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Camino Minerals (TSX-V: COR): Looking for Copper at the Right Time

 -- Published: Tuesday, 17 April 2018 | Print  | Disqus 

By: Nicholas LePan,

The Road to Camino Minerals’ Los Chapitos Copper Exploration Property, outside the town of Chala, Peru


The current list of tier-one assets of copper, many of which were discovered in the early 20th century and have been operating for several decades, are quickly becoming uneconomic as grades fall, sustaining capital outlays rise and processing costs step up according to BMO Capital Markets.


The lack new supply growth from 2019 to 2022 is likely to push the market into deficit, Colin Hamilton, managing director for commodities research at BMO, said. “New copper projects simply aren’t emerging the way they used to.


There is one copper exploration company that is emerging to meet this demand, Camino Minerals (TSX-V: COR).   With the average grade of copper ore in the 21st century below 0.6 percent copper, Camino is drilling results well above average.


There are not many junior mining companies that can in under a year, produce high grade copper drill results, conduct ongoing metallurgy tests and complete additional financing for a drill program. Camino has done this all.


With experienced management, good ground to explore, and exploration conducted with a view to production, Camino Minerals is making quick work of the ground at its Los Chapitos property, just outside of Chala, Peru. 


Los Chapitos is located 15 kilometers north of the coastal city of Chala, Department of Arequipa, Peru, approximately a nine hours’ drive south of Lima along the Pan American highway. Gravel roads connect to the highway from the towns of Chala and Tanaka.


The town of Chala is a centre for small-scale mining with several toll mining operations that are more concerned with gold than looking for large copper.  


Los Chapitos has good neighbors and sits in the middle of geology that hosts economic mineralization. 


The mineralization at Los Chapitos is thought be related to an Iron Oxide Copper Gold “IOCG” type deposit, similar to the Mina Justa deposit which is approximately 100 kilometers to the northwest along the same trend.


Mina Justa has a resource base of more than three million tonnes of contained copper and reserves of more than one million tonnes of contained copper “Cu”; 374Mt at an average grade of 0.71% Cu.


It was sold for ~$240 million to a Hong Kong based firm, which then sold it to Minsur, a private Peruvian company, for approximately ~$590 million. 


The outlined plan for production at Mina Justa is a 90,000-tonne-per-day facility supplied from an open pit.  The processing plant has both SXEW and milling circuits.   The company plans to use ocean water for both processes instead of fresh water; a creative and economic solution for a desert region.


Construction is set to start late 2018 and will require 1,400 workers during the construction phase and will then generate 300 jobs during the ensuing operational phase.


No two deposits are identical but in geology the same processes help to form similar deposits.   Mina Justa attracted Ken McNaugton and Ken Konkin to prospect the region and they came across the Los Chapitos property.


The exploration team has an impressive track record with many members having previously worked together at Silver Standard and Pretivm’s (TSX:PVG) Brucejack property that went into production this year.  


At the head of Camino is McNaughton, who has extensive experience with projects that are currently in production. He joined Pretivm Resources Inc. in 2011 as Vice President and Chief Exploration Officer. Prior to that, he was Senior Vice President, Exploration for Silver Standard Resources Inc. 


Ken Konkin, P. Geo., as General Manager of Exploration Peru for Camino, has managed precious and base metal exploration programs for 30 years throughout North America, South America and Russia. He was the project manager for the surface exploration programs at the Brucejack/Snowfield Projects for Pretivm.  


There was never any thorough exploration in the past of Los Chapitos. The property is barren land, littered with lichen covered rock that has a similar hue to mild copper mineralization which could easily be dismissed as the lichen.   


However, it was McNaughton who saw a speck of green on the side of an outcrop of what would become the Adriana Zone.   It was on this outcrop that gave the two explorers the first target for drilling.

Outcrop at the Adriana Zone that attracted initial interest of exploration

Exposed copper mineralization at the Adriana outcrop


On July 19, 2016, Camino Minerals (TSX-V: COR) entered into an option agreement with Minas Andinas SA, to acquire a 100-per-cent interest in the Los Chapitos project located in the Department of Arequipa, Peru. 


Moving forward four months to Nov. 22, 2016, the company signed a 5-year access deal to the los Chapitos property with the community of Atiquipa.


It was only five months later, on April 18, 2017 when the company produced impressive drill results with the headline result coming out of Hole CHR-002 which intersected 1.30 per cent copper over 106 metres “m” (with the hole ending in mineralization), including 2.12 per cent copper over 38 m from the Adriana Zone.

First drill hole into Adriana, DCH-001


The April 18 drill results sent the company’s share price to an intraday high of $2.21 settling at $1.24 by the end of the day.  The company raised in total $7.8 million in two private placements at 95 cents to fund its second phase drilling program at Los Chapitos.  


The company followed up with Hole DCH-001 was designed to twin CHR-002 on the Adriana zone which intersected 106 metres averaging 1.30 per cent copper.

Significant copper minieralization in core of DCH-001


However, the second phase drill results did not create the same market activity with results such as 168.5 m of 0.72% Cu and 88.5 m of 0.84% Cu at Chapitos at the Adriana zone and 27.2 m of 0.72% Cu at the Katty zone. 


Nonetheless, drilling revealed significant copper mineralization worthy of further exploration with clear zones of interest.


The Adriana zone is exposed over an area measuring 75 m by 150 m, with historical sampling ranging from 0.3 per cent to 2.6 per cent copper as oxides. The Katty zone measures 50 m by 125 m and has historical sampling ranging from 0.3 per cent to 6.6 per cent copper. The Carlota zone, which lies between the Adriana and Katty zones, measures 100 m by 150 m and contains lower-grade mineralization grading up to 1 per cent copper.  Through surface sampling and drilling the company has created several exploration targets.


Small-scale mining was active on the western side of the property in the 1940s and 1950s, which produced high-grade copper oxide mineralization from the Atajo zone. This zone ranges in width from eight metres to 20 m and grade from 0.8 per cent to plus 2 per cent oxides over a strike length of 400 m.  Approximately six kilometres to the east are three additional zones which outcrop along a one kilometre trend.


The belief about the Atajo zone is that it is a parallel structure to the trend along the Diva fault that hosts the Adriana, Katty, Pilar and Lourdes Zones. 


The Atajo zone, which has historical workings along 400 metres of strike length, returned surface chip samples values averaging 2.10 per cent copper over 38 metres, and a second line averaging 1.57 per cent copper over 64 metres.


The company reported results from drill holes DCH-041 which intersected 0.75 per cent copper over 17.80 metres, including 2.15 per cent copper over 3.00 metres. Hole DCH-046 intersected 0.83 per cent copper over 16.30 metres, including 2.09 per cent copper over 5.00 metres. 


These results were not as impressive as the results along the Diva fault but this has not discouraged Ken Konkin who believes the geology is similar there and will just need to be more drilling in the future. 


In the near term, the company is focused on extending the known mineralization from Adriana for about six to seven kilometres.   


The company has outlined an exploration plan for the Diva fault which extends about six to seven kilometres through the property and towards the Lourdes zone located to the northwest of the property.  A diamond drill has been mobilized to the property, and the first step-out hole completed 100 metres northwest of Adriana, approaching the Lourdes target.

The Diva Fault on the west side looking from the top of the Adriana Zone southwest towards Chala


The drill has been moved and will now complete step-out holes to the southeast between Adriana and Katty. Additional drilling will be planned based on the results of these first holes and from the surface evaluation of other targets. Assays will be released as they become available.

Looking northwest to the Lourdes zone, the Diva fault leads right through to the otherside


As part of the ongoing exploration work, the company is making sure that the rock they are pulling out is economic. The company conducted solubility tests that revealed positive soluble copper results for diamond drill holes DCH-001 through DCH-040 drill program on the Adriana zone and the Katty zone.


Hole DCH-012 intersected 0.93 percent total copper over 96.50 metres of which 0.69 per cent reports as soluble copper, including 5.01 per cent total copper of which 4.37 per cent reports as soluble copper.


Hole DCH-024 intersected 0.85 per cent total copper over 95.95 metres of which 0.75 per cent copper reports as soluble copper, including 3.16 per cent total copper over 6.15 metres of which 3.01 per cent copper reports as soluble copper.


This is significant as the mineralization in the Diva structure could potentially be processed either by heap leach producing cathode copper or by conventional milling producing a copper concentrate.


These results are amenable to the same method that is being proposed for Mina Justa, SWEX method which is cheaper and cleaner than other methods.  This goes to overall help support the exploration and development hypothesis of another mineable copper deposit in the same region.

The core oxidizes sitting in the core shack, revealing copper mineralization throughout the core.


It is still the early stages of exploration for Camino at Los Chapitos with approximately 1/10th of the drill holes required to define a resource but nonetheless early results, the geology and early metallurgy suggest an extensive area of mineable copper.  


The region is ideal for mining with flat and open land and could support any processing facilities.


Furthermore, Peru’s Minister of Mines stated goal of becoming the world’s number one copper producer will support copper exploration efforts such as Camino’s.


The speed with which the company identified mineralization, drilled and financed further work, is a testament to good management and regional knowledge but at the end of the day, drill results will reveal the truth.


The only way to get at the truth is to keep on drilling and with upcoming drilling results, Los Chapitos could prove to be a significant new discovery.


Early results and the scale of the project suggest a significant resource that is sitting at the beginning of a period of depleting global copper reserves. The timing is ripe for a new copper deposit.


Mining Analyst with consultancy firm CRU, Hamish Sampson, recently told the International Mining Exploration Forum that around 220 mines that produced around 40 per cent of the world's copper last year were slated to close for lack of reserves. 


It appears Camino’s work could not come at a better time, as the company is defining a copper resource at Los Chapitos.


In the words of Ken Konkin, “a mine is is just a question what size.”

Trying to make sense of it all, in the shadow of the Vicky Zone


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