Chakana Copper Corp.
- TSX-V: PERU
- Shares Outstanding: 93M
- Share price C$0.27 (07.07.2020)
- Market Cap: C$25M
Interview with David Kelley, CEO of Chakana Copper (TSX-V: PERU)
Chakana Copper Corp. is a single-asset Canadian-based copper-gold-silver advanced exploration company. Via its 100%-owned subsidiary, Chakana Resources S.A.C., it is currently advancing the Soledad project near Aija, in the Ancash region of the ‘highly prolific’ Miocene mineral belt in central Peru. While 30,000m of drilling has taken place on Soledad, shareholders have been left frustrated by the lengthy permitting process for the last 2+ years: a notorious and typical difficulty of mining in Peru. However, with the conclusion of the permitting process looking like it will take place in the next 4-6 weeks, new shareholders may be significantly less frustrated.
A maiden resource should be available for Soledad after the next round of fully-funded drilling; 15,000m of it, in fact. Kelley claims that Chakana Copper is an exciting geological story because it is exploring tourmaline breccia pipes. These pipes are providing high grades and long runs of extended mineralisation in the drill core. There was a lot of initial excitement when these numbers first started coming out.
Matthew Gordon talks to David Kelley, 7th July 2020
However, since then, the share price has been tracking steadily and continuously downwards. Why? An early overhang caused share price depression, but this has since been “cleared out.” Overall, the bureaucratic, paper-driven, protracted permitting process has clearly put a lot of investors off, especially for a single asset company.
The business plan from day one was never for Chakana Copper to develop a vast portfolio of projects. Instead, the company intended to leverage its expertise and commercial knowhow to acquire the very best asset it could. Kelley states that acquiring projects is easy, but acquiring good projects is much more difficult. This may well be true, but investors will likely be put off by the risk profile of Chakana Copper: a single asset company in a complicated mining jurisdiction. There is not currently a contingency asset, but it is clear that Kelley always has his eyes peeled for potential quality acquisitions in the future. However, the near-term focus is entirely on Soledad.
Chakana Copper has C$6.6M in the bank today. This will see the company through its fully-planned 15,000m drill programme on 2 new targets it has not drilled yet. The market is not currently valuing Chakana Copper very highly, but Kelley thinks that evidencing a 10Mt resource will be a crucial inflection point for the value of his company. A 10Mt copper-gold-silver project with “spectacular grades” should turn into a mine in Peru. Peru has plenty of mining infrastructure and societal support for mining, but the paper-based permitting issue remains. The physical practice of carrying documents around to be manually stamped has been comprehensively disrupted by COVID-19.
The team at Chakana Copper is solid, with several familiar names. The company has 5 directors, 3 of whom are geologists. Economic geologist John Black is a renowned name, and he serves as one of the company’s directors. He was a key driver in negotiating the sale of Antares to First Quantum Minerals for C$650M. He has plenty of operating experience in Peru and has carried out Chakana’s exact strategy before for a different company: taking an asset to the point it can be developed into mine and “divesting it” so somebody else can develop it. The company has a fully functioning team in-country, and there is no requirement for Kelley to constantly have his boots on the ground.
Gold-mining major Gold Fields invested C$8M at C$0.51 per share into Chakana Copper in May 2019. Kelley claims the company love the concept of multiple high-grade breccia pipes that are vertically extensive. He claims they are very intrigued by the upside potential of what is driving the breccia pipes. Most geologists think that breccia pipes are driven by a porphyry that sits at depth: a much larger type of deposit. The previous explorers at Soledad were solely focussed on this porphyry potential.
Chakana Copper hopes to draw on a level of technical expertise that is uncommon for a junior mining company to drive the de-risk the asset astutely. Kelley will be hoping that when this permit finally rolls in, the stock finally receives a welcome uptick. The company is currently stationary because of COVID-19, and he is itching to get back to work. Let’s see if Kelley delivers on the new permitting timescale. Then, let’s see if it has a positive impact on the share price. Long-suffering investors will certainly be hoping so.
What did you make of David Kelley?
Company Website: https://www.chakanacopper.com/
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