Special Report: Take a potentially large-scale iron and copper project, place it in South America’s best mining address and you have what Chala Metals believes is a recipe for success.

The unlisted company, which is looking to pursue an ASX listing this year, is acquiring private Peruvian company AMP that owns rights to the highly prospective Achatayhua project through a share swap, raising at least $1m in seed capital.

Here’s what makes the project stand out.

Achatayhua is located within the world-class iron ore, copper, gold (IOCG) sub province in south-central Peru and is close to major deposits such as Marcona, Peru’s largest iron ore mine with production of 10Mtpa, Mina Justa with 413Mt at 0.79% copper and the 863Mt Pampa de Pongo IOCG project.

Location of the Achatayhua project. Pic: Supplied

It hosts a well defined outcropping ore body up to 1km across, with a prospective strike length of 8km and rock chips that have returned iron values over 60 per cent iron in some areas and copper grades commonly over 1.0% at surface.

These rocks are all contained within a geological setting that has all the hallmarks of a major deposit.

Highlighting just how large Achatayhua could be, an independent review of geophysics completed to date has indicated that the tenement could host resources of up to two and a half billion tonnes.

Additionally, the project is located just 65km from the coast at an elevation of about 3,900m above sea level which brings opportunity to potentially construct processing facilities next to the coast.

So how did a project with such potential go unnoticed until now?


Finding Achatayhua

Executive director Geoff Muers told Stockhead one of the reasons why the project was overlooked occurred several decades ago when the Peruvian government flew an aeromagnetic survey while there was snow cover on the peaks.

The combination of snow cover distorting the magnetic signature and the project’s location a little off the beaten track meant that it was overlooked until 2006 when it was discovered by a local geologist who had heard anecdotes about some magnetite iron ore outcrop in the area.

“He investigated it on horseback and identified the rocks back then and it’s been in private hands ever since,” Muers added.

Muers, a geologist who worked for the finance industry for a while and has been traveling the world assessing and carrying out due diligence at mining projects for both public and private companies since 2013, first realised the value of Achatayhua just last year.

“I have known Mark Newton, who owns AMP, since 2018. But it wasn’t until late 2020 when I was on holiday and reading technical reports on the geology of some of the largest deposits in Peru such as Las Bambas and Mina Justa that I realised that the rock types at Achatayhua are identical to these other major deposits,” he explained.

“In other words, the geological settings are the same. You have limestone, diorite, and volcanic rocks in close proximity. And what you get often is magnetite, copper mineralisation and skarn ore bodies evolving under that setting.

“That’s when I realised that this was probably a large copper deposit and thus we needed to focus a little bit more away from the iron ore potential.”

Copper surface rock chips. Pic: Supplied

Muers plans to carry out drilling where skarn has been mapped and where copper soil and rock chip anomalies are high, though the company also plans to put some drill holes into the iron ore given the very high grades reported in rock chips.

“Mina Justa is just 85km away and they mine the magnetite separately to the copper. In other words, you’ve got a different company mining the magnetite as you do the copper,” he added. “Here the magnetite and (hopefully) the copper mineralisation are co-existent, hence can be mined as the one orebody potentially, subject to defining resources”.

Big potential

As previously noted, Achatayhua has about 8km of strike and hosts seven or eight magnetic anomalies that are coincident with copper and iron ore anomalies at surface.

But what excites Muers is that the deposit does not appear to have been disturbed too much in terms of folding and faulting as is often the case at a lot of other deposits.

Should this be proven, it will vastly simplify exploration and potentially development of the project.

“We need to do more geophysics but the early magnetic surveys that have been done indicate that this deposit starts at surface and could go to over 500m in depth,” Muers told Stockhead.

Further highlighting the early stage of exploration at the project, he added there are multiple targets at Achatayhua yet to be investigated.

This potential has not gone unnoticed.

“Geologists who are familiar with that part of the world and have seen the data on this project are quite excited in terms of the potential scale here,” Muers noted.

He added that some of the best known resource investors in the world have expressed interest while some of largest mining companies have been keen to send in teams but were stymied by the onset of the COVID-19 pandemic.

Looking further into the future, the project’s height and close proximity to the coast could make development fairly affordable.

“These days, you can run what they call regenerative trucks, which run on electric batteries, thus saving on diesel” Muers explained.

“They run down the mountain and then they come up empty on battery power so they’re quite cheap to operate. Examples are already operating in countries such as Sweden.

“We also had an engineering study done that indicates a slurry pipeline from the project site to the coast will generate quite a lot of electricity and that would go a long way to powering the processing costs at the site.

“This could be combined with solar energy to be a really green self-powering project though a large operation will still need local power or diesel backup.”

However, Chala Metals still has some work to do.

“A lot of the larger investors who contacted me and really like this project said they want to see some drilling first and then they’ll come in and have a look,” Muers added.

Upcoming work and IPO plans

Chala is currently upgrading the access road to allow a diamond rig to carry out a 15 to 20 hole drill program commencing early June.

These will include some shallow holes drilled to depths of between 50m to 100m and a few holes drilled deeper than 200m to get a feel for the prospectivity and to gain a better understanding of where to focus its exploration efforts in the future.

Muers adds the company is currently on the way to getting its minimum of $1m in seed funding and could get over this mark.

“We’re talking to larger groups such as financial investors, high net worth strategic groups about coming in and supporting not just this initial raise, but also the IPO and those discussions are fairly well advanced,” he said.

The company is looking to launch the IPO prospectus around the middle of the year though Muers notes that it would need to discuss details with the ASX about whether this can be done while waiting for assays from the drilling, whether all the assays need to be in, or if drilling has to be halted while funds are raised through the IPO.

“These details can be worked out, but we’d like to be listed this year by the fourth quarter,” he added.

“In terms of the JORC resource post IPO, we hope to have at least two drill rigs going on this project full time and we will certainly be well on track this time next year to having an idea of the scale here and our timeline on the JORC resource.”

He added that if the ore body proved to be consistent in terms of geometry and grades, the company could reasonably expect to get to a JORC-compliant exploration target and inferred resource relatively quickly.

“We hope to have at least an exploration target up ahead of listing or certainly soon after listing.”

Other work that the company has lined up after the IPO include ground magnetics, some airborne electromagnetic work and induced polarisation to ascertain the copper zones.

Chala has already received offtake and funding offers but Muers believes that with the world in need of new copper and iron ore sources, the interest in Achatayhua will only grow once the company starts drilling and progresses it towards development.

For more information on Chala Metals and its IPO plans visit www.chalametals.com

This article was developed in collaboration with Chala Metals, a Stockhead advertiser at the time of publishing.

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