Categories: Base Metals / Precious Metals
Topics: General Base Metals / General Precious Metals

Hannan Metals (TSX-V: HAN) CEO Michael Hudson on Expanded Mining Concessions and Post-COVID-19 Exploration Plans at the San Martin Copper-Silver Project in Peru

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

Michael Hudson: I'm great today, Gerardo. Healthy, safe and well. So very fortunate.

Gerardo Del Real: It's great to hear. Likewise on my end. Let's get right to it. You had some news that was pretty important for Hannan. You increased your mining concessions by 50% in Peru. You previously reported on February the 10th that you had already, frankly, a massive project, right? You're now increasing that by 50%. Total concessions now stand, I believe, at 656 square kilometers. Is that accurate?

Michael Hudson: That is correct. The 50% increase is absolutely correct too, Gerardo. It's a granting of already made applications. So it has increased, the granted claims, by that much, which is great, which is security of tenure. So rather than just putting an application in and waiting for it to be processed and hoping that it will be granted, we now have much more secure granted tenure, which allows us to start exploring properly and engaging with the local stakeholders correctly, because we now have security of title.

We had some titles starting to be granted towards the end of last year. That's just escalated over the last few months. It's a continuing process and we've still got a lot more claims to be granted of course, too. It's a huge land area as you said, 660 square kilometers.

Gerardo Del Real: You mentioned something there that I want to touch on because I believe it's critical, especially considering that the potential here is massive, but it is early stage exploration. The way that companies and the company representatives conduct themselves in the community in regards to social license is absolutely critical to whether you can develop these targets, drill them. 

Let's get way ahead of ourselves. If it one day becomes a mine, how you come into a community plays an important part as to how that dialogue develops over time. So I want to talk a bit about what you've done to that end and what you look to do moving forward.

Michael Hudson: Well, I'm a geologist as you are well aware. I love the rocks and I love discovery, and this is playing to my sweet spot and that of the team of looking for something new and big and exciting. But it means nothing unless you can get on the ground and do the work and progress the project. Of course, it's a bit of a oxymoron to state it so obviously, but maybe 50 years ago it was about the rocks. Today the rocks are very important, but less critical than just getting that social license, which is a big, broad term that's used and bandied around, correct and in place.

We've had more social permitting people than geologists on the ground at the start of this project to make sure we get it right. You start off on the wrong foot anywhere in life and it's very hard to recover. So we put a lot of work in just talking to people, essentially telling them what we're doing, telling them what exploration is. The expectations even around exploration are not always understood. People think that everywhere you're looking is going to be a mine, and that never actually eventuates. Of course, it's a high-risk business.

Telling people what you're doing, going and doing it, coming back and showing them what you've done and building up credibility and gaining support for what you're doing. Because there's so many benefits that come to an area, if it's done correctly, in what the mining industry can do. Really, we're going through a very new reality with the mining industry over the last decade or so, really regaining trust of society, I think. Society needs us. We're the foundation of everything that society does. Having that dialogue and acceptance is critical.

Gerardo Del Real: It's encouraging to hear that that is something that is at the forefront of Hannan and what Hannan is doing in Peru. Let's talk a bit about Peru, and then let's talk about the rocks. 

I know that Peru has indicated that mineral exploration and other industries – but the one we're interested here is mineral exploration – will be permitted to restart, I believe, during June, which is fast approaching. 

Can you speak to that a bit? Then let's talk rocks, because you're finding copper and silver mineralized zones in outcrop kilometers away from known mineralization. So can you speak to that a bit?

Michael Hudson: Sure. Peru was one of the first countries to lockdown. I think it was mid-March, around the 16th of March. They had a very strict lockdown. That's been actually extended to the population until the end of June, because they're really struggling to contain their infection rate and death rate, and all those awful statistics that we're becoming a bit numb to these days, it seems.

However, the government's playing a two-pronged approach here and realizes that it can't shut down absolutely. So there's a four-stage process to open up critical businesses and critical parts of the economy. Exploration was at number three on that four-prong list. The aim is to start exploration again in June.

Now, we'll only do that as long as it's safe and appropriate to do so. Sending people around the country from outside areas is not looked at favorably wherever you are, whether it's here in Australia or across in Peru. We'll stagger it and stage it and do it appropriately if it's safe for our stakeholders and our staff.

But that's the plan. So, that's the first part of the question. So we're very excited, of course, to be getting back again. Like everyone, we're stopped quickly and we're on a roll. But we've got our team in place and we've been working together and they're ready to go when we can.

Gerardo Del Real: Well, there's a reason why you're excited, right? You mentioned exploration kind of being your sweet spot. I tend to gravitate towards the higher risk, higher reward exploration stories. This checks a lot of boxes for me, Mike. I'm biased, I'm a shareholder. But anytime I see outcrops of 2 meters of 5.9% copper and 66 grams per tonne silver, and then additional outcrops, frankly, kilometers away, you can't help but be excited if you're watching the story. 

Tell us a bit about the rocks. I know that you're expecting results here within the coming weeks.

Michael Hudson: Yeah, we had an active program from January through to mid-March. And literally we're just starting to get some of those rocks back. Some are from the assay labs, others are still sitting in our field base. So, there's still more to come when we can get back there in the coming weeks and send them off too. So, it's a bit of a delayed news flow through what has happened.

But I just want to take one step back for a minute. The analog here, this is a sediment-hosted copper-silver system.

Gerardo Del Real: You took my next question, Mike.

Michael Hudson: Sorry, Gerardo.

Gerardo Del Real: Sorry to interrupt. No, no, no, continue.

Michael Hudson: The upside is understanding what we're looking for, and then, absolutely, I can talk about the rocks on the ground. But the Kupferschiefer of Poland or the Central African copper belt are two of the key examples here. These are super giant systems, and sediment-hosted copper systems form the second largest production of copper in the world today.

But interestingly, the Kupferschiefer, which is a copper-silver end member, just like we're looking at, is sort of over the similar scales, hundreds of kilometers. The Romans mined it, the Romans first found it. Now we're the first people to find this here only thousands of years later, compared to the Romans and the Kupferschiefer.

The Kupferschiefer was started mining in 1968, so it's had 51 years of mining, and they've still got 60 or 70 years ahead of them. These are multi-generational, huge systems. Even today, the Kupferschiefer produces more silver in the world than any other production center. So it's the largest silver producer, something like 40 million ounces of silver alone, and that's the byproduct.

The next largest producer single mine is Peñasquito, which produces half that amount, 20 million ounces. So the silver as a byproduct is significant in these deposits. It's something like the fifth or sixth or seventh – depending on what stats you use – largest copper producer, the Kupferschiefer, in the world today too.

So that's the target, that's the style, that's the direct analog. Sorry for preempting that. Now the Kupferschiefer's a couple of meters wide on average. It gets a lot thicker, it gets a lot thinner, but it extends for kilometers and kilometers. It's sort of 2% to 5% copper. We're finding 2% to 5% copper in the earlier stage, but over large areas, literally from 100 kilometers from north to south, or even longer, in context, in the right geology. We've got all the background. There's a staking rush around us. This is a new basin, and it has the opportunity to move Peru from the second largest producer as a country in the world of copper to the first, if it works.

It's significant, demonstrating continuity, the risk is high in early stage projects. I don't think we should use “but.” Yes, but here's the opportunity, right? At a smaller market cap and this is the engine room of discoveries. We've got a lot more work to go. But as I say, so far, so good.

Gerardo Del Real: I talked about the granted mining concessions covering now, I think, over 28,000 hectares. You also have 52 mining concessions that remain under application. That actually is a little bit over 37,000 hectares. It's a massive land package. What are you going to do with all that ground, Mike?

Michael Hudson: You get boots on the ground and explore it. Of course, every CEO, it's in the bingo checklist of IKN. We've got majors looking at our project is one of the things you want to check off. But you could imagine that a system this large has attracted the attention of the largest companies in the world who look for copper, and that's their job.

So I suppose in time, we've got to work out whether a smaller company in a good market can give the 120 kilometers justice, or we look to find partners. That's all the strategy that we're considering at the moment. But we own the asset 100% outright, we're making the discoveries and advancing it in our own right today.

Gerardo Del Real: It's a great problem to have. I mentioned that you have assays pending from the field work. Can you speak to when we'll see results there? Because everything you've published thus far has been absolutely spectacular.

Michael Hudson: Yeah, it's been a bit of a gap between news releases as COVID came down. Perhaps we should have just updated people a little more that assays had slowed down in press releases. We talked about it in management discussions that we publish, but we're back on track now with the assays coming. 

I expect in the next week or so the first round of assays will come, then they'll continue to flow. Hopefully, we can even get back out to our field base and send a lot of rocks that are green and shiny back to the assay lab, too. There's good news flow ahead of us.

Gerardo Del Real: Fantastic. Mike, anything else that you'd like to add? Thank you again for the thorough update. Is there anything that you want to add to that?

Michael Hudson: We're good, Gerardo. Thank you again for having me on your platform.

Gerardo Del Real: Looking forward to having you back on and hopefully shiny green rocks, right?

Michael Hudson: Lots of shiny green rocks.

Gerardo Del Real: Thanks again.

Michael Hudson: Bye.

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