Chakana Copper: Multi-Target Potential Emerges in Peru, 5000m Follow-up Drilling in Q4 2024

• Chakana Copper's 2024 drill program at the Soledad project in Peru made two new discoveries: the Estremadoyro breccia pipe with high-grade copper-gold-silver mineralization, and the La Joya high-sulfidation epithermal zone with significant silver mineralization.
• The company conducted initial drilling at the Mega-Gold porphyry target area, helping to vector towards two distinct porphyry targets and refined search.
• Chakana has identified 80 breccia targets on the project, with 52 still untested, including the promising Compañero breccia complex awaiting final permit approval.
• The company plans a follow-up 5,000-meter drill program, potentially allocating resources across the Compañero breccias, Mega-Gold porphyry target, and La Joya epithermal zone.
• Chakana aims to grow its current high-grade resource of 6.7 million tons to around 10 million tons, which they believe could potentially support a mining operation.

Chakana Copper Corp. (TSXV:PERU) is making significant strides in its exploration efforts at the Soledad project in Ancash, Peru. The company's recent drilling program has yielded promising results, uncovering new mineralized zones and refining targets for future exploration. This article delves into the latest developments at Soledad, examining the potential implications for investors and the company's strategic direction in light of these findings.

New Discoveries, Refining Targets

Chakana's 2024 drill program at Soledad was a pivotal step in advancing the project's potential. The 3,000-meter program targeted three distinct areas within the southern portion of the property, marking the company's first drilling campaign in this newly permitted region. The results have been encouraging, with two new discoveries and valuable insights gained into the property's geological structure.

David Kelley, President and CEO of Chakana Copper, summarized the program's achievements:

"We had three targets: we had a tourmaline breccia pipe target, we had a high sulfidation epithermal zone that's south of the project, and then for the first time we got into what we call the Mega-Gold porphyry target area. In terms of results, two new discoveries: the Estremadoyro breccia pipe has very nice high-grade copper gold silver mineralization right near surface."

Estremadoyro Breccia Pipe Discovery

The Estremadoyro breccia pipe represents a significant find for Chakana. This outcropping breccia pipe hosts high-grade copper-gold-silver mineralization starting at the surface and remaining open at depth. Notably, the discovery of bornite mineralization in this breccia pipe is a first for the project, potentially indicating higher-grade copper mineralization.

Kelley emphasized the importance of this discovery:

"We wanted to remind the market that the breccia pipe story is very much alive. It's a very exciting part of the project, but it's not the only part of the project."

Interview with President & CEO David Kelley

La Joya High-Sulfidation Epithermal Zone

The second major discovery of the program was at the La Joya target, where drilling intercepted significant silver mineralization within a high-sulfidation epithermal system. The best intercept returned over a kilogram of silver per tonne over a narrow interval, within a broader zone of 4.5 meters averaging 323 g/t silver.

This discovery opens up new possibilities for Chakana, potentially representing a standalone precious metals opportunity within the broader Soledad project. The company plans to conduct further drilling to better understand the extent and nature of this mineralization.

Mega-Gold Porphyry Target Advancement

While the Mega Gold area didn't yield immediate high-grade intercepts, the drilling program provided crucial information for vectoring towards potential porphyry targets. The company has identified two distinct porphyry targets and significantly reduced its search space from 2.5 square kilometers to 1 square kilometer.

Kelley explained the significance of this development:

"We discovered that the pyrite shells also sit right on the edge of this precursor intrusion. So it kind of makes sense. It's like, this is a very important controlling feature of the mineral system at Soledad. Get in and around the precursor intrusion, that's where you're going to find the breccia pipes, these breccia complexes, and it's also where you're going to find the accumulation of pyrite in these pyrite shells."

Expanding the Resource Base

Chakana's current focus is on expanding its existing high-grade resource. The company has already defined a small but high-grade copper-gold-silver resource that starts at surface and remains open at depth. Kelley outlined the company's near-term goal:

"We've got 6.7 million tons of resource in high-grade breccias. We want to get that to about a 10 million ton resource because we think a 10 million ton high-grade resource starting at surface in a great location like we have could become a mine."

This strategy of focusing on high-grade, near-surface mineralization could potentially lead to a lower-cost, higher-margin operation if the project advances to the development stage.

Leveraging Advanced Exploration Techniques

Chakana is employing cutting-edge exploration techniques to maximize the value of its drilling programs. The company is using hyperspectral core scanning technology to gain detailed insights into the mineralogy and alteration patterns within drill core samples.

Kelley highlighted the advantages of this approach:

"Rather than relying on a geologist with a hand lens in a dimly lit core shack trying to identify a multitude of different types of minerals, you've got a machine now that can give you very, very quantitative information about the mineralogy. So it's just a way of extracting more information from the rocks."

This technology allows Chakana to more accurately interpret the geological environment and vector towards areas of potential high-grade mineralization, potentially increasing the efficiency of future drilling programs.

Future Exploration Plans

Looking ahead, Chakana is planning a follow-up 5,000-meter drill program to further test the most promising targets identified in the recent campaign. The company is considering allocating resources across three main target areas:

1. Companero Breccia Complex: Once final permits are secured, Chakana plans to drill test this promising breccia target in the southwest portion of the property.
2. Mega Gold Porphyry Target: Further drilling is planned to test the refined porphyry targets identified in the recent program.
3. La Joya Epithermal Zone: Additional drilling is needed to better understand the extent and potential of the high-grade silver mineralization discovered here.

Kelley provided insight into the company's approach: "I'd like to see it all come together in Q4 and have a follow-up exploration plan that hits these three primary target areas. And then the results from that would be used to plan what kind of resource drilling we could do."

Market Considerations

While Chakana's recent exploration results are encouraging, it's important for investors to understand that the company is still in the exploration stage. The path from discovery to a producing mine is long and capital-intensive, with no guarantees of success.

However, several factors make Chakana an interesting proposition for investors with a high risk tolerance and a long-term outlook:

1. Multiple Discovery Potential: The Soledad project hosts multiple styles of mineralization, including high-grade breccia pipes, epithermal precious metals, and porphyry copper-gold potential. This diversity increases the chances of making an economic discovery.
2. High-Grade Focus: The company's strategy of focusing on high-grade, near-surface mineralization could potentially lead to a lower-cost, higher-margin operation if the project advances to development.
3. Experienced Management: Chakana's management team has a track record of success in the mining industry, which is crucial for navigating the challenges of exploration and potential development.
4. Favourable Jurisdiction: Peru is a major mining country with well-established mining laws and infrastructure, which could facilitate potential future development.
5. Strong Partner: The continued interest of major mining company Goldfields in the project's porphyry potential provides validation of the project's merit.

Investors should also be aware of the risks inherent in junior mining exploration, including the potential for share dilution through future financings, the volatility of commodity prices, and the technical and financial challenges of advancing a project from exploration to production.

Conclusion

Chakana Copper's recent exploration results at the Soledad project demonstrate the property's potential to host significant mineralization across multiple target types. The discovery of new high-grade zones and the refinement of porphyry targets provide a solid foundation for future exploration efforts.

As the company moves forward with its planned follow-up drilling program, investors will be watching closely for further discoveries and the potential growth of the resource base. While the road ahead remains long and uncertain, Chakana's multi-faceted approach to exploring the Soledad project offers investors exposure to a range of potential outcomes in one of the world's premier mining jurisdictions.

The Investment Thesis for Chakana Copper

• Multiple discovery potential across high-grade breccia pipes, epithermal precious metals, and porphyry copper-gold targets
• Focus on expanding high-grade, near-surface resource with potential for low-cost, high-margin operations
• Experienced management team with a track record in the mining industry
• Project located in mining-friendly Peru with established infrastructure
• Validation from major mining company Goldfields' continued interest in the project
• Use of advanced exploration techniques like hyperspectral core scanning to optimize drilling efficiency
• Near-term catalysts include results from planned 5,000-meter follow-up drilling program
• Potential for resource expansion from current 6.7 million tons to targeted 10 million tons
• Early-stage opportunity with significant upside potential if successful
• Consider as a small, speculative portion of a diversified mining portfolio

Key Takeaways

Chakana Copper's recent exploration program at the Soledad project in Peru has yielded promising results, including two new discoveries and refined targets for future drilling. The company's multi-faceted approach, focusing on high-grade breccia pipes, epithermal precious metals, and porphyry copper-gold potential, provides multiple avenues for potential success. While still in the early stages of exploration, Chakana's use of advanced techniques and strategic focus on expanding its high-grade resource base positions it as an interesting opportunity for investors willing to accept the inherent risks of junior mining exploration. The planned follow-up drilling program in Q4 2024 will be a key catalyst to watch, potentially providing further validation of the project's potential and guiding the company's future direction.

Macro Thematic Analysis

The exploration efforts of Chakana Copper at the Soledad project in Peru are set against a backdrop of increasing global demand for copper and precious metals. As the world transitions towards renewable energy and electric vehicles, copper demand is projected to rise significantly in the coming decades. The International Energy Agency estimates that achieving the goals of the Paris Agreement could see copper demand more than double by 2040.

Peru, as the world's second-largest copper producer, is well-positioned to benefit from this trend. However, the country faces challenges in bringing new projects online due to community opposition and regulatory hurdles. This environment potentially benefits advanced exploration projects like Soledad, which could provide much-needed new supply in the medium term.

The focus on high-grade mineralization is particularly relevant in the current macroeconomic context. With rising input costs and inflationary pressures, projects with potential for high-grade, low-cost operations are likely to attract more attention from both investors and potential acquirers.

Furthermore, the growing emphasis on responsible mining practices aligns well with Chakana's approach of using advanced exploration techniques to minimize environmental impact and optimize resource definition, which could potentially position the company favourably in terms of future permitting and community relations.