Please start by giving us some background to the company, and tell us about the strengths of your management team.
Since 1993, Chesapeake’s management team has had a successful track record working in the Americas. The strength of the company is the ability of its people to recognize prospective geologic settings, generate quality projects, and finance their exploration and development. The team’s strategic vision and initiative rewarded Francisco Gold Corp.’s shareholders in 2002 with the grassroots discoveries of El Sauzal and Marlin – two multi-million-ounce gold deposits which became mines with robust economics.
With the acquisition of Alderley Gold Corp. in 2021, Chesapeake is now focusing on progressing the world-class Metates project towards production as a sulphide heap leach operation and brings in a team of mine builders with >70 years experience building mines for the world’s largest mining companies including BHP, Kinross, SSR Mining, Barrick Gold, Placer Dome, and others.
Why is Durango an attractive mining jurisdiction?
Durango has long been established as a safe and stable mining jurisdiction within Mexico. There are a number of operating mines in the state, owned by large foreign mining companies. The permitting process is simple and straight-forward, with good infrastructure in place, as well as a strong workforce. The local government is very supportive of mining projects like Metates in Durango.
Briefly discuss your gold and silver operations at your 100%-owned Metates project in Mexico, your primary asset.
Metates is 100% owned by Chesapeake and is located 175km northeast of Mazatlán in Durango state and is one of the largest, undeveloped disseminated gold and silver deposits in the world. A NI 43-101 report by M3 Engineering & Technology Corp. of Tucson, Arizona, outlines a total resource of over 20Moz of gold, over 550Moz of silver.
Chesapeake has gained access to a proven and innovative sulphide heap leaching technology, creating the path towards becoming a new growth-oriented and innovative gold and silver producer. Chesapeake will now focus on progressing the Metates project towards production using the technology in a low-capex heap leach operation.
In your view, why is now a good time to be investing in gold exploration, particularly in companies like Chesapeake, which operate in mining-friendly jurisdictions?
Demand for gold and silver as a store of value continues to rise steadily with excessive growth in global money supply. However, precious metal mining has not kept pace and we are now mining lower grade-ores today than at any time in history. World-class deposit discovery rates are falling, existing oxide resources are being depleted, and a growing number of new mines use much-higher-cost and technically challenging mining and processing methods.
These factors, combined with stricter environmental and permitting regulations, as well global water supply issues, are significant headwinds for the precious metals mining industry.
The gold and silver mining industry is finally reaching a turning point. Surface oxide deposits are being rapidly depleted and miners are now forced to innovate and turn attention towards sulphide orebodies that were traditionally thought to be more expensive to process using existing technologies. The vast majority of total global ore types are sulphide in nature. The solutions however lie right under our noses as the copper industry, as one example, has been oxidizing and heap leaching sulphides for decades.
Borrowing from similar concepts, Chesapeake intends to be a leader in oxidizing and heap leaching sulphide precious metal ores, starting with application of the technology at Metates.
What are the next steps for Chesapeake Gold in the year ahead?
2021 was a transformational year for Chesapeake with new management members and a technical team focused on testing a sulphide heap leach technology that could significantly improve the Metates project’s economics as a low-cost, scalable mine. The positive results of the PEA demonstrated an alternative mine plan with a ~90% decrease in development capital compared to an autoclave process flowsheet; economics for Phase 1 of its heap leach project at Metates showed a pre-tax NPV of US$1.1B and 35% IRR. In 2022, we plan to advance the metallurgical and technical work that will be key value drivers for the company going forward.
In June 2021, we also completed a five-hole PQ diameter core drill programme meant for metallurgical testwork. However, assays returned on average a 19% increase in grade over the block model predicted grades. The company has now commenced an infill programme that will drill both up and down dip as well as along strike between the June 2021 holes. We expect to release results in early 2022 once assays have been received. An overall increase in grade could have a significant impact on the PEA geological model and further improve project economics.