Hannan Metals (TSX-V: HAN)(OTC: HANNF) CEO Michael Hudson on New Large-Scale Copper Acquisition in Chile, Plus Update on Flagship Copper-Gold-Silver Assets


Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the chairman & CEO of Hannan Metals — Mr. Michael Hudson. Mike, it is great to have you back on. It's been a bit. We got a chance to catch up at PDAC a little bit. That was a blast. How are things going?

Michael Hudson: Busy, I think, is what we just had a discussion with off-air here, and there's a lot happening, and we've taken our immediate futures into our hands here with Hannan with the new acquisition we're going to talk about while still maintaining a keen focus on our very large systems in Peru.

Gerardo Del Real: Well, let's get right into it. You just signed an agreement with an option to acquire 100% of Cerro Rolando Copper Porphyry Project in northern Chile. It's within one of the most important belts in Chile. 

It is a target that, knowing you and your group — ‘targets,’ I should say — but there's one specifically that you mentioned in the release that I know you vet diligently. And I know that most of these don't ever make it to the public domain because of the high bar that you set for allocating shareholder capital towards drilling a project. 

That's not something that you do just to do, as I've come to know you here for well over a decade now. Tell me about the project and tell me about what attracted you to it.

Michael Hudson: It's just one of those projects that comes to you and you go, well, there's something really interesting, I suppose; untested, undrilled target, historic geophysical data that demonstrates a kilometer and a half scale conductor down at 200-odd meters, which is below the pampa cover. And then, a big magnetic anomaly underneath that. That's the interpretation from historic data. And that could imply a chalcocite enrichment blanket, which would be conductive, the EM conductor. 

And then, that magnetic anomaly could be the potassic core, which contains magnetite of a porphyry. And it's in elephant country. It's in the Paleocene Belt in northern Chile there. There's no shortage of copper in and around this project. We have BHP with Spence and Cerro Colorado there, and KGHM and Sumitomo with Sierra Gorda, and Relincho, which is a well-known project, of which one of our shareholders is one of the dual owners of that tech. So lots of copper, elephant country, undrilled target, large project at scale. And then, the key point is that we can get in there and drill it relatively quickly and relatively cost-effectively.

Gerardo Del Real: We talked a bit off-air, and you mentioned that. And when we talked a bit off-air, I asked why no one else had ever tested this project. And I thought the answer was interesting, and you reference it in the release. This has been a target in a project that a lot of people have looked at but I understand that it's under quite some cover and it's just never seen a drill bit. Is that correct?

Michael Hudson: Never seen a drill bit. Two hundred meters of cover is very much relatively shallow these days. Obviously, we've got to find the grade and find a porphyry with enough grade from an underground mining perspective. But that's not unusual these days too. I mean, I'm good friends with one of the block cave specialists. 

The science of block caving has been generated here. You can basically block cave at around six bucks, $6.50/tonne these days. So that's changed the way we can look at these big mass targets and the way that majors look at them. So it's been sitting there. It’s got some historic data. It's been in private hands. 

We acquired it from a private group, and it's just got all of the ingredients where we pay US$32,000 up front to basically enter the project. And that's all it's going to cost us in terms of vendor terms until after we've drilled it and seen whether it's got legs or not. So it's a relatively low-cost, high impact project for us while we wait for permits in Peru.

Gerardo Del Real: Let's talk Peru. I've had a lot of subscribers and readers and shareholders and followers of Hannan write in and ask me about how things are coming along there. I know that there were conversations at PDAC about, hopefully, the permitting process being expedited and, hopefully, a willingness in the Peruvian government and the relevant authorities to pivot in that direction. 

How are things moving along, Mike, from your perspective as it relates specifically to Hannan because I know that when you and I spoke maybe three or four weeks ago, you said, ‘Listen, Peru politics aside, the teams in the field haven't been affected in any way. The exploration has gone well, the groundwork has gone well, the vetting of the projects; that's gone obviously very, very well.’

The only thing, of course, that hasn't gone the way we all hope and want is the time it's taken for those permits to come through. What's the status on that front?

Michael Hudson: So we've got two projects in Peru. One in joint venture with JOGMEC that we've spoken at length about. That's the sediment hosted copper project. That DIA, that EIA, to conduct drilling; the environmental impact assessment was actually completed about a year ago today. So we've been waiting a year for a permit. That's not unusual. A year to 18 months would be the rule of thumb at the moment. 

And quite importantly, there's another year or so on top of that for those who are exposed to indigenous landholders. So the Consulta Previa process does not apply to us in any of our projects. Remembering that when we staked all of these projects, we stayed out of indigenous areas, we stayed out of any protection areas. We just wanted to keep our life simpler in context with the complexity of what is Peru. 

So the San Martin project, we've had observations from the authorities, a couple of rounds of very basic observations, more technical stuff about moving vertices of the drilling areas, etc., or moving the buffer to the drilling areas and things like that. Nothing significant.

So it's really in their hands now, and we think that we're getting very close. But I'd be a fool to give you a date because that's hard. But we think in the next quarter or so we should be seeing that. And then, the next stage after you get your DIA is to apply for an initiate activities permit and a water permit, which is probably a three-month process. 

So if we had the DIA approved today, it would still be another three-odd months. But we've got the drill contractor; we've got the drill pads ready to construct. So that's in San Martin with JOGMEC. And then, as it relates to us, which is the exciting 100%-owned porphyry project, we've got 17 porphyries that we've defined in Valiente. We've got one area that we're putting into a DIA as we speak.

We're collecting all of that groundwork. So we had 20 people at site a few weeks ago, and all of that groundwork data has been collected. That's water, air, soil, social issues that need to be dealt with. We need to have a public participation meeting with every village and stakeholder in the district and all of those kinds of things. So that's happening as we speak.

All the scientific data has been collected and literally in the assay lab now. And then, we'll hold the public participation workshops in conjunction with the mining authorities, which is a standard process in the next month or two and submit the DIA. So we're at least a year or 18 months away, as it stands today, from drilling.

Now, you mentioned that there were some discussions at PDAC that were very high level discussions. The Peruvian government came enmasse to say, ‘We're open for business.’ Please continue to invest, basically, was their message. And the Prime Minister, the Minister for Finance, the Minister for Mines & Energy, came and spoke to a group of thirty-odd of us around a round table. And they heard the message loud and clear that we would like to spend money in their country but we can't while we're waiting for permits. 

So they’ve made lots of pronouncements at the very highest level of government that they've heard that message. But politicians are politicians. So let's see what happens. But at least it's back on the radar. So that's not as it relates specifically to this project but the industry as a whole.

So there's a very long expose… but I thought that it was well worth just discussing the specific timeframes and what we're doing.

Gerardo Del Real: That's exactly the kind of answer I was hoping for. I want to ask you about the geophysical survey that outlined a significant exploration target to 500 meters depth, is how you describe it in the February 23rd release. This is at the 100%-owned Valiente porphyry project. 

You mentioned the many, many, many porphyries that you've already discovered. You were really specific in this news release. And geologically, you sounded excited about what you've been able to uncover here with this specific target. Can you speak to that just a bit before I let you go, Mike?

Michael Hudson: Yeah, and it's a complete derisking of the target at the next level. So we had two-dimensional information until a month or so ago. We had flown the magnetic data, a half a million dollar survey over all of our projects. And that's what defined the 17 intrusive or porphyry centers in combination with our surface sampling. 

And then, we've done lots of mapping and channeling specifically at Belen where the IP was conducted. And we've got two porphyries at Belen. That's the DIA area I was just talking about. It's about a 12-km-long area. 

One of the porphyries was tested with IP. IP is induced polarization, and it basically is very good at measuring disseminated sulfides. They hold the charge; the charge is turned off, and then we measure the K. And we ran it over the southern porphyry, Ricardo Herrera, and defined a target that, if you did the math, the chargeable anomaly was something like 600 million tonnes of chargeable rock.

Now, of course, we've got to demonstrate grade in that, so I'm not talking resources. I'm just sort of talking volume and scale of the chargeable anomaly. But it's pretty exciting. The sulfides are associated with porphyries, and copper sulfides are chargeable as iron sulfides. So it defined one of the 17 porphyries in three dimensions and what we want to see, and it’s open beyond 500 meters. We can't see below 500 meters depth with these techniques. So very exciting.

Gerardo Del Real: I'm looking forward to the day where a drill bit goes into some of these targets. I'm looking forward to drilling at San Martin; obviously, the JOGMEC joint venture there. And now, I'm excited for this Chile project, which it sounds like we could see a drill bit turning here within months.

Michael Hudson: We're going to do the geophysics in the next month. So we're getting on the ground as quickly as possible. And then, it's a three to four month permitting process to get a drill rig on the ground. So yes, it should be within that timeframe, subject to the geophysics replicating the historic data.

Gerardo Del Real: Mike, that was an informative update. Always appreciate the time. Thank you so much. Anything to add to that?

Michael Hudson: No. Thanks, Gerardo. I'll let you go. Thanks so much.

Gerardo Del Real: Cheers. We'll chat soon.

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