ATEX Resources (ATX) - Copper Drilling Starts Again in October

ATEX Resources is a Latin America-focused exploration company. ATEX’s flagship property is the Valeriano copper-gold project where it recently reported initial mineral resources for the near-surface oxide gold deposit as well as for the large copper-gold porphyry which underlies the oxide gold deposit.

While the company’s immediate focus is on expanding the current oxide gold resource with the goal of commencing economic studies in the near future, the company is committed to realising the full potential of the Valeriano copper-gold porphyry. The company has also initiated a low-cost generative exploration program in northern Chile for high sulphidation precious metal deposits and has staked a number of properties for review. 

Matt Gordon caught up with Raymond Jannas, CEO, and Director, ATEX Resources. Mr. Jannas has over 35 years of experience in mining geology, exploration, and business development in Latin America. He headed exploration teams that led to the discovery of Pascua-Lama, El Morro, and Johanna in Chile, the Choco 10 Gold Deposit in Venezuela, and the Cerro Corona acquisition in Peru. He has held senior positions with Gold Fields, Barrick Gold, LAC Minerals, Hochschild Mining, Metallica Resources, St. Joe Minerals, Rosario Resources, and Minera Fuego. He holds a Ph.D. from Harvard University. 

Company Overview

ATEX Resources is a Latin America-focused exploration company managed by a team of dedicated professionals with the goal of discovering economically viable mineral deposits through a disciplined approach to exploration. The company was founded in 2019 and is headquartered in Toronto, Canada. It is listed on the Toronto Stock Exchange (TSX-V: ATX). 

Drill Operations

ATEX Resources recently published a press release highlighting the exploration update. The company was looking to drill 3 holes of 2,000m each. Hole 17 was drilled at a depth of 2,057m, over a 3 month period, while hole 19 was drilled up to a depth of 1,308m. The second and third holes couldn’t be drilled up to the desired depth due to issues with the drilling company. These issues led to the abandonment of the drill program. The company did end up finding a bit of porphyry. 

The company already had mineralization appearing in the host rock and the porphyry, however, it was lost. Drilling on the third hole commenced in March 2022, and the company realised that it would be unsuccessful in reaching the desired meterage. This hole was abandoned at a 430m depth due to technical issues. 

The company was able to accomplish hole 19, which was located 200m northeast. In both the holes, the mineralization appears comparable to hole 14. The company is still waiting for the assay results, which are expected in around 6-8 weeks. 

Although the drilling company had a lot of expertise in deeper drilling, it had one and a half crew for one and a half rigs. In order to operate 3 rigs, the company had to bring in new people that lacked the required expertise, leading to the eventual mix-up. 

For future programs, the company is looking to ensure that any team working on drilling has the required expertise to operate each rig. The company had raised capital in December last year and started drilling in early January 2022. At this time, most of the drill companies were unavailable and only one accepted the challenge. As per ATEX Resources, the drilling company did a great job trying to meet the objectives, however, some minor errors ended up affecting the holes. 

As the first hole took 3 months to drill, the company was aware that it would only be able to reach two-thirds of the maximum distance. As a result, I wasn't as concerned about the third hole. 

The 2 holes located 200m southwest were incomplete, however, the other hole 200m northeast helped in understanding the system’s continuity. It is important for the company that the porphyries continue on both sides. However, the extent of the system’s continuity is yet to be determined. 

ATEX Resources is looking at a 70% success ratio for its drill program. Notably, the first 600m-800m are not in the mineralized zone, which continues beyond these ranges. According to the company, hole 17 is considered a 100% success, while hole 19 is 50% success. The company was unable to reach mineralization in the third hole. Its objective was to confirm whether the porphyry mineralization extended in both directions, which was successfully determined. 

The company raised $8.5M in December 2021. It had allocated a $1M budget for each of the three 2,000m holes. The company anticipates that hole 17 will have significant mineralization. Although the exact meterage is unknown at this time, the company believes that the grades at hole 14 would be similar to 17. The latter has some interesting geological features that the former lacks. Hole 17 featured some biodynamic-type breccias cutting through the mineralization. These breccias aren’t big in size but contain a lot of chalcopyrite. 

Hole 17 was drilled up to a depth of 2,050m, and mineralization was found to continue at the hole’s end. However, it wasn’t the highest grade seen within the porphyry. The mineralization continuity appears to be very strong towards the south. In the northeast, the hole was coming into the porphyry when the company had to abandon the hole. It was coming into a long porphyry intersect which couldn’t be completely developed. However, it showed that the hole carried quite interesting grades. 

ATEX Resources had to conclude its drill program by April 30, 2021, because it wasn’t prepared to drill over the winter season. The drill site already had a bit of snow. Currently, the company is demobilising. It has plans to start phase 3 of the drill operations in October. The company anticipates that the assay results will showcase the strength and continuity of the system. This would help the company raise capital for the next stage of the drill program. 

The company is currently in discussions with multiple drilling companies for expert assistance on the drill program. At the same time, the company is conducting an EIA (Environmental Impact Study) for longer-term exploration. The company is also in the process of acquiring a camp to ensure that there’s a definite on-site camp. This would enable the company to drill for at least 6 months, between October and April. If the conditions are ideal, the company has plans to further extend the drill program. It is also focused on the maintenance of equipment and camp during the winter season. 

The company ended up spending a lot more than half the capital allocated for the drill program. This is because losing and abandoning the holes caused the loss of a lot of rods. Recovering the rods is a time-consuming process, and it turned out to be more expensive than originally anticipated. This was the company’s first time drilling to such a depth, and it's likely that ATEX Resources is the only junior company that has drilled at such depths in Chile. 

ATEX Resources shared some of the costs of the drill operation, in order to shield the drilling company from massive losses. The company believes in maintaining relationships with drill companies and considers them a part of the team. 

In phase 3 of the drill operation, the company is looking to deploy at least 3 rigs. Each rig is expected to drill at least 2 holes. The company has plans to drill at least 6 holes in phase 3 of the operation, which has an estimated cost of $12M plus. 

Cash Position

In order to conduct the drill operation, the company is looking to raise additional capital through equity. The company is currently awaiting the assay results for holes 17 and 19. The samples are currently in the lab and are expected around June 2022. Once the results are in, the company is looking to plan a capital raise. 

Pierre Lassonde has been a major shareholder of the company. At one point, he held 10% of the company’s shares. As per ATEX Resources, Pierre realises that there was a problem with the drilling. He also understands that the intersects appear mineralized as expected. Currently, Pierre and the company are awaiting the assay results. The company anticipates that Pierre is going to continue to be supportive of the drill program. 

ATEX Resources anticipates that all the shareholders will continue to support it in the next stage of the drill operations. The deposit is expected to have a big system. The company has already identified 200m of mineralization on either side. The assay results are expected to be quite positive. There’s a chance that this can be an underground blockaded system. The company’s vision is focused on growing the deposit and making it into a geometry that works. Visually, the system looks adequate at the moment. 

The upper part of the drill holes 17 and 19 were found to have high sulphidation-type copper mineralization, similar to Filo del Sol. However, the grades and the extensions for the deposit are currently unknown. The company’s Hypogene porphyry looks very good and consistent at depth. It is expected to make up the bulk of the system. The company is looking to raise funds in late June or in August. The company also has warrants that are set to expire in 2022. This will help the company acquire funds that will help support the operational expenses. It is aiming at an opportunistic raise as opposed to a desperate one. 

ATEX Resources is currently conducting highly-detailed geotechnical logging, as it works towards an underground operation. It is sampling the area in order to carry out geotechnical tests on the drilling. At the same time, the company is working on community engagement and is in discussions with stakeholders in order to promote involvement. 

To find out more, go to the ATEX Resources website