Chakana Copper (TSX-V: PERU)(OTC: CHKKF) – currently trading below US$0.40 per share – is making good on its promise of delivering a steady flow of assay results from its ongoing Phase-3 drill program at its 100%-owned Soledad Copper-Gold-Silver Project in central Peru.
The latest batch of assays has produced some of the highest grade intercepts yet for the entire 7,400-acre project — including an impressive 24.99 grams per tonne gold equivalent starting from just 32.4 meters below surface.
Chakana CEO, David Kelley, stated via press release:
“These are some of the highest grades we have ever seen on the Soledad project after 33,000 m of drilling. Intersecting 10.7 m with 7.25 g/t gold, 10.2 percent copper and 163.5 g/t silver demonstrates the high-grade potential of the tourmaline breccias at Soledad…”
Chakana Copper (TSX-V: PERU)(OTC: CHKKF) CEO, David Kelley, on some of the Highest Grade Hits Yet at Paloma West
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Chakana Copper, Mr. David Kelley. Dave, how are you?
David Kelley: I'm doing great, Gerardo. Thanks for asking.
GDR: Every time I speak with you, I have to say congratulations, but I think congratulations are in order again. You just announced results from three additional holes at the high-grade new copper-gold-silver Paloma West discovery. I mean, just phenomenal numbers.
The headline number or the headline reads, "Chakana Copper Intersects 10.7 Meters of 7.25 Grams Per Tonne Gold, 10.2% Copper, and 163.5 Grams Per Tonne Silver." And as important is that this is from 32.4 meters.
So I am going to do something a bit different before I allow you to provide some context. I'm going to play devil's advocate a bit.
In past releases, I’ve heard the skeptics in the space say, "Well, yes, hundreds of meters of decent sized mineralization, but it's not high-grade,” right? And now, I'm hearing, again from the skeptics, "Yes, super high-grade. It's near-surface, but we're not getting those long widths of sustainable mineralization."
So I'd like to start this conversation by allowing you to address each of those.
DK: Yeah, well, that's exactly right. You drill hundreds of meters from surface of 0.8%... 0.9%... 1.0% copper equivalent, and they're not seeing the spectacular grades. And then you turn around and deliver the spectacular grades — and they want the long, long run.
I think a lot of that is just investors that are not sure what the results really mean. That's where the resource estimate is so critical, right? That's where it comes in and it actually puts some numbers on what you’ve found, and it puts some economic significance on what you’ve found. We're working towards that, and that's going to be helpful for the market to look at that.
But the long runs of 1% copper are very, very significant. The 10 meters of 25 grams per tonne gold equivalent right beneath surface — that's also very, very significant.
What I tell people is that the importance of both of those different types of intercepts is the fact that it gives the projects optionality. We're talking about long runs of continuous mineralization which is great for bulk mining.
The very, very high-grades over 10 g/t, 20 g/t, 30 g/t, 40 g/t… remember, it was just a week ago that we put out the 42 meters of, I think it was, 1.87 grams per tonne gold, 2.1% of copper, and I can't remember what the silver number was. That was a very, very significant intercept too… and that was at Paloma West.
So there are significant runs of mineralization at Paloma West on the high-grade side. But it's also very significant because it means that you could do selective mining in a situation like that and really take out very, very high-value rock. I mean, 25 grams per tonne gold equivalent — that's on the order of $1,500 rock. So that's a very, very significant result.
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GDR: Taking the view – the forest view perspective – instead of looking at the tree… can you explain how this is coming together as a potential mine?
Because the other pushback I've received – and you touched on it right now – has been, "Well what's going to be the preferred mining method?" And my response is always, "Champagne problems, as a wise man once said," that wise man being you.
It's great to have the optionality and to have the potential for multiple types of approaches. Do you see that the same way being that you're running the ship over there?
DK: Well, yeah. It still has to go through rigorous analysis, and that's what the industry does. We first get the resource, and that allows us to start trying to look at what we’ve found from a financial perspective… what's the best way of getting this out of the ground. And there's a variety of different mining techniques.
And the open pit is obviously the favored method because it's a bulk mining technique that allows you to get very high production rates. It's also very cheap. We see open-pit mining rates on the order of $4 a tonne — something like that. Whereas when you go underground, you're looking at more like $40 a tonne.
But when you have high-grade working in your favor, and you have high metal prices like we have now – $1,800… $1,900 gold – that is a great gold price.
Everyone thinks this is going to get higher — and I do too. You know, $24 silver… $3.20 per pound copper — those are high metal prices, historically speaking. And when you have high-grade on top of that, you've got the double benefit of that. It allows you to even look at different alternative mining methods that you might not have looked at before.
The mining engineers absolutely love these kind of results, because, again… optionality, high-grade versus low-grade — we're not talking about marginal things that are right on the edge of maybe being economic or maybe not.
Once we get the resource out, the mining engineers go to work on that and they start looking at the best way to take it out. That's what optimization is all about… it’s figuring out what the best approach is going to be on each one of these breccia bodies.
The other thing, of course, is the fact that we've got so many breccia pipes that have turned good. We've drilled nine of them. Seven of them have returned really, really good grades. So our hit rate is really high.
It means that we could mine multiple pipes at the same time. They're vertically extensive so we could mine multiple levels within the same breccia pipes at the same time. And it's looking really, really good, I think, from a mineability standpoint.
GDR: Assays are still pending and you are now drilling at what many believe is the most prospective target, which is Huancarama. Can we speak to that a bit? How is drilling coming along?
DK: It's going really well. Again, we've seen no disruptions from COVID-19 — knock on wood. We've got our completely isolated 40-man camp installed. It's being used now which is great for the team because it keeps all of the people together. It minimizes impact or contact with the outside communities. So that's going really well.
We've got seven drill holes left that we're waiting on for Paloma West. We've completed seven holes at Huancarama now. No impact either from... you know, there was some political turmoil in Peru over the last week with the impeachment of the President and the appointment of an interim President… which the public didn't like.
That person has stepped down. And now they've appointed President Sagasti as the President. That seems to have calmed people. He does have a very impressive resume, and it's just an interim appointment, anyway, until April, when the elections are held.
But again, no impact on our drill program. We're still really well-funded, and the drilling is going well. So fingers crossed everyone stays healthy and they keep drilling the way they've been drilling. We've got lots of samples in the lab… lots of samples headed to the lab… and stuff like that.
The lab is doing a great job but they do have to spend a lot of time doing re-assays on our work because of the high-grades — but we love having that problem.
GDR: Champagne problems, Mr. Kelley! Thank you so much for the update. You answered my next question, which was in regards to the political turmoil, which, frankly, it's par for the course for Peru. We're all familiar with the region.
Unfortunately, it's been a region that continues to suffer from the instability that the political class there… amongst other countries including the one I live in now here in the US… seems to be going through on a global scale.
So it's great to hear that the camp is isolated… that the COVID precautions you've taken have gone exactly as you planned and that there wasn't any disruption from the political upheaval that we've seen in the media. Is there anything else that you'd like to add to that?
DK: No, Gerardo. Thanks for getting us on the air quickly. I think getting the context around these drill intercepts is really important. It's hard to just read through the numbers because we’ve put out so much. I was just thinking today, we started on hole 17 and we're now on hole 158 — or something like that.
That's over 33,000 meters of drilling on this project. It's a new discovery. Discoveries are rare. How many discoveries are out there that have the kind of copper, gold, and silver grades like we see? This thing is a really, really unique opportunity, I think. And investors are going to be rewarded.
We appreciate all of the support that you guys bring us. You've been there from day one. So this is going to have its day in the sun. I'm absolutely convinced of it. We'll just keep our head down, keep drilling, and keep producing these kinds of results — and I know people are going to pay attention.
GDR: Well, as I tell everybody, we wouldn't be speaking if I wasn't biased. I've added to my position this week, again. Frankly, if you keep delivering these numbers, I hope the price stays here a little bit longer because I will continue to add on continued success. I think you're one hundred percent correct.
Eventually, the market will get it. And in the meantime, you keep finding gold, copper, and silver, Mr. Kelley. Thank you so much!
DK: Thank you, Gerardo.
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Resource Stock Digest, Junior Resource Monthly, and Junior Resource Trader. For more about Gerardo, check out his editor page.
