Hannan Metals (TSX-V: HAN)(OTC: HANNF) CEO Michael Hudson on High Grade Copper-Silver Outcrops Over 2.5 KM Strike at Tabalosos, Peru

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Hannan Metals, the very busy Mr. Michael Hudson. Mike, you have a lot going on. How are you, sir?

Michael Hudson: Thanks, Gerardo. I do feel busy but it's nice to be busy and I'm doing what I love.

Gerardo Del Real: Well, and you're doing it well. The press release today I think speaks to that. Let me read the headline and then I'll let you provide the context. “Hannan discovers first high grade copper-silver outcrops over two and a half kilometer strike at Tabalosos in Peru.” Congratulations. Channel samples included two meters at 4.9% copper and 62 grams per tonne silver. Every time you and I speak, I always caution that it's early stage but you're finding copper and now silver all over the place. You have to be happy and I imagine your JV partner, JOGMEC has to be happy as well.

Michael Hudson: Well, absolutely. I can speak for myself in isolation without a doubt. These were stunning results, really. I mean, when we started uncovering some of these outcrops back in January, and this is when these discoveries were made and some of the photos started coming back from the field of faces of black shiny chalcocite, which is a copper sulfide mineral, and these green areas and now finding multiple zones over a long strike extents, that was my moment of excitement. And, now I can share that joy with hard numbers now the assays are back from the lab. These are the first discoveries from Tabalosos in outcrop. We had some very high grade boulders that sort of were at the similar tenor of what we see in these outcropping areas.

Now it's starting to really take shape It's over two and a half kilometers I think we've now got of this high grade copper and not completely channel sampled. And, I suppose one other thing to really point out that this is high jungle area. It's got soils moving pretty much constantly. There's a very active environment with lots of rain and it's hard to find outcrops and the team has done bloody well. We talk about partially and fully sampled because we're not getting the full lengths of these mineralized or full widths I should say of these mineralized zones. We're only just getting little windows and then they're covered by the soil too thick that we can just can't dig and get down with the hand sampling methods and shovels that we're using at the moment. So, early-ish days but bloody impressive.

Gerardo Del Real: The outcrop discoveries were made in two separate zones. Correct?

Michael Hudson: They certainly were. They were made over a combined strike extent of two and a half kilometers but the two zones... One is Zona Sur, which means south zone, and Zona Este, which means east zone. But, they are covered by areas in between. We've got boulders in between that are shedding off some other areas that we haven't found obviously yet in between. But, the next stage is... Well, the areas that we found consistently are over up to half a kilometer strike. So, they're not small in outcrop that we found, right? We found multiple zones over up to half a kilometer at Zona Sur itself. But, the next stage is to run systematic soil sampling over the length of this prospective horizon that wraps around a salt dome. So, salt is the magic that makes these systems work. The salt has dissolved the copper at depth boarded into these rocks and the copper has dropped the salty fluids where there's a change in what we say redox conditions or going from oxidized rocks to reduce rocks where there's less oxygen and the copper just goes bang and settles out.

To map that horizon, we really need to run these soils. Then, we'll start to see the continuity. We'll be able to infill with more channels and map these things and get an idea of their true widths and grades even more than we have at the moment. Then, we'll move to drilling and we're starting the earliest stages of drill permitting in this area now. We've got a lot of work to do but we're starting the cadastral or the landholder work now that we know where the copper is. We're starting to determine who are the landowners and we're talking with a number of them but we need to confirm them legally and then we'll start doing archeological work and environmental work that will all fill into the drill permits. That will take place late this year or next year. The drill permitting in Peru is not fast, so nobody should have high expectations we're going to drill this tomorrow, but it's all a work in progress.

Gerardo Del Real: You've now, at least at Tabalosos, identified two mineralized target styles. You mentioned a strata-bound position in the upper levels of the Sarayaquillo formation and then you mentioned a structurally controlled sandstone hosted copper-silver target. The widths and the lengths are just... I think it's hard for the average person, even myself and I do this all day, every day, to conceptualize. I mean, the strata-bound Sarayaquillo formation you talk about being correlated over a 30 kilometer long trend and over five kilometers in width. You then talk about the structurally controlled sandstone hosted copper-silver target. That area's seven kilometers long and up to five kilometers wide in Tabalosos. How are you prioritizing the work in the field when you're there?

Michael Hudson: Yeah, and that's just Tabalosos, right? We've got a 120 kilometers of strike of this system that extends down to Sacanche, which is 80 kilometers south of Tabalosos where we're finding exactly the same styles of mineralization both in the Sarayaquillo and the Cushabatay formation. Obviously, the thinner high grade Sarayaquillo is a very compelling target but it will be long and we need to find continuity to get up the tonnes and grade, which it looks like it does have at this earlier stage, but the continuity question is the key question that we need to narrow down and de-risk at every point. And, then that's continuity at kilometers to hundreds of meters down, so the meter by meter sort of scale. We know it's there and it's forming over very large areas and we can start even now with these trenches that we've just taken, you can start to see the continuity at sort of the hundreds of meters scale. Then, the drilling will sort of answer the question at that scale and down.

So, prioritizing was your question though. We're also running a regional stream sediment program, a blag approach, basically, which is sampling the streams for anomalous metals and gold included copper-silver gold. That will give us the anomalous catchment areas within where those streams have been sourcing their waters from. Then, we can start to walk in and see these anomalous catchments, perhaps take more stream sediments into the smaller catchments and start to narrow down the areas. So, I suppose that's one way of prioritizing. The first way was to look at all the satellite data and airborne imagery and target the geology. Secondly, this stream sediment. Thirdly is prospecting and what we're doing now, and then fourth is the soil samples and becoming a little more directed. Then, fifth is the drilling. So, that's the sort of way you narrow it down and prioritize the priority of the areas.

The priority of the styles that'll all come out by that process. The thinner high grade Sarayaquillo is very compelling but the thicker Cushabatay, we're seeing gossans lead zinc parts of the system that are the peripheral parts of these copper systems we see elsewhere in the world. We see these lead zinc gossans at least 50 to 80 meters-wide in Sacanche specifically. So, if you can find something that's host grade at the right grade at those sorts of widths, obviously that's the fast track rather than chasing something that's thinner and high grade, but they're both compelling target styles. They both form in other parts of the world in and around these systems and we've just got to do the work now in that order as I just explained.

Gerardo Del Real: And, that ladies and gentlemen is why Mr. Hudson continues to make discovery after discovery. As a very happy and biased hand and shareholder, excellent job, Mike. Anything else you'd like to add to that?

Michael Hudson: No. Watch this space. I suppose we touched it at the start, but this is a fully funded project here in San Martin with Tabalosos, Sacanche and the projects fully funded by JOGMEC, a wonderful partner, essentially the Japanese government, their arm that is looking for metal supply for their industry. They're going to put in $8 million U.S. over a four year period. The first year is just coming to an end and then they can fund up this project up to $35 million U.S. by taking it through to feasibility. So, the Hannan shareholders in this respect get full exposure to this project. They'll own 25% of it if JOGMEC go all the way to that $35 million spend without having to dilute the company a cent.

Gerardo Del Real: And, then there's the other half of the company, right? You want to speak to that just to remind everyone.

Michael Hudson: Yes. And, then the JOGMEC deal is only a third of our ground position in Peru. We're a top 10 holder in Peru in terms of landholding, which is... I think that the peers around us are some of the biggest companies in the world and we're this little minnow that holds just as much ground as Rio Tinto or Barrack. And, so the JOGMEC deal, which is fully funded is only one-third of our ground holding in Peru. Two thirds is in our own right and we're exploring that to give shareholders full exposure to the upside of a new discovery.

Gerardo Del Real: A lot of upside. I suspect that by year end, you will be trading in dollars, not cents. Again, great work. Thanks again for your time, Mike.

Michael Hudson: Thanks, Gerardo.