Chakana Copper - High-Grade Discoveries & Porphyry Potential Offer Compelling Exploration Play

• Chakana Copper has released new information on their Soledad project, including high-grade silver results from the La Joya prospect and the identification of two porphyry targets.
• The company has had a geological breakthrough in understanding what controls mineralization in the district, involving a large precursor intrusion that set the stage for later mineralization.
• The La Joya prospect showed high-grade silver mineralization near surface, with a 700-meter footprint that needs further exploration.
• The Soledad project appears to capture the mineral potential associated with a copper-gold porphyry system, including breccia pipes, high sulfidation epithermal systems, and lead-zinc-silver mineralization.
• Chakana's next steps include more drilling at La Joya, identified breccias, and testing the porphyry concept at Mega-Gold, with a focus on reaching 10 million tons of resources.

Chakana Copper, a junior mining exploration company, has recently released significant new information about its Soledad project in Peru. The company's President and CEO, David Kelley, shared insights into the latest developments, geological breakthroughs, and future plans for the project.

The Soledad project, located in Peru, has been the focus of Chakana Copper's exploration efforts since 2017. The project area has expanded over time, notably through a deal with Barrick in 2018 that doubled its size. Recent exploration activities have yielded promising results, particularly in the La Joya prospect and the Mega-Gold target area.

La Joya Prospect: High-Grade Silver Discovery

One of the most exciting recent developments is the discovery of high-grade silver mineralization in the La Joya prospect. Kelley describes the find:

"We just have this news release put out of plus kilogram silver right near surface. I think the intercept was 58 meters down hole so I mean very shallow very high-grade mineralization, it's got a footprint of about 700 meters."

This discovery is significant for several reasons:

• High grade: The silver grades exceed 1 kilogram per ton, which is considered very high-grade in the industry.
• Near-surface location: The mineralization starts at just 58 meters depth, potentially reducing future mining costs.
• Large footprint: The 700-meter extent of the mineralization suggests potential for a substantial deposit.

The La Joya prospect represents a high sulfidation epithermal system, which is typically found distal to porphyry deposits. This type of deposit often starts as silver-rich at shallower levels and may become more gold-rich at depth, offering multiple exploration targets.

Geological Breakthrough: Understanding Mineralization Controls

Perhaps the most significant development from a geological perspective is the new understanding of what controls mineralization in the Soledad district. Kelley explains:

"We have this large precursor intrusion on the order of a million years older than the mineralization that came in but the important thing is that intrusion came in is crystallized and solidified, and then the mineralization has come up around the margin of that precursor intrusion."

This breakthrough has several implications:

• Targeting: It allows the company to focus its exploration efforts more effectively, potentially leading to more efficient use of resources.
• District-scale potential: The understanding applies to the entire district, suggesting the possibility of multiple deposits.
• Deposit model: The findings align with classic porphyry deposit models, increasing confidence in the exploration approach.

Mega Gold Target Area: Porphyry Potential

The Mega Gold target area has emerged as a promising location for a potential porphyry deposit. Key features include:

• Pyrite shells: Two distinct pyrite shells have been identified, which are typical of porphyry systems.
• Geophysical signatures: Conductivity zones underlying the pyrite shells are consistent with porphyry deposits.
• Encouraging drill results: While not yet economic, drill intercepts have shown gold and copper mineralization that suggests proximity to a mineralized system.

Project Potential & Exploration Strategy

The Soledad project appears to capture the mineral potential associated with a large porphyry system, including:

• Breccia pipes: High-grade gold-copper mineralization in vertically extensive structures.
• High sulfidation epithermal systems: Represented by the La Joya prospect, with potential for precious metals.
• Base metal mineralization: Lead-zinc-silver deposits in the surrounding district may be related to the same system.

This diverse set of deposit types within a single project area increases the chances of making an economic discovery. The company's exploration strategy involves focused drilling by targeting the margins of the precursor intrusion where high-grade breccias align, systematic approach by using geology, geophysics, and drilling to vector towards the core of the system and balancing high-grade, near-term resource potential with larger, longer-term porphyry targets.

Challenges & Opportunities

As with any junior exploration company, Chakana Copper faces challenges:

• Funding: Exploration is capital-intensive, and the company will need to continue raising funds.
• Market conditions: The mining sector can be cyclical, affecting the availability of capital.
• Exploration risk: Despite encouraging signs, there's no guarantee of finding an economic deposit.

However, the company also has significant opportunities:

• Discovery potential: The geological model and recent results suggest the potential for a significant discovery.
• Multiple targets: The diverse set of targets provides multiple paths to success.
• Experienced team: The management team has a track record in the industry and a clear understanding of the geology.

Next Steps & Future Plans

Chakana Copper's immediate plans include:

• Additional drilling at La Joya to expand the high-grade silver discovery.
• Initial drilling of the Ceiro breccias, which have shown high-grade gold at surface.
• Testing the porphyry concept at Mega-Gold.
• Continuing geometallurgical studies on the existing resource to optimize future development plans.

The company aims to increase its resource base to 10 million tons, up from the current 6.7 million tons. Kelley believes this is achievable with the known targets.

Investor Considerations

For investors considering Chakana Copper, several factors are worth noting:

• Early-stage opportunity: The company is still in the exploration phase, offering potential for significant value creation if successful.
• Multiple avenues for success: The diverse set of targets provides risk mitigation and multiple opportunities for discovery.
• Experienced management: The team's geological expertise and understanding of the project are evident.
• Jurisdiction: Peru is a well-established mining jurisdiction with a long history of successful operations.
• Potential for high-grade resources: The breccia pipes and epithermal targets offer the possibility of high-grade, potentially economic deposits even at a relatively small scale.

Investors should also be aware of the risks:

• Exploration stage: The company does not yet have a defined economic resource or any revenue-generating operations.
• Funding requirements: Ongoing exploration will require additional capital, potentially leading to dilution for existing shareholders.
• Market volatility: Junior mining stocks can be subject to significant price swings based on exploration results and market sentiment.

The Investment Thesis for Chakana Copper

• High-grade potential: Multiple high-grade targets in breccia pipes and epithermal systems offer near-term resource growth potential.
• District-scale opportunity: The geological model suggests the potential for a large porphyry system, offering long-term upside.
• Systematic exploration approach: The company's geological breakthrough provides a roadmap for efficient targeting.
• Multiple paths to success: Diverse target types (breccias, epithermal, porphyry) increase the chances of making an economic discovery.
• Experienced management team: The leadership demonstrates a strong understanding of the geology and exploration process.
• Favorable jurisdiction: Peru is a well-established mining country with a history of successful operations.
• Near-term catalysts: Planned drilling at La Joya, identified breccias, and Mega-Gold targets could provide significant news flow.
• Resource growth potential: The company aims to increase resources from 6.7 to 10 million tons in the near term.
• Early-stage opportunity: Success in exploration could lead to significant value creation for early investors.

Chakana Copper's Soledad project in Peru represents a promising early-stage exploration opportunity with multiple target types and the potential for significant discoveries. The company's recent geological breakthroughs have provided a clearer understanding of the mineralization controls in the district, allowing for more focused and efficient exploration. With high-grade targets in breccia pipes and epithermal systems, as well as longer-term porphyry potential, the project offers multiple paths to success. However, investors should be aware of the inherent risks in mineral exploration, including the need for ongoing funding and the possibility of dilution. The company's experienced management team and systematic approach to exploration provide some mitigation to these risks. As Chakana Copper continues to advance its exploration program, particularly at La Joya, Ceiro breccias, and the Mega-Gold target, investors should watch for drill results and progress towards the company's resource growth targets.

Macro Thematic Analysis

The exploration activities of Chakana Copper at the Soledad project in Peru are set against a backdrop of increasing global demand for copper and precious metals. Copper, in particular, is seeing growing interest due to its critical role in the green energy transition, electric vehicles, and infrastructure development.

The global push towards decarbonization and electrification is driving long-term demand for copper. Electric vehicles, for instance, require up to four times more copper than traditional internal combustion engine vehicles. Additionally, renewable energy systems like wind and solar power are copper-intensive. This growing demand, coupled with concerns about future supply shortages, has led to increased interest in copper exploration projects.

Precious metals, including gold and silver, continue to play a role as safe-haven assets and stores of value, particularly in times of economic uncertainty. The high-grade silver discovery at La Joya aligns with this ongoing interest in precious metals.

Peru, as the world's second-largest copper producer and sixth-largest gold producer, remains a key jurisdiction for mineral exploration and development. However, the country has faced political instability and social unrest in recent years, highlighting the importance of community relations and social license to operate for mining companies.

The junior mining sector, to which Chakana Copper belongs, plays a crucial role in the broader mining industry by taking on the high-risk, high-reward task of early-stage exploration. Success in this sector can lead to significant value creation and potentially contribute to future metal supply.