Don't Forget To
Rate This Article
   

Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe

TICKERS: FCX, LUN, MMC, RMES, RIO; RTPPF

Junior Completes First Drilling on Flagship Project in Chile

Share on Stocktwits

Source:

Copper prices are at record levels due to supply constraints and surging demand. And quite possibly the best place to look for copper is Chile, home to the largest copper deposits in the world. However, one junior is eschewing the countryís typical large porphyry deposits in the Andes for a shot at high grade near the coast.

Red Metal Resources Ltd. (RMES:OTCBB; RMES:CSE) recently completed a 2,010-meter diamond drill program over nine holes at its Carrizal copper-gold-cobalt property in the Coastal Cordillera of Chile’s III region and reports visual signs of copper sulphide mineralization in all of the holes drilled to date.

The company said there are even signs that this could be an iron-oxide-copper-gold (IOCG) deposit. Assays are pending and should start being returned in late April.

Red Metal CEO Caitlin Jeffs says one of the more exciting drill holes was in a new vein being drill tested. The vein had previously been mapped by the company and followed for a full 1.5 kilometers on surface with great surface sample results of up to 4.97% copper.

“We drilled one hole into a new vein, prior to this all of the historical drilling has focused on one vein on the property, however there are five main veins on the property that all have multiple kilometers of strike length we can see on surface that we have yet to drill. We're just starting down that path,” Jeffs told Streetwise.

The 3,378-hectare Carrizal property, which is accessible by road, hosts two projects: Farellon and Perth. The whole land package is in Chile’s III region. Mining first started there in the 16th century at the Carrizal Alto mine, which is contiguous to Red Metal’s Carrizal property.

Throughout the 1800s the Carrizal Alto mine was producing from near-surface copper veins. In total, more than 3 million tons of ore were mined at grades around 5% copper, which would be worth about US$500 per short ton in today’s dollars.

Farellon is along strike from the past-producing Carrizal Alto mine and hosts some of its underground workings. The mine ceased operations due to flooding at 500 meters depth in 1891, and Red Metal is still hitting water in every drill hole, something Jeffs said modern technology can easily handle.

The eight other drill holes of Red Metal’s current drill program targeted the south and north end of the previously drilled Farellon zone.

Core from Red Metal's Farellon zone
Drill core from Red Metal's Farellon zone showing sulphide mineralization, known to host copper.

All eight drill holes have intercepted zones of sulphide mineralization, including chalcopyrite and chalcocite (these are the host minerals for copper) and zones of strong alteration associated with iron oxide copper gold — a “unicorn” among copper-gold deposits. The drilling continued to expand on the known deposit both along strike and at depth.

“We believe the nature of the alteration and veining indicates that we are in the top of a large IOCG system and that we are in the early stages of showing the full potential,” Jeffs said in a release.

One example of an IOCG deposit is the Candelaria complex in Chile’s Atacama region. As of June 2021, it had a Proven and Probable mineral reserve of 5.3 million tonnes copper, 2.8 million tonnes zinc, 77,000 tonnes nickel, and 6.6 million ounces (6.6 Moz) gold. 

Lundin Mining Corp. (LUN:TSX) acquired its majority stake in Candelaria interest from ownership from fellow major metals producer Freeport-McMoRan Inc. (FCX:NYSE) in 2014.

Exploration in Chile Moves to the Mountains

When large copper-porphyry deposits — the largest of which in Chile is Escondida, held by BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK), Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK), and Mitsubishi Materials Corporation (MMC:FSE); were discovered high in the Andes, most of the copper exploration in Chile moved away from the coast and into the mountains. That exodus left Carrizal for smaller fish like Red Metal.

In the 1990s, Carrizal witnessed about 4,600 meters of reverse-circulation drilling, which doesn’t leave you with any core, just results on spreadsheet. Red Metal’s diamond drill program (which does generate core) will provide valuable structural and alteration information to Jeffs and other company geologists.

One promising hole from the reverse-circulation drilling days was FAR-09-C, which intersected 5 meters of 2.57% copper, 4.16 grams gold per tonne 4.16 g/t gold, 0.05% cobalt.

Metallurgical analyses by an Australian firm in the 1990s suggested gold recoveries of around 91% for gold, and 97% for copper. 

Leftist President Could Prove Lucky for Junior

In December, the left-leaning Gabriel Boric was elected president of Chile. Part of his platform to narrow the gap between the wealthy and the poor included higher royalties and more stringent permitting on open-pit mines, as well as whispers of nationalizing lithium production.

His sentiments launched a selloff on stocks with Chilean assets, but one fundamental truth remains: Chile produces about one-third of the world’s copper and its economy relies heavily on copper exports. The country will fetch even more for its copper for the foreseeable future as the red metal flirts with prices above US$5/lb., owing to long-term supply constraints and surging demand.

“Chile has a very stable government system, kind of like Canada and the U.S. It's not like (Boric) can just walk in and make new laws or make grand gestures like nationalizing mines; he's got to go through a process, he's got to get a majority vote from his congress,” Jeffs explained.

She added: “I do not think he has any plans to nationalize the copper mines at all...But Chile is going through a redraft of its constitution right now. And part of that is that the government has elected a constitutional committee. It's 155 members, they have nine months to redraft the constitution and take it to the public for approval, and some radical ideas are going to be presented in the process. . . it doesn’t mean they will pass.”

Red Metal’s ultimate plan of an underground mine with a smaller footprint and lighter environmental impact might mean a smoother path to a mining license from a regime seeking to maintain GDP growth while scoring points with the “green” crowd.

“So many of the huge copper mines have stagnated at the development stage. There are social licence issues and environmental issues that take a long time to deal with. An underground mine has a much smaller footprint. So realistically, environmentally, that is a bit of a bonus for us. And higher grade means you are moving less rock, also environmentally a little bit friendlier,” Jeffs said.

For now, Red Metal is eagerly awaiting the drill results from their most recent drilling program, and they are busy planning for more drilling in the future.

Jeffs’s next goal is to raise enough to drill 20,000 meters on Carrizal to gain a firm understanding of the deposit and develop a resource estimate.

[NLINSERT]

Disclosures:

1) Brian Sylvester compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor/employee. He/she or members of his/her household own securities of the following companies mentioned in the article: none. He/she or members of his/her household are paid by the following companies mentioned in this article: none. His/her company has a financial relationship with the following companies referred to in this article: none.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Red Metal Resources Ltd. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Red Metal Resources Ltd. and Rio Tinto Plc, companies mentioned in this article.

 




Want to read more about Base Metals investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe