Chakana Copper Corp. reports the purchase of a 1.0% Net Smelter Returns (NSR) royalty (the “Royalty”) on the Soledad project from Minera Vertiente Del Sol S.A.C, the registered owner of the Soledad Property and a subsidiary of Condor Resources Inc. The Royalty is autonomous of the company’s 100% option agreement with Condor. Exploration by Chakana has emphasized the property’s gold, silver, and copper potential, and the royalty acquisition is in expectation of continuing success, streamlining the royalty structure and relieving the company’s final financial obligations.
The purchase price for the Royalty is US$565,000 of which US$275,000 was in cash and 900,000 in Chakana shares. The Royalty encompasses Condor’s mining concessions and a 2-km area of interest.
Chakana formerly had the right to re-purchase 50% of the 2% NSR royalty (or a 1% NSR) that would be granted to Condor (the “Condor NSR”) for US$2,000,000 if Chakana uses its option to buy Condor’s Soledad concessions. On account of Chakana purchasing the Royalty now, the option agreement between the parties will be edited to show a reduction of the Condor NSR royalty from 2% to 1%, with Chakana possessing the right to re-purchase 50% of the Condor NSR royalty (or 0.5% NSR) for US$1,000,000 subsequent to using the option agreement. If Chakana does not use the option agreement to buy Condor’s Soledad concessions, Condor has the right to buy 50% of the Royalty (or 0.5% NSR) for US$1,000,000. The amendment to the option agreement also removes Chakana’s pre-royalty payment duties. Chakana’s purchase of the Royalty is contingent on TSX Venture Exchange approval.
The purchase of a 1% NSR royalty on a large portion of the Soledad project where twelve of seventeen confirmed breccia pipes occur captures significant value for Chakana shareholders at a 70% discount to the original option agreement. Purchasing the Royalty also increases Chakana’s flexibility to raise future capital and reduces a financial burden on the project that should enhance the project economics if mineral resources are defined. The Royalty purchase affirms our confidence in the Soledad project based on the initial drilling of four breccia pipes and the extensive surface sampling and geophysical work completed to date.
David Kelley, President and CEO, Chakana Copper Corp.
About the Soledad Project
The Soledad project is located in the Ancash Province of central Peru, 35 km south of Barrick’s Pierina mine. The project has been opened for an aggressive exploration program by Chakana since an early 100% purchase option agreement was struck with Condor in April 2017. Two ensuing agreements expanded the land position to 3,085 hectares. The emphasis of exploration has been on high grade copper-gold-silver mineralized tourmaline breccia pipes that crop out at surface. A total of 25,211 m of diamond drilling has been finished to date on four of the seventeen identified breccia pipes. More than sixty targets have been established on the property, which are yet to be examined. A 20,000 m drill program scheduled for 2019 will begin straightaway after drill permits are approved.
Some highlights of previously released drill intercepts from Bx 1, Bx 5, and Bx 6 are:
* Reported mineralized intervals are not true widths given the vertical nature of the breccia pipe and the steep inclination of the holes.Cu_eq and Au_eq values were calculated using copper, gold, and silver. Metal prices utilized for the calculations are Cu–US$2.90/lb, Au–US$1,300/oz, and Ag – US$17/oz. No adjustments were made for recovery as the project is an early stage exploration project and metallurgical data to allow for estimation of recoveries are not yet available. The formulas utilized to calculate equivalent values are Cu_eq (%) = Cu% + (Au g/t * 0.6556) + (Ag g/t * 0.00857) and Au_eq (g/t) = Au g/t + (Cu% * 1.5296) + (Ag g/t * 0.01307).
Sampling and Analytical Procedures
Chakana follows tough sampling and analytical procedures that match or surpass industry standards. Core samples are stored in a safe area until moved in batches to the ALS facility in Callao, Lima, Peru. Sample batches include blank, certified reference materials, and duplicate samples that are then processed under the regulation of ALS. All samples are examined using the ME-MS41 (ICP method that offers an all-inclusive multi-element overview of the rock geochemistry), while gold is examined by AA24 and GRA22 when values surpass 10 g/t. Over limit silver, lead, copper, and zinc are examined using the OG-46 procedure. Soil samples are examined by 4-acid (ME-MS61) and for gold by Fire Assay on a 30 g sample (Au-ICP21).
David Kelley, an officer and a director of Chakana, and a Qualified Person as defined by NI 43-101, reviewed and ratified the technical information in this press release.