Kodiak Copper (KDK) - Technical Analysis and Due Diligence

Kodiak Copper Corp. is focused on its portfolio of 100% owned copper porphyry projects in Canada and the USA. The company is backed by John Robin’s Discovery Group, founded by Chairman Chris Taylor (President and CEO of Great Bear Resources), and led by Claudia Tornquist (former GM at Rio Tinto and former Vice President of Business Development at Sandstorm Gold). The team has shown the ability to raise capital while protecting a tight share structure and attracting strategic investors such as Teck Resources. The strategy behind Kodiak’s portfolio is to apply Great Bear’s successful approach to the copper space, and unlock the value of historically drilled, under-explored assets in prime locations using new interpretation and technology. 

Merlin-Marr Johnson caught up with Claudia Tornquist, President, CEO, and Director, along with Christopher Taylor, Founder, and Chairman, Kodiak Copper. 

Claudia previously served as a General Manager at Rio Tinto, working with the company’s copper operations. She has also held the position of Executive Vice President, Business Development for Sandstorm Gold, a streaming company. She is the Director of Silver One Resources and former Director of Kennady Diamonds, leading the $176M sale of the company to Mountain Province as Chair of the special committee of the Board. 

Christopher Taylor is a mining entrepreneur and the Founder of Kodiak Copper. He is a structural and economic geologist with more than 20 years of industry and research experience with both mid-tier producers and junior exploration companies. He is also the Founder, CEO, and President of Great Bear Resources, which made a district-scale gold discovery in Canada and was taken over by Kinross Gold for $1.8Bn. He has also worked with Imperial Metals as a former geologist, exploring copper porphyries in North America. 

Company Overview

Kodiak Copper Corp. is backed by the Discovery Group. The company’s most advanced asset is the MPD copper-gold porphyry project in the prolific Quesnel Trough in southern British Columbia, Canada. Here, the company made a high-grade mineralization discovery in 2020 at the Gate Zone. A fully-funded 2021 drill program of up to 25,000m is currently underway. The company was founded in 1987 and is headquartered in Vancouver, Canada. It is listed on the Toronto Stock Exchange (TSX-V: KDK) and the OTC Markets (OTCQB: KDKCF). 

Kodiak Copper is focused on copper porphyry exploration in North America. The company’s main asset is the MPD Project in southern British Columbia, where the Gate Zone was discovered in 2020. This development was a game-changer for the company as it enabled a $12.7M capital raise. Last year, the company drilled 22,000m and successfully extended the Gate Zone. In 2022, the company is planning a larger, 25,000m drill campaign. 

Underlying Geology

The MPD Project is located less than a 3 hours drive from Vancouver, Canada. The project is based in an established mining area with several mines and projects in the vicinity. The company’s project is located between 2 large copper mines. Towards the south is Copper Mountain, a geological analog, while Teck’s Highland Valley Copper mine is located 50km to the north of the MPD Project. This is a well-established mining area, which makes exploration highly cost-effective. The project is easily accessible from the highway. 

Since Copper Mountain is analog, it is highly likely to have a porphyry with a very similar age to MPD. In fact, the host and the deposit have very similar characteristics. Copper Mountain has a similar host rock and mineralization to Imperial Metal’s Mount Polley project in the north. 

Prior to the acquisition of the MPD Project, the company’s team had a site visit. This project had exploration done by various exploration and development companies in the 1960s. There were more than 100 drill holes at the project. Notably, all these drill holes had copper mineralization. Kodiak Copper realised that this was a porphyry-type system, where copper oxides are often seen on the surface. It was the Propylitic alteration style that spanned several kilometres that caught the company’s interest. Based on historic drilling, it was evident that deeper drilling led to a type of potassic alteration that indicates the presence of better copper and gold grades. This asset was known as a prospective porphyry project. 

Notably, it was Kodiak Copper that worked on deeper exploration, going through the nested porphyry type alteration system to find better copper-gold grades. Here, the nested porphyry refers to the classic shell with an outer halo of propylitic alteration with a more intense alteration in the middle. The outer envelopes indicate that the system carries mineralization, however, it isn’t heavily mineralized. The right sort of peaty conditions and proximity to the magmatic cupolas leads to higher-grade mineralization, as seen at the Gate Zone. 

Interestingly, when the better-graded copper mineralization picks up from the surface, it often contains 0.1%-0.3% copper. This is highly dependent on the drill location. There are some elements of preferential orientations when it comes to mineralization. Occasionally, nice grading mineralization may also be found right at the surface, but in most cases, the higher grade materials start at a depth of 200m-300m. The company found that even at an 800m depth, the system continues to be present. 

Kodiak Copper is currently in the exploration stage and is focused on discoveries. It is looking to determine the highest-grade zones in order to gain insights into the orientation of the mineralization. 

The company’s presentation shows two bounding faults in the north and the south. In the most recent images, the company has added IP (Induced Polarisation), and geophysical data, which indicates the presence of high-grade material outside the zone. Within the map, the dotted lines represent the approximate location of the corridor where the company has drilled and intercepted mineralization. The background of this map is the geophysical data from the 2021 autumn survey. This survey helped the company find a close correlation between high conductivity in the zones, which is represented by red and pink zones along with high-grade mineralization in the drill holes. 

The grade shells are represented by lines in the northern part of the area. The company drilled this area and intercepted high-grade mineralization. In the southern part, the company found lower grades. Notably, the geophysical data was found to corroborate with the drilling. The lower grade area was found to have lower conductivity, while the higher conductivity zone curves around to the east. This helped the company in planning its drill targets. It is looking to drill further east and test along the high conductivity anomaly. Notably, the company has only drilled a very small part of the anomaly so far, and a lot of area remains to be drilled. It is expecting a lot of potential for high-grade mineralization. The anomaly extends to the northeast and the southwest. The company has plans to carry out extensive drilling in this area in order to fully realise the expansion potential of the Gate Zone. 

Drill Targets

The map shows 2 vertical dashed lines that are oriented almost in the north and south directions. These lines highlight the area where the company has drilled so far and has intersected mineralization. 

Kodiak Copper drilled along a surface anomaly where copper was identified in the soil. This is based on the geochemical map of the area, where the anomaly is represented in pink. This anomaly effectively guided the company’s drilling program and served as a key input for drilling and testing. The company now has new geophysical data and is looking to further test the area along the underlying geophysical anomaly. 

The glacial till found here is in-situ. Compared to what was seen in surface soils, the drilling correlated very well in bedrock copper. There is a till on the project, however, it’s not around the Gate Zone. 

Based on the geophysical data, the company anticipates the presence of a large pyritic shell adjacent to the copper mineralization. Some late structures are also seen going through, however, it does not seem to displace the deposit much. The structure also appears to have a clay presence. The company has plans to conduct target drilling at the edges of the large conductivity anomaly. It is anticipated that this drilling might lead to well-developed copper mineralization, similar to the Gate Zone. 

For the initial drilling, the company is looking to focus on the western edge of the horseshoe structure. Over time, it is looking to drill the fences across to observe how closely it duplicates the observations at the Gate Zone. Based on past experiences, the company is looking to drill around the big chargeability anomalies, and not in the middle.

Towards the southeast of the deposit, the company has highlighted a second array of drill targets. Based on the work carried out so far, there are indications that the system has a very-deep seater centre. It is expected to be around 2km below the levels where current exploration is being conducted. It implies a concentric system, which means that the target is on the eastern side. Drilling the western flank would enable the company to see if there is a duplication of the copper adjacent to the chargeability. 

Based on the recent drill testing, there seems to be evidence of a larger multi-kilometer deep-seated porphyry-type system with the copper zones. Although it's quite early to make a definitive analysis, the company has found some interesting features such as the evolution of the intrusions over time. There are some late monzonitic intrusions that cut across the mineralization and early dioritic intrusion which seems to be more closely associated with the mineralization. There appears to be a transition between the diorite and monzonite which can be visually observed in terms of enrichment with time, potassium content, and other common features. The company is anticipating the presence of a multi-phase system. 

There is strong evidence of multiple pulses of hydrothermal fluid interaction with the rock. In essence, a typical porphyry vein is followed by very intense copper mineralization along with silica solidification. This region also features disseminated bornite in the host rock mats, which isn’t a common occurrence in the way of veining or solidification. This grades really well, however, since it is bornite-based, it can be easy to miss. 

When bornite is first drilled, it is brownish in colour due to a lack of oxidation. Once the bornite is exposed to the air, it starts displaying peacock colours over time. Interestingly, the company has seen the presence of disseminated bornite mineralization at certain depths within the system. Although the system features typical geology, the deposits appear to reflect each other without forming exact duplicates. 

Ongoing Operations

Kodiak Copper has started drilling the Gate Zone, where a single drill rig is currently deployed. The company has plans to add a second drill in this area. The company is also looking to test the second anomaly which appears to run 600m parallel to the east of the Gate Zone. These targets will be the major focus in the first half of 2022. 

In the second half of 2022, the company will drill other targets on the property, including the northwestern corner of the Gate Zone. The company is also looking to drill target areas that have had very shallow historical drilling at the Gate Zone along with the Man and the Dillard zones that are located 2km away. There are several other targets similar to the Gate Zone which have a near-surface copper-gold presence. The company is looking to drill and test these zones. 

In this area, historical drilling was done up to a depth of 350m. Dillard’s topography appears to rise to the east. The Gate Zone appears to be more eroded, while Dillard appears to have some good at-surface high-grades along with a big surficial feature. The company is looking to systematically test all targets across the project and understand how they sit in the system. 

Notably, the Dillard project first came into notice when the company prospected the project. The Dillard core was largely a propylitic system with deeper holes that had a potassic alteration. Here, silica veining with porphyry-style was visible. Medial copper mineralization was observed within the silica veins, similar to typical porphyry features. This target was found to be quite substantial in terms of soil anomaly. There may be some glacial transport in the area, which effectively attenuated the surface anomaly. However, past drilling shows the presence of porphyry copper-gold mineralization, helping the company locate the systems. 

Similar to the Gate Zone, the company is looking to systematically test all the targets and use the results to guide the exploration program. It is looking to follow the concentric or zoned porphyry-style alteration, ensuring that all the targets are tested. The company has the budget to test out these targets. In fact, Teck Resources, the company’s biggest shareholder, is likely to support this move once a proof of concept is in place for the presence of higher-grade at-depth mineralization at the Gate Zone.

The company is looking to test the concept across the property and compare it to other deposits located within the area. The MPD Project was found to have less erosion in comparison. This means that there is more preservation of the complete system in the ground along with more surface exposure in the Propylitic alteration. Although the Gate Zone has provided promising results, the company anticipates that it might not even be in the main centre of the project. 

Pencil porphyry systems in Australia are known to have very nice copper mineralization above. Interestingly, the anomalies added to the Axe Project last year are physical lookalikes to the Gate Zone. However, the company is still looking to test across the entire MPD and the land package. 

Kodiak Copper has been working with various consultants over the last year for green rock vectoring and the chlorite fluid inclusion processes. The company has various generations of regional magnetic survey data. The company has carried out some airborne work as well. It is also looking to reconcile historical databases with the new data. Ground-based geophysics was also conducted recently. 

Integrating the magnetic datasets with the 3D IP survey has led to the generation of target maps that provide an in-depth report on the structure, the sub-terrain, and the morphology. However, the company needs to drill these regions in order to confirm. 

In 2022, the company is looking to drill Dillard, followed by Man and Axe properties. The drilling strategy will be conducted on a result-based strategy. The company has plans to test out several targets outside the Gate Zone. As the company is drilling cubic kilometres of altered material, even if mineralization is not found, the company would still be able to understand the intensity of the system, which can help plan the next phase of the operation.  

The Mohave Copper-Molybdenum-Silver Porphyry Project

Although the majority of Kodiak Copper’s drill work will be focused on MPD, the company has also planned a small maiden drill program on the Mohave Copper-Molybdenum-Silver Porphyry Project in Arizona. Arizona has a number of notable copper mines. The Freeport-owned Bagdad copper mine is located 30km east of Mohave. The project site is easily accessible as its located just off the highway. Mohave has had historic drilling operations and exploration, similar to the MPD Project. The company is planning a small maiden drill program here, similar to the MPD drill program 2 years ago. 

Kodiak Copper is looking to drill about 1,500m for the maiden program. At the Mohave project, rocks are seen outcropping over half the land package. The eastern part had a gravel lid on it when the project was first visited 12 years ago. Porphyry mineralization is visible on the surface. The company also identified some interesting early brecciation along with late breccia pipes. The presence of breccia pipes serves as evidence that there are multiple pulses of hydrothermal mineralization or alterations on the project. 

It is important to note that the project is more on the cal-alkalic side of the porphyry spectrum than the alkalic side. Based on the geography, it is a copper-silver-molybdenum type system. Despite the highly-encouraging early results, the company is yet to determine the 3D placement of the deposit. 

Kodiak Copper was interested in the Mohave project 12 years ago, however, back then, a different company acquired it by paying more. 3 years back, when the company was looking for a copper project, Mohave was taken into consideration. It was found that the project was acquired by Bluestone Resources, which is also a part of the Discovery Group. Bluestone Resources had also acquired a much larger, advanced stage Gold Project. The company agreed to offload the Mohave project to Kodiak Copper as it was a non-core asset. 

Kodiak Copper  is planning to work on the Mohave project in the second half of 2022. The company has initiated indigenous consultations and preparatory work. Drilling is expected to commence by Q3-Q4. The company already has the required drill permits in place. 

ESG Considerations 

Kodiak Copper has a consult-early approach when it comes to projects. Before drilling is commenced, the company is looking to enter discussions with the local tribes in the area to ensure that there isn’t any opposition. This would also enable the company to develop a working relationship with the local community. 

The company had followed a similar process for the MPD Project, where it consulted the First Nations community in the area early on. Engaging with the local communities helps ensure that everyone is on board with the project. 

At the MPD Project, the First Nations in the area had an in-depth understanding of mining, its economic benefits, and the business opportunities created by an exploration project or a mine. The community here is pro-mining and is looking to ensure that it is carried out in a responsible way, with a minimal negative impact on the environment. The First Nations community has also provided valuable input on how to look after the fauna and the water within the region. The company has taken these inputs and integrated them in order to make a better project. 

To find out more, go to the Kodiak Copper website