Copper-Gold Hit Sends Shares Higher

Gerardo Del Real
by Gerardo Del Real
Chakana Copper (TSX-V: PERU) (OTCQB: CHKKF) surged over 12% Wednesday on more excellent results from its copper-gold-silver Soledad project in Peru.

I spoke with CEO David Kelley about the results and what to expect in 2021.
You can read that interview below.

Let's get it!
Gerardo Del Real
Gerardo Del Real
Editor, Junior Resource Monthly

New Interview with Chakana CEO David Kelley

Gerardo Del Real
Gerardo Del Real:  This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Chakana Copper — Mr. David Kelley. Dave, how are you this morning?

David Kelley
David Kelley: I'm really well, Gerardo. How are you?

Gerardo Del Real
Gerardo Del Real:  I am well, I am well. The last few times that you and I spoke, I played devil's advocate, and you had one release where you had very, very good widths of mineralization. But me playing devil's advocate, I argued that, yes, you have very high grades… but it's 5 meters… it's 6 meters.

And then, the next time I played devil's advocate, it was… well, sure you have these long widths of mineralization now but it's lower grade. And today it seems like you just decided to hedge both of it.

The headline reads, "Chakana Copper Intersects 101.5m of 0.61 g/t Au, 0.91% Cu, and 19.8 g/t Ag (2.26 g/t Au-eq) from 32m at Paloma West, Soledad Project, Peru."

I want to get your take on the geology. It seems like you now have a great handle on this portion of the property. But there were some other numbers that were pretty fantastic from these four holes that you reported today.

You had a 53.5 meter intercept of 3.07 grams per tonne gold equivalent. If you want to take the copper numbers, that's 53.5 meters of 1.26% copper and 0.78 grams per tonne gold. You had, within that 101.5 meter intercept, an 18 meter intercept of 5.63 grams per tonne gold equivalent.

Just fantastic numbers. I would love some context on today's results, Dave.

David Kelley
David Kelley: Yeah. Thanks, Gerardo. I mean it really is significant. When you start drilling out a new discovery, this is kind of how they evolve. You hope to get some good initial hits to just tell you that there's strong mineralization there… but you're still trying to figure out the geometry.

And we know that the grade changes significantly too as you continue to drill because this style of mineralization lends itself to some very, very high grades, often along the margins of the breccia. And so we know that once we get into the system and figure out the geometry that we're going to continue to find these pockets. But also more importantly, maybe to look at it from a mining standpoint is figuring out the geometry so you can figure out where this breccia pipe is going.

And that's where you start getting the long runs of mineralization.

And that's what's happened here. The first few releases were relatively shorter intercepts but very high grade… but we were really trying to figure out the geometry. And then, once we start figuring out the geometry, then we can start drilling down the pipe at different angles trying to penetrate the margins of the pipe to get a control on the model and the geometry.

And then you start seeing these longer intercepts like this.

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Gerardo Del Real
Gerardo Del Real: You talk about looking at it from a mining perspective. And I couldn't help but notice that the release references hole 152, which, as you stated, significantly extends mineralization to approximately 165 meters below surface and is open at-depth. Can you speak to that?

David Kelley
David Kelley: Yeah. And that's really the hole that kind of opens it up for us. We put together our models and we worked together in a 3D environment. We do these GoTo meetings where we're looking at the 3D model, probably three or four times a week we're doing this, updating it every day with the drill results.

And we're constantly trying to put in our thoughts on where the pipe is going and what the shape looks like and that type of thing. Because, as we've talked, we've never seen the bottom of a breccia pipe yet. They're all open at-depth. And that's really, really significant when you think about the upside potential for this project.

So the goal, of course, once you start figuring out that model is to test your ideas. And that's what hole 152 was all about… was putting a drill hole down where we thought the breccia pipe was going. And sure enough, we get that nice long run of mineralization within which we have some very, very high grades that you pointed out.

Gerardo Del Real
Gerardo Del Real: You mentioned that additional infill drilling will be conducted at both Paloma East and Paloma West to be included in the initial resource estimate. I know that Paloma West turned out to be a much bigger system. Frankly, East and West both turned out to be larger than expected.

When can we expect that resource estimate and at what point do you decide… okay, we're going to stop here for the purpose of the initial estimate. And then, of course, we can update later with Huancarama, which we'll chat about here in just a second.

David Kelley
David Kelley: Yeah. And really the key is… when do you stop drilling and take what you've got and put it into the resource? Obviously, we've just started drilling on Huancarama. Actually, we've completed 13 holes now and we're drilling hole 14. So we've got a good start on it, but we need to get those results out and we need to understand what they mean.

The challenge in something like this – when you're actually in the middle of a discovery – is when do you stop and pull the numbers together, especially when you're drilling something exciting like the Paloma target area and something like Huancarama? So we're going to be monitoring that.

Our goal has been to have a resource out by the end of March. Everything is going really smoothly with the drilling. The only thing that might interrupt that schedule or that plan would be just continued good drill results that we know are going to contribute to the resource. And it would certainly make sense to do more drilling and include that.

But we're committed to getting a resource out in 2021, and we think it's going to be a great initial step for the project just to demonstrate what the potential is. And with all the targets that we have remaining to test, and all the breccia pipes that are still open at-depth that we have drilled, the upside potential in the project really looks exceptional.

Gerardo Del Real
Gerardo Del Real: You've drilled 13 holes at Huancarama. How many do you anticipate drilling?

David Kelley
David Kelley: That's a tricky question, Gerardo. I mean, I can't think of a great analogy to come back to you with on that… but it's a big area. And we drilled 52 holes at Breccia 1 in part because we discovered a blind breccia pipe there. 

But as part of the initial scout drilling, I would say, because it's such a big area, we probably will end up with 20 or 30 drill holes. But from a resource drilling standpoint, it could be big, and obviously it depends on the grades we're seeing and getting from the drilling and how the breccia geometry shapes up there.

But certainly just looking at the footprint of the breccia system at-surface – and we did include a photograph of the Huancarama system, a drone photo, in the news release showing where the drill rig was located at the time of that photo – so you can see how big the footprint of the Huancarama breccia system is.

So I think we're going to be drilling there for quite some time.

Gerardo Del Real
Gerardo Del Real: I think the market is slowly but surely going to start appreciating the significance of this discovery. I know that we talked about the short position that now has finally been exhausted. It's great to see that. It coincides with some phenomenal results. 

2020 obviously has been a challenge for a lot of people. I'm excited for 2021. I suspect that we should anticipate assays for Huancarama after the new year. Is that accurate, Dave?

David Kelley
David Kelley: Yeah, we'll be getting back on the phone together, Gerardo, and talking about Huancarama in January for sure. I'm really excited about that! You guys have been with the story since the very beginning so you've seen the evolution of the exploration unfold and your subscribers have benefited, I think, from your very persistent reporting of the results.

And we'll continue to do that in 2021, starting in January, and I'm really excited to have that first conversation.

Gerardo Del Real
Gerardo Del Real: I am as well, Dave. If I don't speak with you, have a great holiday, have a great Christmas, a phenomenal New Year — and we'll chat in January!

David Kelley
David Kelley: Thank you, Gerardo. You as well.

Gerardo Del Real
Gerardo Del Real: Thank you so much!


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.

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