Tuesday 10 October 2017

One for the value watchlist: Chakana Copper

A double thank you to IKN.  The first is for helping to bring viewers to this site, which is greatly appreciated and an honour.  Insight from IKN and the Angry Geologist have been extremely valuable to me in the past and their unbiased and helpful work was part of the inspiration for this blog.

The second thank you to IKN is for highlighting the pending RTO of Remo Resources (TSXV:RER - halted) by Chakana Copper Corp.  I've taken a peek and I really like what I see, both in terms of the team and the project.

The Team
David Kelley will be President & CEO of Chakana.  The last time I met David he was working at MMG as the Exploration Manager for the Americas, which means he looked at a lot of projects and obviously found this one to be one of the more interesting available.  David has an extensive technical background, including direct experience in Peru at MMG's giant Las Bambas copper project.  Joining David on the board of directors will be John Black, another strong technical expert with extensive experience in Peru, whom I have a lot of respect for.  I have never met Douglas Kirwin, Chairman and Director, but he also looks very strong on paper with 45 years of international exploration experience.

The Project
Chakana is working towards acquiring 100% of the Soledad Project, located in the western ranges of the Andes Mountains in Peru.  The Project hosts a cluster of near-vertical magmatic-hydrothermal quartz-tourmaline breccia pipes that contain copper-gold mineralization, associated with silver, zinc, lead and moly.  The thesis is that the breccia pipes may be related to a deeper porphyry deposit.  The company has commenced a 16,660m drill program to determine the geometry of several pipes previously drilled and the first two holes look very promising.  Hole SDH17-017 intercepted 146.6 metres grading 2.51g/t Au, 48.6 g/t Ag, and 0.77% Cu from surface and hole SDH16-018 intercepted 209.0 metres grading 2.22 g/t Au, 69.6 g/t Ag, and 0.96% Cu from surface.  Some historical drill results are highlighted on the website of Condor Resources (TSXV:CN), which optioned the Soledad Project to Chakana.

The Soledad Project mineral exploration concessions only cover 11.4 square kilometres, which is  a bit smaller than I would like at a company hoping to find a large porphyry, and there will be future cash payments totaling US$5.375M and a 2% NSR (50% of which can be bought back fro US$2M).  However, these are exceptional gold and copper grades, especially since the best grades are near surface.

Chakana currently has 41.3M shares outstanding and will issue 1.2M shares to RER shareholders as part of the RTO, plus 0.2M shares to finders.  It also plans a minimum $6M equity raise at $0.50 per share prior to completing the RTO.  So, coming out of the gate, Chakana should have 54.7M shares issued (more if the equity raise is over $6M), a valuation of roughly $28M at $0.50 per share, and around $8M in cash.

I need to take a closer look at the Soledad Project, but at first glance $28M for a project with these grades and this team suggests a lot of upside potential.  Thanks IKN, this is definitely one to watch!

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