Hannan Metals (TSX-V: HAN) CEO Michael Hudson on the San Martin Sediment-Hosted Copper-Silver Project in Peru with 76 Kilometers of Strike

May 10, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the Chairman and CEO of Hannan Metals (TSX-V: HAN)(OTC: HANNF), Mr. Michael Hudson. Mike, how are you this afternoon, morning in your part of the world?

Michael Hudson: Top of the world at an early start, Gerardo, here in Melbourne, Australia.

Gerardo Del Real: Excellent. Well, listen, I wanted to have you back on. I appreciate your time. Thank you in advance. The field season at the San Martin sediment-hosted copper-silver project in Peru has commenced. I have the good fortune of having a very detailed press release in front of me, and frankly, I don't think that I can put the context and color that the release deserves any better than you did in the release.

So I'm just going to read what you said in the release. What you said was:

"Very rarely does a junior exploration company gain a first mover advantage that allows claiming of a district-scale sedimentary copper-silver target over 76 strike kilometers in length. With our new geological synthesis and understanding, we look forward to the 2019 field season which will target mineralization scale, grade and thickness."

You're absolutely correct. Very rarely does a junior gain a first mover advantage that allows for 76 strike kilometers in length. Can you provide some details there for me, Mike?

Michael Hudson: Thanks, Gerardo. You've stolen my thunder, really. I mean, that's the story, isn't it? I mean, we've got a new basinal scale discovery of a sediment-hosted copper project, which is the second most prolific style after porphyries for copper in the world, where we have the super deposits that Ivanhoe and the like are going after in the DRC, and they also extend out to Zambia.

They form over big areas, and this is what we've got here. We've got some very detailed geological thoughts there that will be lost on most people, but we wanted to demonstrate the work that we've been able to put in behind the scenes here. This is essentially an unexplored basin for base metals, but it's been explored for petroleum for many years, and a lot of that data now is available.

So, we've been able to strip back the understanding, if you like, of that basin that the oil guys used, and apply it to the base metal world. These styles of mineralization are very well understood, and we're very excited. It's got all the hallmarks, at this stage as we understand it, and some of the work we've done in the field that suggests that, you know, that a big system can develop here. We've got copper over that 76 kilometers that we've found to date, or has been in some very early stage historic work.

The grades there, so far in non-representative grab samples in creeks, at the end of last year we got close to 3% average copper and an ounce silver in 15 kilometers, and we're extending that work. The challenge now is to find, as you just read out, not to find only the mineralization, we know that exists, we know it's a new discovery, not many companies get hold of basins and are first movers. But now we've got to find where it's thickest and highest grade, and that will take a lot of work over this large area, but we've got a lot of the boxes ticked to date.

Gerardo Del Real: It's interesting to me, Mike, as a non-geologist, non-technical person, when I hear that the regional geological framework has a similar correlation like the Central African Copperbelt, that's quite a statement. Can you explain that to, again, people like me who are not geologists, who are not technically educated when it comes to geology, in these types of systems, why the correlation? What is it about the systems that's striking to you?

Michael Hudson: In simple terms – and geologists are pretty simple people, actually, Gerardo, with our fancy words, so that's one good lesson to remember also – it’s source, transport and trap. So you want to find a source of metals, you want to find how they get transported into an area, and then you want to find out they're trapped or concentrated in an area. Each different style of mineralization forms differently around those three parameters.

So what we've seen here is a big basinal scale, movement of copper, looks like we've got the right source rocks with what we call the Mitu Formation, we think.

Then importantly, there's a lot of salt that was deposited, a huge amount of salt that was deposited in this basin. That works in many different ways in these deposits, including in the Central African Copperbelt, where the salt dissolves. It moves the copper around, it creates these big structures, it creates porosity. Those big structures are what we're looking for to move things around.

Then we need to find the traps. The traps here are chemical in many respects, so we call them redox traps, reduction oxidation traps, where you go from oxidized fluids, where the copper's mobile, into a reduced trap, and there's a lot of big, reduced sequences here where the copper's falling out at multiple levels.

So, they're the kind of things we look for, and then we've got all the seismics from the oil guys to reconstruct all those parameters, and just determine where we are in the basin. Yeah, it sounds simple. Of course, the devil is in the detail. But that's the 101.

Gerardo Del Real: Excellent. Field season is supposed to take approximately 5 months, is that correct? Do I remember that right?

Michael Hudson: It will be basically predicated by the dry season. So, we started there in early May, and it will take us until October, sometime like that. The rains and the creeks, and getting up and down this area. This is high jungle, so it's around about 1,000 meters, the 600-1,200-meter range. But it's on that Eastern side of the Andes, and probably why it has been left. They're all the same age rocks as we see up in the main Cordillera of Peru, but it's been underdone probably in one instance because of that jungle cover. So, that's the challenge, but during the dry season, you get around pretty easy.

Gerardo Del Real: Sounds like a fascinating project. Your team has extensive experience in Peru, I'm looking forward to samples and results on that front. What can we expect next from Hannan?

Michael Hudson: Exactly that. We've got three geologists and teams with those geologists, basically walking up these creeks, making these discoveries, and literally we're making discoveries, primary virgin discoveries, and looking for the outcrops, mapping those outcrops, and trying to find that scale, grade and width. Then really understanding also, right? That's a very key part when nobody's really put this framework together. Applying all that understanding that we see at the big level and the seismics, and applying it on the ground.

So, lots of samples that will extend the system is the ideal, and then locating drill targets for next season.

Gerardo Del Real: Fantastic. Mike, thank you so much for that thorough update, it's appreciated.

Michael Hudson: Thanks, Gerardo.

Gerardo Del Real: Chat soon.

Michael Hudson: Bye.

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