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Publisher's Note: Zinc is one of the hottest commodities in the market right now, and a company in Ireland is working on a groundbreaking exploration project.

The Outsider Club's Gerardo Del Real visited the site and talked with the CEO of Hannan Metals (TSX-V: HAN)(OTC: HANNF), Michael Hudson. Today we have the transcript of their talk about Hannan's unique history and future for you.

To your wealth,

Nick Hodge Signature

Nick Hodge
Publisher, Outsider Club


Gerardo Del Real: This is Gerardo Del Real with the Outsider Club. Joining me today is President and CEO of Hannan Metals, Mr. Michael Hudson. Mike, thank you for having us.

Michael Hudson: Gerardo, welcome to Ireland.

Gerardo Del Real: Thank you, sir. Thank you, sir. We've talked in the past about your district-scale high-grade zinc package and how it's literally the right project at the right time in the right place, and I want to talk about why that is.

First off, I'd love for you to introduce Hannan Metals. Why the name Hannan metals?

Michael Hudson: Well, there's no better place to describe than where we are. We've got the amazing Franciscan Quinn Abbey behind us. 14th-century construction there. Built on an old Norman castle. This is where a lot of the English history is developed. Henry VIII has been here. Thomas Cromwell.

Amongst all that, something else very famous happened here in the mining space. A young man was born in 1840. Patty Hannan, Patrick Hannan. In this town, just very close to us, just right here. At that time in Ireland it was the ending of the mine, so what we're going to talk about soon is our project, but that was an old mine and one of the largest mines in the 1830s and 1840s in Ireland.

Then came the potato famine that many of your listeners will know about. It was a very hard time here in Ireland and they literally... There was more people in Ireland at the time back in the 1840s than there is today, so the population has never recovered from that whole time.

It must've been a very hard time. Mining had finished. It was very hard to feed the population, and by the time he was 20, Patrick Hannan, who was born here in Quinn, immigrated to Australia. He went on to find Australia's largest gold mine, the Kalgoorlie Gold Field, that's still in production today.

Gerardo Del Real: That's incredible.

Michael Hudson: He found that in 1893 and there's some fantastic stories there. Obviously, the accent, I'm an Australian. I couldn't help but with the association of Quinn and literally not too far below us here is our project.

This area forms part of our exploration project, so with Patrick being born here, with him finding Australia's largest gold field, what a wonderful explorer to name our company.

Gerardo Del Real: Absolutely. Now, we talked about Ireland being the right place. Many people aren't aware that Ireland is one of the top zinc-producing countries in the world. Can you talk a bit about that?

Michael Hudson: Yeah. Well, the places like behind us that people generally associate with Ireland, not zinc mining. There's been some significant mines here. Since, well, that early phase that I talked about, the 1840s, 1830s, then Ireland was thought to have nothing left until another Patrick, Pat Hughes, in the 1950s, went across and made his money prospecting in Canada. After going there initially to brick lay, he came back here to Ireland with the premise that there was more to find. He was very successful. In a few years, he found the Tara deposit and then went on to find Navan, which is still in production today and is Europe's large base metal mine.

There's been a very rich history. In fact, that idea of Patrick Hughes from the 1950s, that there was more to find, was very right because there's been no more zinc found in the world since those days on a per-square-kilometer basis than here in Ireland.

Gerardo Del Real: That's impressive.

Michael Hudson: Europe's largest zinc mine is still in production, and there's been many more mines opened and shut. It's where zinc is formed and is predictable to find, and the Irish have been very good at finding a lot of zinc.

Gerardo Del Real: Now, you mentioned that it's predictable to find, and that's important, and we'll talk about why that's important to this project. Before we get to that aspect of it, can we talk a bit about your background? Because you cut your teeth with zinc projects.

Michael Hudson: I did. I know zinc. I spent the first 12 years of my career starting in Australia, three years underground. One and a half kilometers underground daily working in a zinc mine.

Then I went and started exploring for zinc around the world. It took me to some fantastic places, to Pakistan, to Peru. I even came here to Ireland during the 1990s and Pasminco was the largest integrated zinc company of the day. We spent a lot of time looking for zinc. I knew a lot about Ireland, of course, and that's what led me back here.

Gerardo Del Real: Perfect. Now, we've talked about it being the right time. I believe we're clearly in a base metals bull market, and what an opportune time to have a high-grade district-scale land package in Ireland, right? Tell us about the project, Mike.

Michael Hudson: Absolutely. It is a fantastic time. It is a zinc bull market. Only a week or two ago we were at 12-year highs with the zinc price. Zinc has a much more volatile history.

There's been a huge underdevelopment over the long term in zinc. This is not just a normal 10-year cycle where we see undersupply come in and more mines will come on. We're not seeing that now. The zinc remains in deficit, the supplier remains in deficit. There's been a lack of zinc exploration worldwide for the last 40 years essentially.

We're now putting into play our mines that have been sitting around for literally 80 years. They've been compromised because of metallurgical issues or difficulty in terms of location. Those new discoveries just have not been made in the zinc space, and that will lead to, I think... My prediction is that this deficit will continue for a lot longer.

It is controlled by a few players. The Chinese traditionally have controlled the excess supply coming to the market. Their environmental cleanup seems to have limited their ability to produce into this deficit.

Of course, Glencore took half a million tonnes off the market and have shown great restraint in bringing that on very slowly, so they also control the market greatly, but there is that fundamental reason there's been a lack of zinc exploration worldwide for a long time now.

Gerardo Del Real: Now, we know in the zinc space, with the zinc market it's controlled by the major players. You alluded to that. Any time that you're exploring a district-scale land package you need to check a few boxes. Location and infrastructure, obviously, are some.

Metallurgy, obviously, is a box that you definitely want to check.

Then scale, the potential for scale, because any mid-tier or major that wants to come in and take over a project isn't looking for a small project. I'd love for you to talk about the project a bit and talk about the infrastructure and the early metallurgical results that you've had some success with.

Michael Hudson: Okay. A very broad question. I can, suppose, start with the history of this project.

Patrick Hannan, we can go back to the history, was born here in the 1840s and the mine shut around that time — those Victorian age mines — but it was only 10 years ago that this discovery here was made, Kilbricken. It's one of Ireland's most recent discoveries. It was explored intensively with $25 million of cash spent in the ground drilling out what is Ireland's 10th largest resource to date.

It's had a lot of cash put into it by mainly Lundin Mining, who own the project, and we bought it from them in 2015. A very good start with a very good resource base.

There's approximately just over four million tons that have defined at high grades. When I talk about high grades, I mean 10% combine lead-zinc is what you really want to put a figure on as a high-grade deposit. We figure that we need to find, our modest first pass aim is 10 million tons at 10% to put us into an economic category. That's our aim on this project, so you can see we're 30% to 40% of the way there already, but this project is so much more, as you mentioned.

We have a good start over a kilometer and a half, where $25 million was spent, but if that's all we had in that area there'd be very little opportunity to get bigger than our modest aim to put 10 million tons and put some economics around that.

What the majors look for is our systems that will produce mines that can produce through multiple cycles. That means that they need to have lots of tons associated with them, and we're talking 10 million tons could produce.

There was a mine here that shut down a few years ago, Galmoy. That was an eight-million-ton system and that was a 12-year mine life, but we'd like to find mines that last longer and can produce a larger amount because that's really only how mining works. You must have the scale to produce over the long term and ride these cycles.

Our land package, that has large scale. We've got a very large chunk of Southwestern Ireland here that we're exploring. The scale is something like 20 kilometers of strike length that we've got beyond Kilbricken, and it's much more than that too because we've got to start thinking three-dimension.

Certainly, there's this project, even if something economic can be found in the short term it will be explored for decades to come. There's huge opportunity here. It's one of the last frontiers of Ireland that since the 1950s, I should say, exploration has just moved down here. There's been some big discoveries made around us. There's 100 million tons in historic resources and new discoveries that have been made within 40 kilometers of where we stand today.

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