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

Hannan Metals (TSX-V: HAN)(OTC: HANNF) CEO Michael Hudson on De-Risking Valiente Copper-Gold Project, Peru, Ahead of Phase-One Drilling

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the chairman & CEO of my favorite copper-gold exploration play, and it will probably be that for years, folks, Hannan Metals — Mr. Michael Hudson. Mike, how are you today, sir?

Michael Hudson: Good morning from down under. I'm very well. Thanks, Gerardo.

Gerardo Del Real: Let's get right into it. I'm going to try to be brief in my intro, unlike how I normally do things: Hannan channel samples 126 meters of 0.22% copper from Previsto Central in Peru. You've expanded the copper-gold porphyry footprint over at least 5 km by 3 km. 

I want you to really explain it to me like a fifth grader, as a non-geologist, why this is so significant and why it’s so unique. It's early, and I'll caution that to listeners and readers. But it's a unique system at Previsto… and we can get into the details in a bit.

Michael Hudson: Sure, standing back, we have a new copper-gold porphyry belt in Peru. There's no doubt about that now. We've got 18 porphyries, and we've identified 5 that we've worked on in more detail. 

We've done all of the regional surveys and magnetic surveys. And we’ve identified the 18 porphyries and have worked on 5 of them. We've done soil sampling and geophysics. And we have some that are much closer to drill permitting, which is the ultimate truth-machine as we know. 

But this one, called Previsto, is the monster that we’ve found. The footprint is something like 3 km by 4 km, which is a very large footprint. And I will caution that it is early; soil sampling and channel sampling are only two-dimensional. We need to get three-dimensional information. And the drilling will be that. 

We'll be doing some IP [Induced Polarization] soon, which is a geophysical technique that will show us how much sulfide is in the ground going down to a depth of about 500 to 600 meters. So that's one thing we cannot wait to see.

But with this footprint and the scale, the grades that we're seeing in the soils are very high. And now, with this press release, we're starting to find outcrops, remembering that outcropping in this high jungle means it's about a thousand meters high, and it's hilly, steep, and quite difficult terrain.

When you get into the creeks, you can see a little bit of outcrop or where the rock comes to surface and is not covered by soil or trees. That's probably 0.2% of this very large area where we get to see these little windows of outcrop. And now, we're starting to trench hundreds of meters at 0.1% to 0.2% copper. That, in itself, is an impressive number in leached rocks. 

The copper basically gets weathered out near-surface and moves down below the surface, or gets washed away, in simple terms. If we're seeing those kinds of grades at surface, then there are good expectations that that will be upgraded quite significantly at-depth.

It's a unique system in terms of the scale. It's part of a big new porphyry belt. This doesn't happen very commonly on Earth these days where new porphyry belts are found. It's the same age as the major porphyries that are located about 50 to 70 km west of us in the higher Andes, which produce some of the world's largest mines. 

Peru is the second or third-largest copper producer on Earth. We're in the right area searching for elephants. And it certainly looks like we've got the head of one that's developing and developing very nicely.

Gerardo Del Real: You used the word unique. I use the same word. How special is the system? And mind you, this is just Previsto Central. We can talk about Previsto East here in just a bit. But how special is it to have a 10 km by 5 km airborne-magnetic and radiometric anomaly? How often have you seen that, Mike?

Michael Hudson: In isolation, magnetic anomalies are quite common. But in the context of finding the mineralized rock and all of the very high-grade soils and channels we're finding, we definitely know we're in a porphyry system. And it's varying from a very gold-rich top at the top of the hill. And then, down 800 meters, we're seeing the copper-rich part. 

We're seeing the system transition, and we know we're at the top levels of a porphyry. I've never seen anything at this scale in terms of what I've been involved with. Again, this is cautionary because we haven't got the drill holes into it yet. But the footprint and the scale of this system is equivalent to some of the biggest porphyries in the world.

You just don't see the scale of these systems very often. You can, if anyone wants to do the exercise, go and find the footprint of something like Escondida in Chile, which is one of the world's biggest mines, and put it next to the scale that we're finding. It's a simple analogy. We have more work to do but that's what we're comparing with.

Gerardo Del Real: Again, I want to be clear, what I just described, and what you just described is just Previsto Central. Two and a half kilometers to the east, you have Previsto East. You mentioned in the news release that the style of mineralization observed at both targets shows strong similarities. Is it possible that the entire system is connected?

Michael Hudson: Well, that's why we're doing the geophysics. What we’ve found at Previsto East is some very high-grade copper and gold in rocks. And it's actually the most gold-rich part of the system. We haven't found outcrop there; it's just very large, almost car size blocks, right down to very small. 

It could be sourced very locally. Or it could be a debris flow from about 3 km away, which would make it a massive system in itself if we're seeing it shedding from that far away. 

And that does happen in geology. Something like Yanacocha, which is one of the world's largest gold deposits, not too far from us, has some glacial deposits that are mined from the system, and they've been moved by glaciers over time. 

So we need to determine if there is a bedrock source to Previsto East or if it's just shedding from the monster 3 km to the west.

Gerardo Del Real: What comes next in terms of de-risking the project? And then, what comes next as far as the areas that get drilled first? It's a hypothetical question because I know the answer but I'm excited about the drilling at the Ricardo Herrera target at the Belen trend. 

I'm really excited about drilling the monster at Previsto. What steps are you taking now to further de-risk the project so that you can work on permitting the Previsto part of the project?

Michael Hudson: Yes, as you mentioned, we're getting closer to the end of the permitting process at Belen, which comprises two porphyries and an epithermal system over 12 kilometers. And we have 40 drill platforms that we're permitting there. We hope to see more permitted platforms in Q3 or Q4 at that boundary that's about 12 or 13 km from Previsto as it is all part of this same porphyry belt. 

At Previsto, the challenge is that it is such a large system. We’ve got more work to do. We currently have 30 people onsite; 8 geologists along with all of the support technicians and local support. 

And then, doing the geophysics is an exercise in logistics in itself doing 5 or 6 km lines through the jungle. We're putting lots of people on it so that we can fast-track it to determine the way the system works and what parts of the system are the best and what areas are most easily accessible for getting the drill rigs in.

There's a road going past Previsto East. You can literally drive a car to it. Then, as you go further west, you end up going up a hill that’s about 800 meters high, as I mentioned… so that's a little more challenging. 

So, again, what are the best parts of the system? How does the system develop? And then, what are we going to start permitting to be the first parts of that big system to drill so that we can make sure we’re testing the best parts of it?

I'd say, by the end of this season, which is around October, we will have done all of that work. And we will have started all of the environmental work that we need to collect from the flora and fauna, air quality, water quality, etc., to be in a position to put in a permitting application at the end of the year. 

So that's where we’re going. And we’re really going for it so that we can get the answers we need that will allow us to make sensible decisions by around year-end. 

Gerardo Del Real: The first drill bit that goes in at Valiente will go into the Belen area. Can you speak to — and, of course, we're assuming the permitting process goes as quickly as it has recently with Peru making efforts to bolster the exploration budgets for companies by expediting permitting… and, to my simple brain and my simple eyes, there has definitely been a more consistent approach by the Peruvian government — so as far as Belen goes, what are you hoping to see from the drill bit when you finally get in there and start drilling later this year or early next year?

Michael Hudson: Yes, so we have the 40 drill platforms permitted at the Belen trend for the two porphyries, Ricardo Herrera and Sortilegio. They are 1 km by 1 km in themselves, which is a significant footprint.

They're dwarfed by Previsto but, nevertheless, are of significant dimension. We've completed geophysics at Ricardo Herrera, and we can see that the system continues to great depth, and we literally know where to drill tomorrow. 

The key when drilling a porphyry and the associated skarns around the edge of it, and, in this case, the epithermal systems coming off to the side, is just to try and get into the best bits of what's there in terms of grade. 

There's no doubt that the mineral system is there. But what's the grade? Is it going to be a 0.4% porphyry? Is it a 0.7% porphyry? If it's 0.7%, then it’s literally world-class in terms of grade. And it’s at those higher grades where mines are being developed.

A 0.4% porphyry is not the number you'd probably want to see unless you've got some very favorable characteristics. Twenty years ago, 1% was the number. Ten years ago, it was around 0.7%. Now, it's coming down to 0.5%. So it's a question of grade.

Where do we focus as a junior? We know that there are gold-rich systems for kilometers. And gold is an easier story to tell and drill out than a porphyry zone. So we want to get those initial holes in and see what the system is and see what that grade is. 

And then, we can make the correct decisions on how to allocate our scarce capital and drill the best parts for the best bang for our buck for our shareholders.

Gerardo Del Real: Looking forward to it. Anything else to add to that, Mike?

Michael Hudson: No, just that it’s an exciting time, Gerardo. Peru has been slow to permit these things. We know that. But it's getting better, like you said. Certainly, we're seeing at least double the permitting speed at Belen as compared to what we saw at our other project to the north at San Martin in terms of where the Peruvian government currently is in that regard. 

We're getting support from the highest levels of government now, and they really want to demonstrate that the country is open for business. So that's a key part. We're onto a very large system, and we're starting to peel back the layers of the onion in working out where the best parts of the system are located. 

So keep an eye on things as we’ll have lots of news flow coming out with such a massive team on the ground.

Gerardo Del Real: I’ve got to believe your phone is likely ringing. I’ve got to believe that majors are watching. Obviously, one of the largest shareholders is a major mining company. They have to be thrilled with what they're seeing.

Michael Hudson: Well, the whole reason Canada's largest mining company currently owns 9.9% of Hannan is that they got in in the early days when we had only very little information about the system at Valiente. In terms of their support, they’ve come in in three tranches of financing over the last couple of years, and they've continued to follow their money and increase their position to now 9.9%. 

It's an independent validation that we have something unique. Without drill holes, we have a 9.9% holding from Canada's largest mining company, and we have a joint venture with the Japanese government on our other project at San Martin. 

So we're being backed by some of the biggest and the best.

Gerardo Del Real: I’m looking forward to getting out there in September. Thank you so much for your time, Mike.

Michael Hudson: Thanks, Gerardo.

Gerardo Del Real: Cheers!

Click here to see more from Hannan Metals Ltd.