How has Chakana Copper been affected by the COVID-19 outbreak, and what actions is the company taking in response?

Out of concern for the health and safety of our employees, contractors and the communities where we work, we suspended field programs the week of March 16th, 2020 to comply with the State of Emergency declared by President Vizcarra.  We remain productive advancing our understanding of the geology at Soledad and preparing for the continuation of our Phase 3 drill program. We had just completed a detailed ground magnetics survey prior to the shutdown and the team is active interpreting the results from that survey. We have a strong treasury and the goal this year remains to drill test some very exciting new targets in the Paloma and Huancarama areas.

How do you think the coronavirus pandemic will impact the mining industry as a whole?

There will be reduced production from mining companies that will affect their revenues and the royalties that are paid to the Peruvian government. Exploration companies will see delays in their programs and permits due to the state of emergency. On a positive note, the pandemic will emphasize the importance the mining industry has to Peru's economy and in the communities in which we work

Can you provide an update of Chakana Copper’s Phase 3 drill program at the Soledad project?

Chakana Copper started a 20,000 m drill program at the Soledad project in June 2019, with the aim to test numerous targets and complete definition drilling on additional mineralized breccia pipes. We drilled 5,700 m of the program in 2019, and then made the decision to halt the drilling and wait until we had an expansion of our drill permit approved to get us into other parts of the property that have not been drilled yet.

During the 5,700 m of drilling, we tested one of our high priority targets, breccia pipe 7, which had never been dilled before. It had both an excellent geophysical and surface geochemistry response. All four drill holes intersected significant mineralization, including 31 m of 0.68 g/mt Au, 205.9 g/mt Ag, and 0.23% Cu from 157 m in hole SDH19-111, and 35 m with 0.80 g/mt Au, 53.8 g/mt Ag, 0.35% Cu from surface in hole SDH19-114. We have a lot of enthusiasm and excitement for this particular target.

We also performed additional drilling at breccia pipe 6, which was necessary to get it to a point where the mineralization could be included in an initial resource. We then moved on to breccia pipe 5 where we had a target set out on the east side, which achieved some of the highest grades we have seen in this pipe. It was very interesting to see how the pipe geometry is changing at depth; we were able to extend the mineralization to depth, which gives us more volume and significantly improved the copper grades. All of the breccia pipes we have drilled thus far are open at depth.

In 2019, Gold Fields invested C$8 million in Chakana Copper. Can you explain how the relationship has developed?

In our initial two years of drilling we saw some spectacular results, which attracted the attention of several large mining companies. Gold Fields was the most aggressive in terms of wanting to learn about our project, and was very thorough in its due-diligence, which culminated in an investment in the company.

We are increasingly seeing large precious metals producers investing in copper projects. One of the reasons for this is that it is becoming increasingly difficult to replace reserves in the gold industry and there are obvious benefits in diversifying your portfolio. Furthermore, mining producers are looking at ways in which they can extend life of mine, which makes copper projects favorable.

How is Soledad evolving from a mineralization standpoint?

The commodity mix at Soledad is really interesting as we have had copper grades up to 10%, gold grades over 1 oz/mt, and silver grades up to 5 kg/mt. This gives an indication of the grade potential of the nature of the mineralization, being a mix between precious and base metals. Looking at the value of what we have drilled up to date, approximately 60% of the value sits in gold and silver and the remaining 40% sits in copper. This may change over time as we are drilling numerous breccia pipes which have varied commodity ratios. I believe as we go deeper, copper will become more dominant.

Why do you believe it has been so hard for juniors in recent years, and do you think that things will start turning around in 2020?

In general, junior companies have struggled to keep afloat, especially project generators. We have, however, seen that junior companies that have really good projects, a great team and are located in a favorable jurisdiction are finding financing support in today’s markets. With a good project you can either go to the capital markets, or attract the interest of big mining companies. As juniors with good projects are again finding support, it tells me that there is still a backbone to the capital markets. The increase in the gold price has helped significantly and I believe that things are starting to turn around for explorers.

How has Chakana Copper dealt with working with and engaging the communities in the areas you operate in?

In my experience, if you are working in a mining area and the mining has been undertaken in a good way, mining is generally well accepted as it has given the communities time to understand and appreciate its benefits. When mining in new areas, the potential for conflict arises as there is not yet that understanding.

Chakana Copper is very fortunate that the Soledad project is in an established mining district and we have good examples of modern, first class mines surrounding the project. We have had a very positive experience with the communities surrounding Soledad and have been active in programs aimed at stimulating education, health and agriculture that provide real benefits to these communities.

What do you envision for the Soledad project moving forward?

In terms of developing the resource, there are potentially 40 to 50 breccia pipes on the project. Each breccia pipe varies in size and we have confirmed that the breccias get bigger at depth. We have never seen the bottom of a breccia pipe, even though our deepest breccia intercept is over 700 m. We truly believe that the resource potential at Soledad is considerable. Chakana Copper’s initial target for putting a resource out is 10 million mt, which will allow for investor confidence and put the company in a position to raise money to continue aggressive exploration.