Chakana Copper (TSX-V: PERU) CEO David Kelley on Approval of the EIAsd Permit that Allows for 120 Additional Drilling Platforms at the Soledad Project in Peru
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Chakana Copper (TSX-V: PERU)(OTC: CHKKF), Mr. David Kelley. David, how are you?
David Kelley: I'm doing great, Gerardo. How are you?
Gerardo Del Real: Fantastic, fantastic. Thanks for your time today. Congratulations are in order. You finally got approval of the very, very important Semi-Detailed Environmental Impact Assessment Permit at Soledad in Peru. Congratulations, I know it took a little longer than anticipated. And I know shareholders, including myself, were a bit nervous. But you managed to pull it through. So congrats on that front.
David Kelley: Thanks a lot, Gerardo. Yeah, it is a very important milestone for the project. As you know, the delay was related to a replacement of the administrative staff in the ministry department. All of the cabinets and ministries were switched out after P.P.K. resigned this year and that was completely unanticipated by ourselves. Many other companies were caught in that same delay. We had originally estimated that the EIAsd would take about six months and it ended up taking ten and a half months. The delay was really attributable to the switch out in staff.
But the fact that we did get the EIAsd tells us that the government and that administrative agency is functioning again. They're starting to catch up on the backlog of permits that had accumulated during that time. And it was kudos to our team, our general manager, and our permit and legal team to get that done.
Gerardo Del Real: Excellent. So what this permit does, to be clear, it allows for an additional 120 drilling platforms, but more importantly you can now apply for a modification to the existing permit that will allow you to relocate platforms to go and drill some high-priority targets. Is all of that accurate, David?
David Kelley: Yeah, that's right. It's really important, Gerardo, for people to understand that the fastest way for us to get the EIAsd was to limit the permit application to the existing permit, which was based on the original Condor land position, and then modify that permit after we receive it to expand the work area boundary, and then allow us to selectively relocate platforms from the original Condor area into new areas where we want to drill. So that's the process. The second part of this process is now to submit the modification application that will expand that work area boundary, tell the ministry where we want to relocate some of the 120 platforms into the new area.
And the exciting thing for our shareholders is that at the same time that we're doing this modification, we're busy in the field doing surface EM surveys. We just started EM surveys three days ago. We've completed a very extensive detailed soil sampling survey over the entire Soledad breccia pipe cluster on 50 meter sample centers. And that data, together with the mapping and sampling that we've done, will be used to prioritize the targets.
So for the first time in the history of the project has the entire geological opportunity been put together from a mineral rights perspective but now also from a modern exploration dataset perspective. And we expect some very high-priority targets to come out of that at about the same time that we hope that the ITS is being approved. We will have that target prioritization done, the drill plan in place. We've already got two drill rigs sitting on the property, ready to be fired up. Once we get back to drilling, then we will be drilling some very exciting targets.
Gerardo Del Real: Now I understand that the modification that you're seeking will go through the same group of people, the same office that just approved this permit. Is that correct, David?
David Kelley: Yeah, that is. And we hope that that helps expedite the approval process. It's not a large area that we're expanding the boundary to include, it's the southern part of the breccia pipe cluster that takes us down to the valley bottom. But it does importantly include several breccia pipes including the very, very large and exciting Huancarama Breccia Pipe Complex.
It's multiple breccias in a 200 meter wide by 100 meter across zone that had very high-grade gold right at surface rock chip samples, and a very impressive soil gold anomaly around it. It will include all of that. Having the same team evaluate the modification that approved the permit just means that they're intimately familiar with the details of the project, and we're hoping that helps expedite the approval of the modification.
Gerardo Del Real: Excellent. Now we know that you have the two rigs on site, they're idle for the time being while you continue with the work to delineate the high-priority targets. What does the cash position look like? It sounds like you're keen on conserving the robust cash position that you have right now.
David Kelley: Yeah, that's right. We're trying to be very smart with the money that we have. We have about $8.5 million Canadian in the bank right now. That's more than enough to do the 20,000 meters of drilling that we need to do, to get our target initial resource assuming that those meters go into productive infill resource drilling on mineralized pipes, which we anticipate that it will. But we are being very cautious with our spending right now, obviously the markets are down, and we were fortunate to do the financing last March to get a strong treasury position, and we're in a good position to carry out the drilling once we get the ITS approved.
Gerardo Del Real: Excellent. In the meantime, I know we still have assays pending, you had another excellent set of results a couple of weeks back. I believe it was something like 264 meters with I think it was 0.71% copper, and 1.3 grams per tonne gold, and 24.3 grams per tonne silver, if I'm not mistaken. So assays are still pending, correct?
David Kelley: Yeah, that's right. And importantly that was on Breccia Pipe 5. We put out a lot of great results on Breccia Pipe 1. And that hole you just mentioned is the best drill hole ever drilled on Breccia Pipe 5, which is another very exciting breccia pipe.
It definitely is going to factor into the resource estimate along with Breccia Pipe 1. So we were excited to see that kind of a result come out of 5. And then we got some additional final results on 5 to come out and then we will be reporting on two additional pipes that we drilled in the northern part of the property in the Condor area.
And our decision to stop drilling was really based on wanting to be able to drill the best priority targets, or the highest priority targets first once we get the ITS approved. So it was just an opportune time to take a time out from drilling, get the surface surveys done, the EM surveys, the soil surveys, detailed mapping and sampling. And then come back drilling with all of that data put together in a 3D model in a targeting session to identify the best targets and then really try to maximize the impact that this first resource estimate will have.
Gerardo Del Real: You mention the soils, and that's an important piece to this because the soil geo-chemistry is working pretty well from what I understand. I mean you've had pretty good success in identifying targets and drilling them and getting some great results. How important has the soils been to you?
David Kelley: It's been really important and they've worked even better than I thought they would, and I'm a geochemist. I was optimistic we were going to get good results from doing soils. We brought in a geochemist, a guy named Chris Benn. He's one of the best in the industry, and Chris did a proper orientation survey to tell us the optimal sampling method, the optimal spacing of the samples, and analytical method. And that really allowed us to fine tune and hone in on the correct, or the most optimal way of doing the soil surveys. We've now, in the release we put out recently, showed a big part of the soils for the center part of the property, and it outlines the known breccias beautifully.
Huancarama has got a 400 meter by 200 meter continuously anomalous soil, not only around the known breccias. And this is determined on 50 meter centers so it’s really well substantiated, and it also highlighted all the other known breccias – Breccia 1, Breccia 5, Breccia 3. But it also importantly highlighted several additional areas where we didn't have exposed, or altered rocks due to soil cover or colluvium. Some very exciting new targets have come out of that systematic soil sampling, so that even adds to the inventory of targets to be tested that we had already previously known about.
So we're real excited about those results, and actually we expect the same thing to come out of the EM surveys. We expect to see things that we hadn't seen before just because of exposure in addition to highlighting and substantiating the known breccia systems. So I think we're really going to be in a strong position to put forth a really exciting drill program.
Gerardo Del Real: In addition to that drilling program, and the modification permit of course, we have a resource estimate to look forward as a potential catalyst in 2019. When should we anticipate that? I have to assume that you're going to use some of the summer drilling and work that into the resource estimate. Would that be correct to assume that?
David Kelley: Yeah, that's right. We've already done a lot of drilling that's going to contribute to that, and our goal is to put several more pipes into that inferred resource drilling category. So we're looking at getting three or four additional pipes into that.
And really the upside for the project is the idea that we can have multiple breccia pipes, high-grade mineralization, vertically extensive pipes. Pipes that are getting bigger at depth which we've already confirmed in our drilling on two of the pipes. But demonstrate that by putting multiple pipes together you develop a much more impressive inventory of mining resources to go after. So in terms of how you would design the mine, how you would interconnect the breccia pipes and ramp up production, and how you would be able to deal with mining multiple pipes to get the production rate up.
That's really the upside potential we wanted to be able to demonstrate. So by holding off and putting out a resource that's based on multiple pipes, we hoped that brings home that concept that this really could be an impressive mine in the future if we could get the resources in the similar grades ranges that we've already drilled on the first few pipes. If we could deliver that we really think that it's going to be a huge catalyst for the company.
Gerardo Del Real: Well, we know it’s been a tough year in the junior resource space. There has been very few exceptions. You were smart, you raised money at $0.90 back in March. Shares sit at $0.29. I believe your market cap is somewhere along the lines of $24 million Canadian. I think it's a heck of an opportunity and 2019 sounds like a pivotal year for you.
David Kelley: Yeah that's right, Gerardo. It has been a really tough year in the markets. Our view is keep your head down, keep doing good work. Our shareholders are very supportive of us. They like the results, they like the project. Nobody likes the share price of course, and it pains me to see our share price go down as much as it has. But I can tell you that there's more good results coming out. There's a really exciting potential that's yet untapped, and we're just going to keep working hard. We've got a really good team in Peru. They haven't been distracted at all by what's happening in the market. Their heads are down, they're working hard, and we're doing some exciting things on the project right through this period. So I do expect to reward the shareholders with some good news and keep moving the project forward.
Gerardo Del Real: You've executed well. Congrats to you and your team, and I'm looking forward to 2019. Thank you for the time today, David.
David Kelley: Thank you, Gerardo. Always a pleasure.