Categories: Base Metals
Topics: General Base Metals

Hannan Metals (TSX-V: HAN) CEO Michael Hudson: First Step-Out Hole Results Demonstrate Resource Expansion Potential at Kilbricken Zinc Project

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is CEO and Chairman of Hannan Metals (TSX-V: HAN)(OTC: HANNF), Mr. Michael Hudson. Good morning in Australia, Michael. How are you?

Michael Hudson: Good morning, Gerardo. I'm top of the world, thank you. Actually, bottom of the world.

Gerardo Del Real: Literally, literally. Now, listen, Mike, you and I had an opportunity to catch up at the Beaver Creek Precious Metals Summit, and I though the conference was very well attended. I thought the chatter was the right type of chatter, and I thought it was the right people at the conference. By that, I mean there were a lot of mid-tiers and majors that weren't presenting, but were definitely there, looking for ways to participate in what's going to have to be a replenishment of their reserves, eventually. I thought that was meaningful. I'd love to get your take. How did the meetings that you had during the conference go for you, Mike?

Michael Hudson: As I'm getting older, I realize that everything in our business is about timing and moments, Gerardo. Even more and more, even though exploration is a longer-term business, if you like, and this is one of the preeminent moments and times on the calendar, this conference. It really is the who’s who in the business. It really struck me between the eyes, we've talked about it, but exploration is back. The level of interest in exploration, and the value proposition that it provides, and some of our competitors have done very well, and tweaked the interest of the market. But, more importantly, people see that resource creation that only comes from exploration, and the depletion of resources around the world is real.

So, everybody's interested in exploration, again, and looking for those stories. From the majors, right through to investors, and investors at every level, and brokerage houses, and it's a good time to be an explorer, again.

Gerardo Del Real: Excellent. Excellent. We've talked about the Kilbricken project, and you've stated that it's the right project, in the right place, at the right time. When I think about the right time, this is a very advanced project, but it’s very early days with Hannan. I think your market cap, the end of day today, was a tiny, tiny sub-Canadian $12 million dollar market cap. Can we talk a bit about the latest news release? I'm going to read the headline and I'd love for you to provide some context.

The headline read, "Hannan drills 4 meters at 0.7% zinc, 8.9% lead and 31 grams per tonne silver, or 8.6% zinc equivalent, in first step-out hole at Kilbricken, Ireland." Now, this was a 50 meter step-out. I think you were a little bit of a victim of your own success, Mike, because that first hole was absolutely spectacular. So much so that the regulators triple checked to make sure that the numbers were accurate. But this, I thought, was a very successful hole that showed a lot of good continuity. Can we talk about the results a bit and could you provide some more color to it?

Michael Hudson: Absolutely, Gerardo. This was a very strong hole in all respects, really. I think you are right. I mean, the first hole that we reported a few months ago included 3 meters at over 80% lead plus zinc, and over a broader intersection, and that was one of the highest grade holes I'd seen in my career. Remember, I've had a dozen years in the biggest lead-zinc company at the start of my career. So, I've seen a lot of these results and that was certainly one of the best.

We followed this up with the first step-out hole. Now, a step-out means literally that, right? We step out 50 meters from the last resource hole and this is what our story is about. We need to expand this resource. We think we've got a very good start of over 4 million tonnes, but our stated aim is to get to 10 million tonnes. So, these step-out holes all add tonnes and grade, and that highlight was certainly very much in the resource category, but importantly, as over a 55 meter that was mineralized in continuous intervals down the hole, and that's very important as the system continues. So not only did we see grade, but we saw thickness, and that means continuity.

So, 50 meters of continuous mineralization, with the first step-out hole, is certainly something that we were very excited about. I urge people to get into the detail of mineralization and have a look at the cross section that was at the bottom of the press release, which shows that mineralization and the continuity of that body.

Gerardo Del Real: Excellent. Now, Mike, you have a pretty clear mission statement for Hannan. You want to reach at least 10 million tonnes, because you feel that's the threshold at which point you can be a takeout target. You can monetize the asset. Can you explain to those that are maybe new to Hannan, or new to mining in general, why the continuity is important, if you're a mid-tier or a major looking to buy a resource, a deposit, a company with good exploration upside? Why is that continuity so important?

Michael Hudson: Continuity equals minability, is the technical term, I suppose. People might have heard that word, but basically, we're trying to find a body that is potentially minable, here. This is not early stage exploration, looking for a resource, and starting to drill it out. We've had $25 million dollars in the ground that's got us a very good start, and we need to demonstrate enough tonnes here to establish enough mineral in the ground that will give us enough value to put the capital into the project that is required to ideally develop it. That needs resource expansion. This is a resource expansion story and first step-out hole, concept proved. Big tick.

We've got an 8,500 meter program planned between now and year's end to continue to expand that resource and look for new development of mineralization, but the mineral doesn't stop at the resource boundary and that's very important. That's what we've been telling people, and this first hole demonstrated that.

Gerardo Del Real: Excellent. Excellent. Now, tell me about the current drill program. You mentioned 8,500 meters that are scheduled to be completed during the first quarter of 2018. I know there's a rig turning now, can you provide an update there?

Michael Hudson: We've got two rigs turning right now, Gerardo. So, two rigs on the property, turning, and we want to get that 8,500 meters completed by the end of the year, or early into next year. This money we raised, only a few months ago, $3.3 million in an over-subscribed placement, was targeted towards drilling and seismic. So we've got a very big seismic program starting next month. A 40 kilometer plus seismic program, which is a big onshore program, just to try and put this whole mineralization in context, to continue to develop targets and that resource expansion over a larger area for next year.

So, we're going gangbusters here and I think there's a lot of eyes on the company and the stock, but exploration's back. This has got a very good chance. First concept proved that mineralization can extend, and where we sit, compared to our peers in the zinc space, is at the very low end, with a very advanced project. I'm very excited, at least, as what we're going to see in these drill holes as these two rigs continue turning over the next three to four months.

Gerardo Del Real: Wonderful. Now, are both rigs diamond drill rigs?

Michael Hudson: Absolutely. They are, Gerardo. There's two diamond drill rigs.

Gerardo Del Real: Wonderful, and how are core recoveries thus far?

Michael Hudson: Excellent. Excellent. That's a very good question, that I don't normally get on interviews, but it's a key point because the only way to see what's beneath our feet is with a drill rig. If you're only recovering 80% or 50% of the drill core, then you're only getting that much information. 80 or 50% of the information, and it's really wasted information. So, you want to make sure you return every bit of the rock in the drill core, from the drill bit into the drill box, and we're getting 95 to 100% recovery. It's no problems where we've been drilling today.

Gerardo Del Real: Excellent. When can we anticipate the next set of assays?

Michael Hudson: The next set of assays will be a month or so away. We've got two rigs turning, it takes about a month to complete every drill hole, in Kilbricken, and we've got two holes in their infancy, at the moment, and with the turnaround, I expect a month or so.

Gerardo Del Real: Fantastic. Well, Mr. Hudson, I'd like to thank you for your time. Is there anything else that you'd like to add?

Michael Hudson: We're doing a lot more work, we've got a strong core team of very experienced people on the ground. So, as I said, it's the drilling, it's the seismic. We've taken, literally, nearly 1,000 soil samples over the last few months, which is the first stage of exploration that targets the drilling, and we're seeing some very interesting results there that we'll announce, also, in the next weeks.

Gerardo Del Real: Fantastic. Mike, thanks, again, for your time. I look forward to having you back on, as those results start coming back in.

Michael Hudson: Thanks, Gerardo.

Gerardo Del Real: Thank you.