Chesapeake Gold (TSXV:CKG) Looks to Improve Oxidation Rates for Faster Gold Recovery

• Chesapeake Gold is focused on its Metates project in Durango, Mexico, which holds a vast gold-silver deposit of over 20 million ounces of gold and +550 million ounces of silver.
• The company has been working on solving metallurgical challenges to unlock the value of this significant deposit.
• Initial testing showed promising results with the oxidation process, improving gold and silver recoveries from 30% to 60% and 15-20% to 50%, respectively.
• Subsequent tests revealed slower oxidation rates in fresh material, prompting further research to speed up the process.
• The latest press release highlights the discovery of conditions that accelerate oxidation by 50%, which is a significant breakthrough for the project's development.

About Chesapeake Gold

Chesapeake Gold Corp (TSXV: CKG) is a Canadian mineral exploration company focused on the discovery and development of major gold-silver deposits in North and South America. The company's flagship asset is the Metates project, located in Durango State, Mexico. With over 18 million ounces of gold and over 500 million ounces of silver in resources, Metates is one of the largest undeveloped gold-silver deposits in the world.

Chesapeake Gold's President and CEO, Alan Pangbourne, has extensive experience in the mining industry and expertise in heap leach processing and oxidation of sulfide ores. Under his leadership, the company is pioneering new technologies to improve gold recoveries from refractory sulfide ores at Metates. The success of this work could be an industry-changing development, unlocking value at Metates and other large low-grade refractory projects globally.

Interview with President & CEO, Alan Pangbourne

Progress on Oxidation and Recovery Work

A key challenge at Metates has been developing a cost-effective processing method to recover gold and silver from the refractory sulfide ores. Traditional processing options are capital-intensive and reduce project economics. As a potential solution, Chesapeake has been testing an oxidative heap leach process.

Initial test work had achieved gold recoveries over 60% and silver recoveries near 50% by partially oxidizing the sulfide minerals. However, oxidation kinetics were too slow on fresh drill core samples. The company has spent the past year systematically testing different conditions to improve oxidation rates.

The latest metallurgical results, announced in early September 2023, are a breakthrough. Chesapeake has identified a set of proprietary conditions that accelerate oxidation rates by 50% compared to initial tests. Microscopy work clearly shows the sulfide minerals are oxidizing along fractures and in a diffusion pattern from the outside inwards.

While additional test work is needed, CEO Pangbourne stated these results replicate the strong recoveries from the early column tests. This demonstrates the oxidation process is functional and now it's an engineering challenge to optimize kinetics. The company is targeting a 100-120 day timeframe to achieve the targeted 70-75% gold and silver recoveries.

Path Forward

Chesapeake Gold appears to have successfully proven the concept of oxidizing refractory pyrite under alkaline conditions to improve precious metal recoveries in heap leaching. Optimization work is ongoing, with an updated metallurgical release expected in Q1 2024.

Pending these final confirmation tests, the project could rapidly advance to a Pre-Feasibility Study in late 2024. The capital and operating costs for the novel process flowsheet have already been modeled in the 2020 Preliminary Economic Assessment. This study showed the potential for a large, low-cost gold mine at Metates with a 26-year mine life.

While there are risks with any early-stage mining project, Chesapeake Gold is methodically de-risking Metates and could unlock major value if the oxidation technology continues to show positive results. Investors interested in the company should watch for pending metallurgical releases, an updated economic study, and advancement in permitting next year.

CEO Transition

In August 2023, Chesapeake announced Alan Pangbourne would be stepping down as President and CEO for personal reasons. Pangbourne will remain engaged as a technical advisor to the company. He reports being highly confident in the technical direction and notes his sizable personal shareholding.

The board of directors has commenced an executive search process and expect a smooth transition. Pangbourne's technical expertise and industry knowledge will help minimize disruption during this leadership change.

5 Key Takeaways for Investors

1. Flagship Metates project in Mexico has world-class gold/silver resources but requires new processing method.
2. Testing shows promise for oxidative heap leaching to improve precious metal recoveries from refractory pyrite ores.
3. Recent results achieved 50% faster oxidation kinetics, a potential breakthrough.
4. Next steps are finalize metallurgical work in 2024 and complete a Pre-Feasibility Study if results continue positive.
5. While technical risks remain, successful development of this technology could significantly improve project economics. Upside potential is substantial but still early stage.

Conclusion

Chesapeake Gold Corp has assembled an impressive portfolio of exploration assets in the Americas. However, the investment case really centers on the huge potential at Metates if they can successfully apply this oxidative leach technology. The recent metallurgical results provide encouraging evidence that the process is working and economic.

However, technical risk remains until the work is finalized and proven at a commercial scale. Chesapeake is still at an early project stage with permitting and feasibility studies pending. Investors should be aware of the elevated risks for a development-stage mining company.

Upside potential is also substantial if Chesapeake can cost-effectively extract gold and silver from Metates' low-grade sulfide resources. The next year will be pivotal as optimization work continues and the company aims to release a Pre-Feasibility study. Savvy investors with patience and higher risk tolerance may be rewarded for following this emerging story in the gold development sector.