Etienne Moshevich, Alphastox | Originally posted on July 13, 2017: Chilean Metals (TSXV:CMX) has a tremendous land position in Chile and Nova Scotia, Canada. Chilean Metals own 100% of (5) Chilean properties & (4) Canadian Properties. Like most other juniors, they’re looking to monetize them through a discovery and then a potential partnership/sale to another mid-tier in the area…it’s pretty simple. Let’s first review their Chilean Portfolio. With three key projects, their assets are extremely prospective and could yield spectacular results.
THE CHILEAN PORTFOLIO:
Flagship Project – Zulema
Located 30 kms from Lundin Mining Corporation’s Candelaria mine and with similar geology, the Company’s Zulema project comprises 4,300 hectares (10,600 acres) in the heart of the productive Atacama mineral belt in Chile’s 3rd Region. Lundin purchased Candelaria for $1.8B even though it has been mined for 25 years.
The association of major IOCG-type mineral deposits with the Atacama Fault zone and its splay faults is well-recognized. Candelaria, the world’s second largest “IOCG” deposit* lies adjacent to one such splay fault. Pre-mining reserves at Candelaria were 470Mt @0.95% Cu, 0.22 g/t Au, 3.1 g/t Ag. The Candelaria orebody does not outcrop but is overlain by 100-200m of barren siliceous hornfels and calc-silicate skarn. Copper sulphides occur as stringers, disseminations, breccia in-fillings and mantos. The orebody measures one kilometer in length, 600 metres in depth and is being exploited by low-cost, open pit bulk mining.
The Zulema property is owned 100% by Chilean Metals with no underlying third party royalties or net profits interests. It is road accessible and ideally located at low elevations of less than 400 metres, 30 kms from the mining town of Copaipo, 15 kms from both the Pan-American Highway and Chile’s main northern power grid, and 25 kms from the coast.
Intensely skarned hydrothermal breccia is exposed on the property over an area of one square km and is open to extension beneath sand plains. Sporadic but widespread disseminated copper oxides on surface assay in the range of 0.4 to 5.5% Cu and 0.2 to 0.4 gpt Au. Previous drilling at the extreme southern tip of the main prospective area encountered up to 22 metres of 0.45% Cu and 0.11 grams/tonne Au in stockworks. The target is a Candelaria look-alike: a blind, CuAu deposit beneath desert sands and siliceous skarn breccias associated with strong surface geophysical features and amenable to bulk, open pit mining methods. Chilean Metals plans to drill test this target in 2015.
Zulema Drill Program Highlights – Stage 1
In January 2017, Chilean Metals initiated Stage 1 of their 2 Stage Drill Program. Stage 1 was a minimum of 2000m and up to 9 Drill Targets. Some of the highlights are discussed below. Chilean Metals was very excited to have confirmed an IOCG Style Mineralized System with similar host rocks as the Candelaria Mine. This is a very important point to absorb. Remember, they are hunting IOCG Style deposits, they believe they have a Candelaria “Style Opportunity” here. Here are a few highlights:
Drill Hole #1, intersected Calcopyrite (Cpy) between 107m – 126m. Drill Hole #3, intersected Copper – Gold @ 285m – 334m IOCG Lenses with Cu Grades from .12% – 1.19% and Au grades from .05 – .99 g/t.
Drill Hole #5, intersected Copper – Gold @ 179m – 218.50m, Cu grades up to .44% and Au grades reaching .27 g/t. Drill Hole #8, assays reached .60% Cu & .15 g/t Au.
Zulema historic drill holes @ the same target area resulted in 99.16m of Cu @ .24% & Au .06 g/t, including a 24m section of .45% Cu & .11 g/t Au. Their other holes proved a system and the area is definitely charged with mineralization.
Zulema Next Steps:
Conduct ground Geophysical Program, over target area with new technology that was implemented @ Candelaria by the same Geophysics firm and processing conducted by Minotaur Exploration (Australia) and provide recommendations and possible new Target areas. Strategy is to conduct Stage 2 drill program in Fall of this year.
Palo Negro & Hornitos
The contiguous Palo Negro and Hornitos properties, 100% owned by Chilean Metals, together comprise over 9,000 hectares (23,000 acres) in the Atacama Province of Chile’s Third Region. The properties cover a 14 km strike length of the Atacama Structural Zone, locus of numerous high-grade Cu, Au, Ag and Fe deposits including the large Candelaria deposit of Lundin Mining Corporation less than 30 km to the northeast. Pre-mining reserves at the Candelaria IOCG deposit stood at 470Mt grading 0.95% Cu, 0.22 g/t Au and 3.1 g/t Ag.
Lying on a splay fault of the Atacama Structural Zone, Candelaria is the largest of the iron oxide copper-gold deposits in the Punta del Cobre belt, and the second largest IOCG deposit in the world after Olympic Dam, Australia.
The Palo Negro and Hornitos properties are easily accessible by a network of well-maintained gravel roads 10 km from the Pan-American Highway. The properties are well situated for low-cost exploration and future mine development.
The Osorniña mine is situated on a small third party concession within the Palo Negro property. Magnetic surveys show an intense magnetic response over a strike length of 2.5 kms extending well beyond the Osorniña mine and coincident with the Atacama fault. Meta-sediments and meta-volcanics in this area have been hydrothermally altered by the introduction of iron oxides and copper. This and similar magnetic anomalies delineated over the Palo Negro & Hornitos properties are priority IOCG targets.
IOCG deposits are generally responsive to magnetic and induced polarization (IP) surveys. Future exploration of the Palo Negro and Hornitos properties will require further geophysical surveys to define exploration targets, followed by reverse circulation drilling.
Tierra de Oro
Chilean Metals’ wholly-owned Tierra de Oro (TDO) property is located in Chile’s prolific IOCG (iron oxide-copper-gold) belt. The belt hosts numerous copper-gold deposits including Mantos Blancos, Manto Verde and the nearby Candelaria IOCG deposit, owned by Lundin Mining Corporation, with reported reserves and production of 470 Mt at 0.95 % Cu, 0.22 g/t Au, 3.1 g/t Ag.
This 5,600 hectare (14,000 acre) property is located 70 kms south of the mining town of Copiapo in Chile’s Third Region. It lies 20 km east of both the Pan American Highway and Chile’s main power grid and is accessed by well-maintained gravel roads. With a maximum elevation of only 1,500 meters the property enjoys good climactic conditions allowing year-round exploration. TDO hosts bulk-tonnage Au-Cu-Ag exploration targets.
Geologically, the property is underlain by two distinct domains: a Western Domain of intrusive rocks with Au-Cu mineralization, and an Eastern Domain of volcanic strata with Cu-Ag mineralization. The two domains are separated by a major north-easterly trending fault, a splay of the main Atacama Fault some 20 kilometres further west.
The Western Domain presents several inadequately-tested gold exploration targets. Previous exploration was focused principally on establishing a resource on gold veins developed and mined in past years by artisanal miners. These veins locally contain in excess of an ounce per ton of gold. Individual veins can be traced on surface for up to a kilometer but are generally narrow and discontinuous, pinching and swelling like beads on a string. Several bulk- mineable targets have been identified, the most promising of which is the Cerro Chanchero zone where strong Au-Cu soil geochemical anomalies coincide with a prominent IP (induced polarization) anomaly and intense argillic alteration. Previous drill holes which tested the periphery of this target encountered abundant disseminated pyrite. The 500m x 250m core of this promising porphyry Au-Cu target remains untested by drill holes.
The Eastern Domain hosts the Algarrobito copper zone on the western flank of Cerro Algarrobito. Copper is exposed in numerous surface showings over an area of 1,000 by 400 metres (and open to extension) in fracture stockworks and disseminations. The mineralized zone is open to the east. It is associated with a strong copper soil geochemical anomaly roughly 1,500m in diameter and with a prominent aeromagnetic anomaly outlined by a ZTEM survey in 2011. The Algarrobito zone has never been drilled.
THE NOVA SCOTIA PORTFOLIO
In 2016, Chilean Metals acquired 100% of (4) Priority target IOCG Properties in the western extension of the CobequidChedabucto Fault System (CCFZ) in Nova Scotia. This is an identified IOCG Crustal Fault System identified by the Nova Scotia DNR & Minotaur Exploration (Australia). The CCFZ comprises of a series of crustal-scale faults along a 250km x up to 25km wide that divides Nova Scotia into 2 distinct terranes (Avalon & Meguma). When the Nova Scotia DNR & Minotaur Australia re-defined the CCFZ as a potential IOCG belt, the entire thinking of the area has changed We believe there will be several significant ICOG Copper – Gold discoveries in this system over the near term. There has been over $10M in exploration in this system in the past few years to advance these projects. There has been assay results of up to 30% Cu & 20g/t AU in this system.
“I believe many will be surprised at the results the Cobequid-Chedabucto Fault Zone (CCFZ) properties will deliver over the next few years. I believe there is the real potential for 2-3 deposits discovered in this system in the near term.“ stated Patrick J Cruickshank, President & CEO, Chilean Metals Inc.
Bass River JV:
In fall of 2016, Chilean Metals signed a JV Agreement with Tejas Gold Co., (Texas Based PE Group). Chilean Metals received 100,000 shares in Tejas Gold Co & $25,000 Cash Option Payment. After $400,000 in Expenditures on the Bass River Project, Tejas will earn a 35% Interest in Bass River. Chilean Metals is the Operator, along with the Technical Advisory Committee. The Bass River (Castlereagh Target is the largest VTem anomaly delineated from over 2000 line kilometers of data. Previous work to the southwest at Gamble lake identified a mineralized system (Lead, Zinc & Silver). Work at Bass River was successful in identifying a new volcanic center in the Cobequids which is presently being studied by the DNR geologists as part of their regional re-mapping program in the Cobequid Highlands.
Chilean Metals has just press released this past week. The High Priority Targets are defined as (BRN_VT01), (BRN_VT03) & (BRN_VT06). Minotaur Exploration Ltd (Australia) has processed the Geophysics. CDI inversions were conducted on all targets in order to better determine the target depth, dip and extent. Three component fixed loop ground EM will be executed over these targets as recommended. The Target definitions are below.
Once the Geophysics are processed by Minotaur Exploration (Australia) Chilean Metals – Tejas will commence a minimum 2000m Drill Program.
THE TECK ROYALTY “HEDGE”
Their fourth asset is a royalty which they sold to Teck Resources for around $3 million, leaving them with a 3% NSR (net smelter return) royalty on production. Teck has the right to purchase one third of the NSR for Cad. $3,000,000, thereby presenting the Company with near-term cash flow potential. By way of comparison, total sales in 2013 at Quebrada Blanca, Teck’s nearby copper mine and SXEW operation, were $422 Million. The royalty, whether 3% or reduced to 2% through Teck exercising its right, has potential to provide significant future benefit to the Company in terms of nondilutive exploration funding and/or dividends to our shareholders, and may provide a model for the Company’s future accretive growth— That’s the real kicker/”hedge” as CMX’s management team likes to call it. Other than having superior assets, that’s what’s sets CMX apart from most juniors on the venture.
Aside from Patrick Cruickshank and Terry Lynch, who are both very well-respected mining entrepreneurs, Chilean Metals was able to recruit Chris Hodgson to their team. If you haven’t heard of him, Chris’ claim to fame was his recognition of the Santo Domingo IOCG (iron oxide-copper-gold) deposit, subsequently developed by Farwest Resources and ultimately sold for $700 million to Capstone Mining. He got involved with CMX because he felt their assets resembled what he saw in the early days on Santo Domingo…if he’s half right, trust me, we’ll be very happy shareholders. Minotaur Exploration (Australia) is the firms Geophysical partner & Dr Tony Belperio has joined the Technical Team. Tony bring a proven track record with the discovery of one of the largest IOCG Deposits in the world, with Prominent Hill Australia, which they sold for $1.2B, and more recently their Cloncurry Discovery. There are many correlations between Australia Exploration & Chilean Exploration.
With the first tranche of their $1.5M financing at $0.15/share finally complete, it’ll give them the runway to start a significant work program at Zulema and generate the news flow the market’s been craving for the last six months.
The stock’s been sitting around the $0.14-$0.15/share range for quite a while mostly due to the fact that they’ve had this financing overhanging their market. It’s been a constant ceiling for the last few months but once that’s complete, I can see the stock start to firm up and potentially creep back up to its previous highs.
As I mentioned above, I am a shareholder and took part in the company’s $0.15/share financing so I’m obviously biased on the story but I do like its potential. I met Patrick and Terry a few a months ago and they’ve been working hard to position the right guys that could help take their story to the next level and so far, without mentioning any names, they’ve been able to recruit a few very influential mining investors that shared our view on the project. This is obviously a very risky investment, much like any other exploration company, but it’s one that provides shareholders with potential cash-flow with the upside of a discovery. Chilean Metals is a unique Junior exploration company operating in the very favourable Copper – Gold space and in the best jurisdiction on the planet for this bonanza size deposits. They have built the best Geophysical Team with a proven discovery record and I think we couldn’t get a better entry point with our position as right now. Where can you get a Canadian Junior exploration company with 9 terrific IOCG properties, A Teck Royalty and a Veteran Technical Team & highly accredited Management Team all for $10M market Cap? I believe there’s tremendous upside potential at these levels. And don’t forget that Hedge “Royalty”.
Make sure you keep CMX.V on your radar screens and stay tuned for more news/updates to come. The team is just getting started so don’t be surprised to see some increased activity in the market as management begins to expose their story to a broader range of investors.
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