Chakana Copper (TSX-V: PERU) CEO David Kelley on New NSR Royalty Agreement, Permitting & Community Relations at the Soledad Project in Peru

March 26, 2019

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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. Dave, how are you?

David Kelley: I'm great, Gerardo. How are you doing?

Gerardo Del Real: I'm doing well. Thank you for asking. I was joking offline that despite the permit delays that I know everybody's excited to get through, it appears you've been busy. You've been out in the field. You've just acquired the royalty on the Soledad Project, a 1% NSR royalty at a pretty substantial discount to what the original deal was, and I thought it was important for you to come on and just explain to everybody what the thinking was and what this allows Chakana to do moving forward.

David Kelley: Yeah, thanks Gerardo. It was an exciting development for us and it was really driven by our confidence in the project. We've done a lot of work on the Soledad Project, have a lot more to go, but based on what we've done to date and the 25,000 meters we've drilled so far, we're very, very optimistic that the project's going to continue to progress. It was an opportune time to acquire a standalone NSR on the project at a very substantial discount. It's about a 70% discount to the right that we had if we went forward and exercised the option agreements. But the important aspect of the NSR is it's an NSR that we hold now. It gives us an actual standalone NSR, free and clear of the option agreement, which gives us a lot of flexibility. We can potentially use that down the road for financing support to advance the project. But even if we didn't do that, if we just exercised the option agreement, it brings down the underlying royalty on the project going forward by one percentage point, which you know can be huge in a producing situation.

Gerardo Del Real: I touched on the permitting, you know copper is flirting with $3, gold seems to have put in a pretty good bottom here, it's currently trading at the $1,320-level, but it's seeing strong support above $1,300 recently. Obviously, the macro situation in regards to commodities looks better than it has in quite some time, this despite the fact that the US and China are still negotiating a trade deal, which of course if agreed to is supposed to be beneficial to the base metal prices. But where I was going is can you provide an update on the permitting and how that's coming along?

David Kelley: Yeah, the permitting is moving along. We've seen a lot of good progress made recently. We're waiting on one final signature, one final document to be approved as part of the permitting package. We meet with the ministry today in fact to get an update on where that is in that process, but things have been happening. We've seen other companies get permit approvals and no doubt that after PDAC and the ministry being there in force and seeing the excitement about exploring in Peru, no doubt they're anxious to get these projects moving forward, too. It's a significant investment in Peru. So we expect that that's going to continue to move forward. We've said May/June, in that time frame, but we actually think we're going to be ahead of that, but we're not going to keep off the pressure. We're going to keep our team focused on getting that last approval. The drill rigs are on the property. I saw them yesterday, they're ready to be fired up, and we've got plenty of great targets to test once we start doing them.

Gerardo Del Real: In the meantime I know you're doing some important field work. You've done some met work recently that I know you were expecting results from. How are those things coming along and moving forward?

David Kelley: The surface exploration is going really well in spite of the fact that it's right in the middle of the rainy season. In fact, we're starting to come out of the rainy season now, but the team's been really active. We've taken several thousand additional soils to the north side of the property, the west, and importantly to the south side, and those results are starting to come in. We've also done extensive geophysical surveys, detailed Time-Domain EM loops over all the know breccia occurrences and breccia pipes and targets. That data is being used to set our priorities for the drilling. We've done a targeting workshop recently and confirmed over 60 targets on the project. We're really well-endowed, I guess to say, with respect to targets on the project. It's a matter of prioritizing those targets and starting off drilling the highest priority targets first when we get that permit approved and moving forward with that.

Gerardo Del Real: For people that may be new to the Chakana story that are really banking on that permit before they dip their toes in the water per se, can you provide a bit of context as to the community relations, which is becoming more and more critical everywhere, but especially in Peru lately?

David Kelley: Yeah, it is a critical part of every project in exploration, obviously and no more so than in Peru. You see a lot of projects that are held up by community relations in Peru. We're fortunate that we're in a mining center of Peru. We're in the Ancash Province where the Antamina mine is and the Pierina mine have operated for a long time. There's actually an operating mine immediately adjacent to our property to the east, and it's an indication that mining really is a part of the fabric and the culture.

We have three communities that are close to our project. They're all part of our community social enrichment program that includes lots of different aspects, but most recently we were involved in bringing in dentists to serve the two closest communities, small communities with people that normally wouldn't be able to afford to get dental checkups and that type of thing. That was very well received in the community. We've also done other programs to help just improve the community, put a roof on the church, buy tables and chairs for one of the community meeting rooms, those types of things. We're very engaged with these communities and for good reason, they're our partners next to the project, but also a lot of our employees come from these communities.

Gerardo Del Real: Fantastic. David, anything else you would like to add? I appreciate the thorough update.

David Kelley: Gerardo, we always love to do these updates. We appreciate the support. Just keep watching us, we're working hard to make this the year that our shareholders are going to get rewarded on the exploration program at Soledad. It's a great project. We've had great success so far, but as I've told many of our shareholders, we're just scratching the surface. We've got over 20 confirmed breccia pipes to date, and we've only drilled 4 of those with some really excellent results and we expect those results to continue.

Gerardo Del Real: Fantastic. Thanks again, Dave.

David Kelley: Thanks, Gerardo, and have a great day.

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