little bit further to the east of us in the Amazon basin itself. But it's sort of the forgotten belt.

Gerardo Del Real: Now, you've filed claim applications for nearly 15,000 hectares. You're waiting for those claim applications to be granted. Do you have a timeline for that, Mike?

Michael Hudson: Yeah, it's normally 8 months. 8 to 9 months is the rule of thumb in Peru. We did put those claims in back later in 2018, in September or October, when we first filed them. They were accepted and they're going through their review process now, which is a little bit faster than we would have thought.

So, I think sometime Q2 we'd hope to see some decisions being made around these, but there are claims adjacent to us that are granted and people are working, for the salt specifically, and we trust that we'll get a favorable outcome. But until it's granted it remains an application, of course.

Gerardo Del Real: Excellent. Mike, I'm looking forward to more news from Ireland, of course, and now this exciting new project in Peru. I think it's a good way to diversify the asset base and the jurisdictional risk. I think it spreads it out. And, frankly, it gives shareholders a couple of shots on goal with very little, if any, dilution. Right?

Michael Hudson: The beautiful thing about this project is that it's mineralization from surface and it's large. We can get crews in there and they'll be going back from March, wandering up the creeks and then wandering up the hills and mapping out the outcropping areas. So we'll get a good idea of width, grade, continuity, scale, doing it relatively cost-effectively with people rather than having to drill first up blind.

So, a unique project in that respect because there's not many big, high-grade systems poking out of the earth that are still left to be found. I can say we've got another one at this stage. Lots of questions because it's early stage, but it's a unique project.

Gerardo Del Real: Mike, thank you very much. Appreciate the time. Look forward to getting you back on.

Michael Hudson: Excellent, Gerardo.

View Interview Archive

Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.

Part of the Stock Digest family of websites

Small Cap Stock Digest

MARKET SUMMARY

INDICES

Name Last Change
DOW 25628.90 2.43%
S&P 500 2847.11 2.66%
NASDAQ 7751.77 3.09%
TSX 16037.58 1.35%
TSX-V 581.95 0.00%

Resource Commodities

Name Last Change
Gold 1481.10 1.11%
Silver 17.44 2.41%
Copper 2.54 2.538
Platinum 901.00 0.67%
Oil 54.17 2.18%
Natural Gas 2.15 0.33%
Uranium 25.08 0.00%

@RSDigest ON TWITTER