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Chakana Copper (TSX-V: PERU)(OTC: CHKKF) CEO David Kelley on Upcoming Resource Estimate & High Grade Copper-Gold-Silver at Flagship Soledad Project
Gerardo Del Real: This is Gerardo Del Real at the 2021 Precious Metals Summit in beautiful Beaver Creek. I have with me the president & CEO of Chakana Copper — Mr. David Kelley. Dave, how are you?
David Kelley: I'm doing great, Gerardo! Thanks for having me on.
Gerardo Del Real: Not your typical day in the field…
David Kelley: Yeah, this is nice… isn't it!
Gerardo Del Real: Listen, you are on to one of the more exciting discoveries in recent months and maybe recent years. I mean, you hit some grades recently at the Soledad project in Peru — which I understand you just came back from — that were just absolutely eye-popping. Caught the market's attention.
Top of mind here, I believe, it was something like 12 meters of 27% copper with some impressive gold and silver grades to match. First off, congratulations!
David Kelley: Thank you; thank you.
Gerardo Del Real: I say congratulations because it felt like a new discovery. Though the fact is, you've been hitting great grades throughout this 32,000 meter drill program that you just recently completed.
David Kelley: Yeah.
Gerardo Del Real: I would love for you to provide just a brief overview of how your trip to Peru was because — for all of the media hype that we hear — you just drilled 32,000 meters without incident. You were just in Peru… we chatted… you said it was a great time. The labs are full. Everything seems to be a go!
David Kelley: Yeah!
Gerardo Del Real: And so not to say there haven't been changes but you haven't been impacted directly. Neither has the company, correct?
David Kelley: That's right. I mean, I would describe Peru, right now, as… it's bustling… it's open for business. All of the businesses that we needed to see were there… greeted us. It was great to go to site and visit the team when the drilling was active and going on. And we've accomplished a lot.
Even with COVID and everything that's happened… we've still been able to drill 32,000 meters. So, hats-off to our team! We've got a phenomenal team there operating in Peru. But also, the Peruvian people are resilient people… and they're going to find a way to get back to work and to make things happen.
And the mining industry is such a fundamental part of their economy. It has to continue doing what it does best, which is produce copper and silver at the second highest rate in the world… a very significant producer of the other metals. And they need new discoveries like we've made. So it's an exciting time for us!
Gerardo Del Real: You mentioned the team. You just made an addition to the board here over the summertime that I think really went unnoticed because, I think, in a better market, there would've been a better response. Do you want to share with the audience the addition to the board and just the past success of the gentlemen?
David Kelley: Yeah, let's start with Doug Kirwin because Doug really brought a lot of technical expertise to our team, and he was so knowledgeable about these tourmaline breccia pipe systems. And Doug is still a very strong supporter of us — he's only a phone call away. But Doug had other things he wanted to do… and he had made a valuable contribution to us.
So at the same time, we really needed the expertise of somebody like Doug Silver. And I've known Doug for 20 years now. And he is a geologist. He is left-handed like Doug Kirwin, and he's got the same name… but he brings such a strong commercial discipline to our team.
And he's been so successful, not only in the royalty and streaming side of the business, but in M&A. And he understands how the industry works. And so it's really, really good for us to bring on somebody like Doug.
Gerardo Del Real: Let's talk about the 32,000 meters of drilling. And let's talk about the last couple of releases with those spectacular grades, right? The name of the company is Chakana Copper. I've joked with you privately that it should be Chakana Copper, Gold & Silver!
And you know what, frankly, the last couple of releases seem to validate that — at least a little bit! Can we talk about some of the grades that you're seeing and what we can expect moving forward?
I know the answer to that is a very exciting resource update. And we'll get to that in a second. But talk to me about the grades that you're seeing and just how you feel about the geometry of the pipes. And then, the over 100 targets that you have. It's just the beginning of this story, right?
David Kelley: You know, our grades have always been impressive. And, really, the more sulfide you have — the greater the grade. I mean, that kind of makes sense. We never really expected to start seeing long runs of massive sulfide on the order of what you might see in a VMS — or a Volcanogenic Massive Sulfide — deposit. We're drilling breccia pipes, right?
But we were seeing one to two meters of massive sulfide. So we knew that the potential existed to create larger zones of massive sulfide. And it was really the more detailed drilling that you do in a resource definition drill program where you really start probing these areas. And all of our resource drilling was planned by a gentleman named Bill Tanaka. He's a very experienced resource geologist; he's worked on 160 projects in his career.
And the interesting thing about Bill, after he looked at our initial drilling on Breccia #1, Breccia #5, and Breccia #6, he said, this is one of the most well-organized mineral systems he's ever seen. And what he's really commenting about is the continuity and the way it all holds together.
These aren't sporadic intercepts that you can't follow up and substantiate, right? So that's a great thing to have in your mineral system. And you can see it in our results. We come in and we target a zone… and all of these zones are being targeted by Bill because he wants more resource drilling within these particular areas to use in the resource estimate.
So these aren't exploration holes; they’re infill holes. And then, to come in after 55,000 meters of drilling and hit a hole like that — not only the best of the project history — the best of my career by a long shot: 12 meters with 35% copper equivalent is just stunning!
Gerardo Del Real: And you made that statement, “The best drill intercept of my career,” I think, three times this year, if I'm not mistaken!
David Kelley: Right, yeah!
Gerardo Del Real: Which, again, speaks to just how lucrative those grades are. And I think you hit on a key point… how well the system is holding up. Because if you're ever, and I know the plan is this, if you're ever looking to have discussions with a major or a mid-tier that wants to come in and buy itself a copper, gold, silver-rich system — it has to hold together; it has to be mineable.
The grade means nothing if the geometry doesn't make sense. And I think it's a credit to your team that you've focused on that at this point. How is the met work… because if you can't recover it — the grade also doesn't mean much, right?
David Kelley: That's right! And you know, the first step is to get a resource and then drive your metallurgy based on where your resources are. And because we have multiple deposits — multiple breccia pipes — it was important to quantify how much metal we have in each breccia pipe.
We're really hitting the mineralogy hard. We're working with SGS out of Burnaby, and they're some of the best in the world in terms of mineralogy. So we're characterizing very quantitatively. We've done some preliminary met studies, and we've had some good results with that.
Gold Fields is really keen to see us take the next step in the metallurgy. And they bring not only financial resources but also technical resources and stuff, too. So that'll get hit really hard after we get that Inferred resource out because we'll then know really where to focus our attention on the metallurgical testing.
Gerardo Del Real: You have a new addition to the board that specializes in M&A and financing. You have a partner in Gold Fields that's clearly a major and is clearly supportive of the results that they're seeing. You have a resource update that's pending. You just completed 32,000 meters of drilling.
When can we expect that resource update so that the audience can start wrapping their mind around the start — the start — of what is at Soledad.
David Kelley: Gerardo, I wouldn't even call it an update because we've never had a resource estimate — it's the initial. I don't like to call it a maiden resource because, oftentimes, a maiden resource will paint a 75% picture of what the ultimate resource is. That's clearly not going to be the case here.
We're going to have a resource that's only going to be based on 6 breccia pipes. It's only going to be from surface to 300 meters depth. We know they're open at-depth. We know there's multiple other breccia pipes that we can bring into inventory with additional exploration. So I call it an initial resource.
It's going to be a demonstration of concept; 6 pipes down to 300 meters and demonstrating this well-organized mineral system and how it hangs together. And then, it's going to be building on top of that and adding more and more and more.
Gerardo Del Real: And you're going to add more and more and more because you have how many targets now… 110?
David Kelley: We have 110… but that's growing daily. Yeah, it's growing because, I don't know if we've talked about this, but we're doing a new generation of geophysics on the project. It's called Gradient Array. And we're doing a second follow-up technique called 3D IP. And this has worked… really, driven out of Gold Fields… and it's remarkable.
We finally have dialed in the geophysics specific to these breccia pipe targets… not the type of geophysics you do for a porphyry or a skarn or anything like that. This is really customized. We do what's called orientation surveys. We have a laboratory. We've already drilled out 6 breccia pipes.
We know exactly the depth, the shape… everything we need to know about them; the sulfide content. And now, applying these geophysics to these known mineral systems allows us to really customize the setup of the geophysics. And then, we're unleashing that property-wide. So there's going to be some exciting targets that will come out of that.
Gerardo Del Real: We know the market has responded well to the recent news. But we also know that, if we look at a one or two year chart, shares pulled back with the elections and then, kind of, the hype around that in Peru.
I’ve got to say, just on a personal note for speculators, I think that mitigates a lot of the risk. And I think 110 targets, resource estimate, the team you have in place, and the success you're having — it's a lot to like there! Where's the market cap?
David Kelley: Today, I think we're at about C$38 million… but it's going to go. I mean, we think we're really undervalued. But you can say that about a lot of the Peru stories. It's a great time to invest in Peru.
When I was down there, I didn't see anything that had changed or slowed down or changed in any way as a result of the elections. Everything is still steaming full steam ahead on the mining front. And I don't expect it, and we've always said that, I don't think the elections are going to change mining.
Are they going to top up the royalties or tweak them a little bit? That's possible… that's par for the course. But is it radically going to change the mining industry? I don't think so. It's too important to that country. It's been steaming ahead hard for 20 years. So I think good times are ahead for mining in Peru.
Gerardo Del Real: When can we expect that resource estimate?
David Kelley: First two weeks of December. Yeah, it'll be out this year, and everybody's aligned with that. I'm taking our resource estimation QP down, in two weeks, back to Peru. We're going to repeat the trip that I just made. We're going to do the site visit… we're going to visit the lab… we're going to visit the core facility… and we're working hard on it now.
We just finished the resource drilling; samples will go into the lab as soon as we get the logging done. And we're all on the same page as far as getting that resource estimate out this year.
Gerardo Del Real: And in between now and December, you have, I think, what… just over 60 holes pending?
David Kelley: Yeah, 61 drill holes to publish that we've actually drilled but haven't gotten the assays back. So there's going to be steady news flow. We've been really good about getting news out every four to six weeks. So that's going to continue.
We're trying to focus on individual breccia pipes in our reporting, going forward, just to create clarity that, Okay… that's Breccia #1; that's in the resource. Breccia #5; that's going to be in the resource. Huancarama; that's going to be in the resource.
We have lots of results on Breccia #5 and Huancarama because those are resource drilling programs that we had to hit really hard to get. We had a lot of open high-grade zones at Breccia #5 that had never been drilled out. So we went back there.
Huancarama, as you know, is a new discovery. It's big; it's got great grade. And so we've done a lot of drilling there. Paloma East and Paloma West; we've drilled those out. They're ready to go… they'll be in the resource estimate.
Gerardo Del Real: What's the over/under on beating that 12 meters, 35% copper intercept… I kid! Dave, a lot to like! Thank you so much for your time today.
David Kelley: Absolutely! Thank you.
Gerardo Del Real: Appreciate it.
David Kelley: You bet.Click here to see more from Chakana Copper