One of the Best Speculations in Its Sector
With gold in a new bull market, the early gains are had by producers with healthy margins whose assets become more valuable as the price of gold increases.
However, the most explosive gains are often in successful explorers that are onto significant discoveries.
I just laid out three great picks for my Junior Mining Monthly readers. You can find out more about them here.
Another one is Chakana Copper. It has a robust treasury and a healthy balance sheet that will allow it to immediately continue drilling once its long-awaited permit is issued and the COVID-19 lockdown is lifted.
I spoke with CEO David Kelley about the opportunity and why I believe Chakana presents one of the best exploration speculations in the space.
To your wealth,
Gerardo Del Real: This is Gerardo Del Real with The Outsider Club. Joining me today is the president and CEO of Chakana Copper (TSX-V: PERU)(OTC: CHKKF), Mr. David Kelley. Dave, how are you this morning?
David Kelley: I'm doing great, Gerardo. Thank you very much.
Gerardo Del Real: Practicing social distancing, washing your hands, I assume?
David Kelley: Absolutely, yep. We're doing everything we can here. I'm based in Colorado. We're following all the right protocols, staying home and staying healthy.
Gerardo Del Real: Excellent. Approximately one year ago, May of last year, Gold Fields came in and wrote a check to the tune of approximately $8 million Canadian. They did it at a significant premium. I believe it was roughly at $0.51 a share, Canadian. And here we are, one year later almost to the day, right? About three weeks away, and you're trading at $0.13 with a market cap of approximately $12.5 million Canadian, the last time I checked.
I want to ask you, for those that are newer to this space or looking for opportunities — because I believe Chakana is one of the best exploration opportunities in the space — I want to ask you about the due diligence process that comes with a cornerstone investor like Gold Fields. What does that look like when they come in and vet the project?
David Kelley: Yeah, that's really a great point, Gerardo. That was huge for us because of the thoroughness of which they made their investment. It was based on several months of due diligence, covering multiple aspects of mining, not only the different technical aspects like resource geology, metallurgy, all the technical disciplines like geophysics and the exploration potential upside assessment, but also much broader than that. They looked at social and legal and the permitting circumstances, and where we're located in particular, being in an active mine district, was a real important thing for them.
So they were very, very thorough. And they're already a miner in the country of Peru. So having a team come in there and look at everything that we've done, and then step back and make an investment at a significant premium, as you mentioned, like they did. That was really, really huge for us. That's part of the reason our treasury today is so strong, is because of that investment.
Gerardo Del Real: And what does that treasury look like today? That's so important, right? I'm focusing right now on opportunities where the companies, as soon as the lockdowns are lifted, companies are ready to go.
I know you already have a drill rig on site, ready. Talk about the treasury and the market cap relative to it.
David Kelley: Yeah. So right now, we're just below $7 million Canadian. They put in $8 million and we're just right below $7 million. Obviously, we're keeping a very close watch on our spending, which has dropped dramatically, of course, because of the nature of the quarantine in Peru and the general shutdown.
So we're very, very healthy on the treasury side of things. As you mentioned, our market cap in there at $11 or $12 million. It's just remarkable, the strength of our treasury compared to the quality of the project and the results we've obtained to date with the 30,000 meters that we've drilled and the fact that we're fully funded for another 15,000 meters that's already planned to test new targets in parts of the project that we have not had access to.
And I can tell you, from looking at the data in detail over several months, the targets we're about to test are as good or better than the targets we've already tested. So we're extremely excited about the upside potential yet to come.
Gerardo Del Real: Let's talk about the upside potential and why I believe Chakana is one of the best opportunities and speculations out there. The bottom line is I think we're in the very early stages of what's going to be a historic precious metals market, led by gold.
I also believe the second half of this year, with supply destruction and everything being shut down, I know it's affected demand a bit with the economy at a standstill, basically. But I believe copper, mid-term, has fundamentals as strong as any. Your project, the Soledad project, has I believe 60% gold-silver component to it and approximately 40% of very high-grade copper. Is that accurate and can you provide a little bit of context there?